Tax Law
Senate Stalls on AMT Fix
Posted Dec 4, 2007, 06:17 pm CST
By Martha Neil
Although senators on both sides of the aisle agree that an alternative minimum tax fix is needed, they stalled today on efforts to work together to craft an acceptable resolution to the problem.
As a result, it appears increasingly likely that as many as 25 million middle-class wage earners can expect to be hit with the AMT on their 2007 tax returns, up from 4 million taxpayers who were targeted by the tax in 2006, according to the Associated Press. Even if a so-called AMT patch is approved, revising tax forms to accord with the tax law revision is likely to take nearly two months, delaying early filers or requiring them to amend their returns.
As discussed in an earlier ABAJournal.com post, a so-called patch to prevent the AMT from affecting a large number of taxpayers earning as little as $75,000 annually has already passed in the House. If the Senate doesn't approve comparable relief, those who have to pay the AMT can expect their tax bills to go up by as much as $2,000.
"The AMT was created in 1969 to prevent a very small number of wealthy people from avoiding all tax payments," AP notes. "But it was never indexed for inflation, and every year more middle income families are subject to the tax."
Because the AMT no longer serves its original purpose, the ABA opposes the tax.