CongressNow
By Jennifer Bendery
Even though lawmakers have told the IRS to prepare now to produce tax forms for the 2007 filing season that reflect a temporary repeal of the Alternate Minimum Tax, billions of dollars in tax refunds could be delayed because of legal restrictions on how the agency plans for collecting taxes, Acting IRS Commissioner Linda Stiff said today.
Stiff said that every day that passes without Congress enacting a one-year AMT 'patch' increases the likelihood that about 50 million taxpayers will have $75 billion worth of refunds delayed for at least 10 weeks.
Stiff today told attendees of an American Institute of Certified Public Accountants conference that one of the greatest challenges for the IRS is grappling with the late enactment of legislation. That said, there has not been "a challenge of greater magnitude of anything in the past" compared to how legislative delays in enacting AMT relief for 2007 will stall operations at the IRS, she said.
Under present law, more than 23 million taxpayers will be subject to higher taxes in 2007 unless legislation is enacted to limit the reach of the AMT. Established in 1969, the AMT was intended to ensure that 155 wealthy Americans paid their fair share of taxes. Since the levy was not indexed for inflation, however, a growing number of less affluent taxpayers have paid the tax each year.
The House is set to take up legislation (H.R. 3996) this week that would provide a one-year AMT "patch" for 2007. However, Democrats remain no closer to an agreement with Republicans on how to come up with the estimated $55 billion to offset the costs of the AMT patch for 2007 — or whether those lost revenues even need to be offset at all.
The IRS has indicated that some type of AMT fix must pass by Nov. 16 in order to prevent serious logistical problems relating to printing and distributing accurate tax forms.
Stiff said she was "very gratified" to receive a letter last week from leaders of the House and Senate tax-writing committees indicating that legislative relief on the AMT is "forthcoming."
In a letter from House Ways and Means Chairman Charlie Rangel (D-N.Y.) and ranking member Jim McCrery (R-La.), along with Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa), the lawmakers state their intention to pass legislation preventing the AMT from reaching additional taxpayers in 2007.
"We want to assure you that legislative relief is forthcoming so that no new taxpayers will be subject to the AMT for taxable year 2007. To accomplish this, we are committed to extending and indexing the 2006 AMT patch with the goal of ensuring that not one additional taxpayer faces higher taxes in 2007 due to the onerous AMT," the letter reads.
"We plan to do everything possible to enact AMT relief legislation in a form mutually agreeable to the Congress and the President before the end of the year," it states. "We urge the Internal Revenue Service to take all steps necessary to plan for changes that would be made by the legislation."
Stiff said while the letter is "very helpful" because officials can begin planning and designing tax forms, it will still take the IRS about 10 weeks after a bill is passed to begin processing tax forms. This is due to the agency’s antiquated computer system, which she said can only be programmed in one way: consistent with the law on the books.
"We can’t make major progress until we know what the law is," said Stiff. "This is unlike anything we’ve seen." In the meantime, "we are rapidly approaching the critical point" given that the filing season begins on Jan. 14.
For now, all that the IRS can do is "stay tuned, fasten our seatbelts and hang on," she added. |