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Dispute in Congress May Delay Tax Refunds in 2008

By Samantha A. Torrence     Dec 2, 2007 in Politics
A current dispute over the Alternative Minimum Tax may delay the start of tax season on Jan 14th 2008. This inaction will put Americans counting on an early refund in financial hardship.
Samantha Torrence for Digitial Journal - The Alternative Minimum Tax was legislation enacted in 1969 with the intent of forcing wealthy individuals to pay taxes despite using deductions to forego paying any tax. The act has been largely unaltered and now effects more people every year further contributing to the undue hardship currently placed on the middle class. The Congress' Joint Committee on Taxation predicts that if no changes are made about half of the individuals and families in the $75,000 - $100,000 income bracket will be effected. In 1969 the act targeted only 155 families but now effects over 4 million tax payers and that number is set to soar in 2008.
The IRS is already in a bind stating that tax forms cannot be printed until the H.R. 3996 is passed in the Senate for the sake of accuracy. The IRS must also reconfigure information in the computerized filing system to account for changes.
In a statement from the IRS Oversight Board
The IRS does not have the capability to develop dual baselines for certain systems associated with the submission processing of tax returns. These systems can only accommodate one programming option without introducing excessive risk to the filing season. Above all else, the IRS must ensure that its systems can process tax returns under current law. The IRS believes that implementing program changes into these systems that do not reflect current law could jeopardize this responsibility.
The IRS is committed to taking every action possible to mitigate the impact of tax law changes that affect the AMT. It normally takes 10 weeks to complete programming after enactment.
Yet again the dispute stems from differing opinion between the Congress and the White House. Congress is proposing a raise in taxes on businesses and higher income individuals to offset the projected money lost by the inclusion of middle class Americans in next years tax period. The proposal would increase the tax burden on the rich and businesses by a total of $80 billion in 2008. The White House is asking for an AMT patch to redefine the income bracket it would effect without increasing the tax burden on any individual or group.
The White House Deputy Press Secretary Tony Fratto outlines the concerns of the White House in a statement made in early November. "The President called for a one-year AMT patch in February, but instead of acting promptly to send the President a bill he can sign, the House is just now considering a bill that would raise taxes on individuals and businesses by nearly $80 billion. If Congress continues in its failure to send the President an AMT patch he can sign into law, as many as 50 million taxpayers could face delays in the processing of their returns and $75 billion in refund checks could be delayed – essentially forcing American taxpayers to extend a $75 billion no-interest loan to the IRS. Congress should not be playing politics with money American families are counting on to pay off credit card debt or get current on their mortgage."
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