The Alternative Minimum Tax: So much for a smooth start to tax season
by
Dec 6th 2007 4:30PM
Updated Dec 6th 2007 7:55PM
As the year-end draws near, lawmakers still can't agree on potential changes to the tax code. The current issue is the Alternative Minimum Tax, AMT for short. The AMT was enacted nearly 40 years ago, and was intended to make sure that high-income taxpayers with lots of deductions still paid a minimum level of income taxes.
The problem is that the tax code hasn't kept up with inflation, and what was once considered "high income" is now applicable to some taxpayers in today's middle class.
Republicans want to change the AMT rules so they apply to higher income earners. Democrats are unwilling to change the rules unless they can collect those taxes elsewhere. Some say the "cost" of changing the AMT rules will be a $50 billion decrease in tax collections each year.
A delay in action by lawmakers may put taxpayers in a bind. The IRS needs about seven weeks from the time a law is changed to when the agency's computer systems are ready. This could cause a delay of refunds, and taxpayers who file their taxes early in 2008 may be forced to amend their returns.
If an agreement between lawmakers is not reached this week, IRS officials say they will encounter problems with the beginning of their tax season rush.
Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Accounting. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.
The problem is that the tax code hasn't kept up with inflation, and what was once considered "high income" is now applicable to some taxpayers in today's middle class.
Republicans want to change the AMT rules so they apply to higher income earners. Democrats are unwilling to change the rules unless they can collect those taxes elsewhere. Some say the "cost" of changing the AMT rules will be a $50 billion decrease in tax collections each year.
A delay in action by lawmakers may put taxpayers in a bind. The IRS needs about seven weeks from the time a law is changed to when the agency's computer systems are ready. This could cause a delay of refunds, and taxpayers who file their taxes early in 2008 may be forced to amend their returns.
If an agreement between lawmakers is not reached this week, IRS officials say they will encounter problems with the beginning of their tax season rush.
Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Accounting. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.
