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US Tax Writers Notify IRS Of Upcoming AMT Fix

by Mike Godfrey, Tax-News.com, Washington

02 November 2007


The leaders of the Congressional tax-writing committees have informed the Internal Revenue Service of imminent changes to the alternative minimum tax, and have encouraged the agency to plan now to produce accurate tax forms for the 2007 filing season.

Senate Finance Committee Chairman Max Baucus (D-Mont.), House Ways and Means Chairman Charles Rangel (D-N.Y.), Finance Ranking Republican Chuck Grassley (R-Iowa), and Ways and Means Ranking Republican Member Jim McCrery (R-La.) sent a letter to Acting IRS Commissioner Linda Stiff, indicating their intention to complete legislation preventing the AMT from affecting any additional American taxpayers for 2007.

The AMT was originally meant to ensure that wealthy Americans paid some income tax, but without indexing for inflation it has begun to affect middle-income American taxpayers. Consequently, Congress has had to enact a series of temporary 'patches' to curtail the system's reach.

Lawmakers were last week urged to legislate a new AMT patch by Treasury Secretary Henry Paulson, who told Grassley in a letter that 25 million taxpayers will be subject to the AMT in 2007 - 21 million more than were subject to the tax in 2006 - if nothing is done soon.

Paulson called on Congress to approve the new patch by early to mid-November to avoid a chaotic 2008 tax filing season. However, the lawmakers could only offer the reassurance in their letter to Stiff that AMT relief legislation "in a form mutually agreeable to the Congress and the President" would be enacted "by the end of the year".

"We realize that this fact is causing concern for many taxpayers and is creating administrative difficulties for the IRS as the agency prepares for the upcoming filing season," they wrote.

"As the leaders of the Congressional tax-writing committees, 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," they added.

In addition to allowing the personal credits against the AMT, the legislators stated that the exemption amount for 2007 will be set at $44,350 for individuals, and $66,250 for married taxpayers filing jointly.


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