Congress’ failure to reach an agreement over the so-called fiscal cliff could lead to the delay in 100 million tax filings. Part of the fiscal cliff deal, which is due on December 31, 2012, includes an Alternative Minimum Tax (ATM) fix that effects many Americans.
The IRS predicts that 100 million Americans would take advantage of the expected AMT shift.
Decades ago, Congress enacted the “wealth tax” program, and, since that time, they have “patched” the program to adjust for inflation. However, Congress has not passed a new Alternative Minimum Tax “patch” for 2012 tax levels.
If Congress failed to pass the patch, the current adjustment would sit at $45,000 for joint filers and $33,750. Those numbers are compared to inflationary levels of $78,750 for joint filers and $50,600 for 2012.
IRS Acting Director Steven Miller wrote a letter to the House and Senate on Wednesday in which he explains that no AMT patch would mean:
“Lengthy delays of tax refunds and unexpectedly higher taxes for many taxpayers, who will be unaware that they are newly subject to AMT liability.”
Miller estimates in his letter than 30 million American tax payers would need to pay extra taxes if an amended AMT rate were not reached.
“[I]f Congress were to act at some point next year to enact a new AMT patch, the time and substantial expense necessary for the IRS to reprogram its systems to reflect expiration of the patch would ultimately be wasted.”
While both the Democrats and Republicans are almost certain to offer an AMT patch, when that decision will occur is anyone’s guess.
This is hardly the first time taxpayers have been delayed. In recent years, last minute changes to tax forms and other stipulations have delayed the ability for some taxpayers to file their end of year tax returns.
The fiscal cliffs has many ramifications that effect businesses and individual tax payers; some of those ramifications are just more immediate then others.
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