Don’t count on those early tax returns
The Associated Press picks up on a story the House GOP has warned the American people about: a delay in tax returns for millions of Americans.
The culprit: a lack of an Alternative Minimum Tax patch.
WASHINGTON (AP) — Silena Davis had counted on an early tax refund to pay for getting her teeth fixed. Now, because Congress has dawdled all year on a tax bill, she and millions of other early filers could have to wait extra weeks for refunds that last year averaged $2,291.
The Internal Revenue Service is looking hard at delaying the start of its filing season, set to kick off on Jan. 14, if Congress fails to pass legislation in the next two weeks. At issue is how to handle what could be a dramatic increase in the number of people facing a higher alternative minimum tax.
If there is a delay and it extends into mid-February, it would slow nearly 32 million refunds worth a total of about $87 billion, the IRS Oversight Board predicts.
The House passed its own version of the temporary, one-year, patch of the AMT - paying for it with a $70 billion permanent tax increase. Rep. Boozman voted against the plan. The 130% tax increase is also DOA in the Senate, where even some Democrats have balked at it.
The alternative minimum tax was passed in 1969 and was aimed at about 155 very wealthy families who used deductions to avoid paying any federal income tax. The AMT disallows certain deductions and credits. It was not adjusted for inflation; as a result, over the years it has hit a growing number of middle-income taxpayers.
More than 4 million were subject to it in the 2006 tax year, and that could soar to 25 million this year without congressional action.
The House needs to pass a patch which doesn’t increase taxes and does not violate the PAYGO rules a bipartisan majority of members voted on in January.