Congress Passes One-Year Alternative Minimum Tax (AMT) “Patch” – President to Sign Bill Into Law
The U.S. House of Representatives voted 352 to 64 on Dec. 19, to pass a one-year AMT patch without an additional tax increase, thereby agreeing to the Senate Amendment to H.R. 3996 (The Tax Increase Prevention Act of 2007). No Republican voted against the bill. The President has stated that he will sign the bill. The House had previously passed an AMT “patch” that also contained a tax increase, but the Senate-passed version did not contain a tax increase. The Administration announced that it would veto any “patch” that contained a tax increase, and the Senate rejected the House bill by a 48 to 46 vote – well short of the 60 votes needed to advance the bill. That set up the Dec. 19 vote in the House.
AMT was originally enacted in the 1960s as a means of ensuring that about 155 untaxed multi-millionaires would pay at least a minimum amount of tax. However, over the years, the Congress failed to index the exemption from AMT for inflation. As a result, in 2006, approximately five million taxpayers were impacted by the AMT and the tax generated $20.9 billion in revenue for the federal government. Without the legislation, it was anticipated that approximately 26 million taxpayers would have been hit with an average $2,000 AMT liability in 2007.
The AMT exemption amounts for 2007 (once the President signs the bill) will be as follows:
Married Filing Jointly: $66,250
Married Filing Separately: $33,125
Without the legislation, the AMT exemptions amounts for 2007 would have been as follows:
Married Filing Jointly: $45,000
Married Filing Separately: $22,500
In 2006, the AMT exemption amounts were as follows:
Married Filing Jointly: $62,550
Married Filing Separately: $31,275
IRS has stated that it will take about seven weeks to reprogram forms from the date the President signs the bill, and they haven’t decided whether processing delays will be applied to just AMT taxpayers or to all those filing returns. But, in any event, it is very likely that there will be some delays – including delays of some tax refunds. IRS is also cautioning taxpayers that any delay will be industry-wide, and that taxpayers should be skeptical of possible scams from those claiming they can get around delays and get refunds faster.
Download AMT legislation: AMTlegislation.pdf
Download IR-2007-2002 (Dec. 19, 2007), the IRS news release on the legislation: IR-2007-202.pdf
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