Chaos Predicted at the IRS if Congress Doesn't Act

The Alternative Minimum Tax (AMT) was written into the tax code in 1969, its purpose being to prevent wealthy Americans from completely avoiding income taxes through crafty tax planning strategies.  The AMT was meant to ensure that those who have the means to contribute to the public coffers do not get undeserved tax relief.  But the AMT income threshhold that was established back in 1969 did not account for inflation.  The only reason the middle class normally avoids having to pay an AMT is because each year Congress puts together temporary legislation that raises the threshhold.

Except Congress hasn’t done so this year.  And according to IRS management, their systems will not be able to process tax returns until they get this yearly AMT patch that they are accustomed to getting each year.  They could begin to reprogram their computers now, but it appears that they are waiting until January 1, 2013 to see if lawmakers can agree on a permanent fix.

A mad scramble in January would mean delays; delays in processing returns and delays in paying out tax refunds.  Acting commissioner, Steven Miller, says that the consequence would be that taxpayers would temporarily be unable to file, but I think what he means is that the returns would not be processed.


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