By George L. Yaksick, Jr., Washington Staff Writer
Thanks to Congress, the check is not in the mail.
Individuals who file their 2007 federal income tax returns as soon as they receive their Forms W-2 may be surprised to learn that their refunds will be delayed. The IRS is bracing for slow processing of returns early in the 2008 filing season because of Congress' delay in passing an alternative minimum tax (AMT) patch, Richard Spires, IRS deputy commissioner for Operations Support, warned on November 8, 2007.
Although many lawmakers agree that an AMT patch is necessary to prevent roughly 20 million more taxpayers from paying the tax, Democrats and Republicans differ on if the patch should be offset with other tax increases. The House of Representatives has already passed a patch, the Temporary Tax Relief Bill of 2007, funded by an increase in the taxation of carried interest. Passage in the Senate, where support for offsets is not as strong as in the House, is still in doubt. Moreover, President George W. Bush has promised to veto any bill he views as a tax hike.
Lawmakers are scheduled to leave Capitol Hill for their Thanksgiving recess on November 16. They return to work on December 4 with the next day off for Hannukah. The Christmas and New Year recess is anticipated to start as early as December 14, leaving a very short window to pass the AMT patch (along with the tax extenders and possibly legislation about the subprime mortgage crisis).
The IRS will need 10 weeks from the time legislation is passed until we are prepared to administer a patch, Shires said. The IRS must reprogram seven major computer system sure we are processing returns correctly."
Because of the 10-week lag time, individuals who file during the first early peak of filing, in late January and early February, could experience delays in receiving refunds, Shires said. He advised individuals not to switch from electronic filing to paper filing. "We won't be able to process paper returns more quickly than e-filed returns."
The IRS is operating under the assumption that the 2007 AMT patch will be the same as the 2006 patch, Shires said. The 2006 patch allowed personal nonrefundable credits against AMT and increased exemption amounts.
In related news, Bob Erickson, senior technical advisor, 2007 Tax Forms and Publications, reported that 2007 tax forms will reflect late legislation. "We are internally marking-up forms to be ready for whatever happens."
- Related items:
- Congress Begins Work on Temporary AMT Patch, Extenders Bill
- Year-End Tax Planning Must Deal with Uncertainty
- Tax Rate Projections for 2008
- Senate Finance Panel Hears Solutions for AMT Problem
- IRS Begins Tax Season With Important Issues Unresolved
- Permanent AMT Fix Poses Difficult Choices
Posted November 16, 2007.
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