Refunds Could Be Delayed This Tax Season
Thursday, December 6th 2007, 5:54 pm
By: News On 6
Tax season is never fun, but this year it could be worse. The two sides in Congress can't agree on how to adjust the alternative minimum tax or AMT. The News On 6â€™s Steve Berg reports if they don't decide soon, the IRS won't be able to process your tax return.
Longtime accountant Ceil Bowers says it's shaping up to be a most unusual tax year.
"This is the first time in 51 years that I have seen a threat of filing season happen,â€ said accountant Ceil Bowers.
The problem is that Congress could resolve the Alternative Minimum Tax dispute today, but it would take the IRS seven to 10 weeks to make the adjustments to their computer programs.
"So if they were to pass the patch December 15th, it would be the third week in January minimum before any returns could be filed and processed,â€ said Ceil Bowers.
At worst, the delay could stretch into March, causing headaches for people who, Bowers says, figure their tax refunds into their budgets.
"They get those refunds filed in time to pay for trips, for spring break, ski trips, or whatever,â€ said accountant Ceil Bowers.
Bowers says there's little doubt the AMT needs to be changed. Created in 1969 to make sure the richest Americans paid a fair share, it was never adjusted for inflation and more people like Bowers clients are subject to it. Two teachers working two jobs, they do pretty well. But, theyâ€™re not what you would call ultra-wealthy.
Unless Congress fixes it, they would go from getting a $1,300 refund last year to owing $2,300 this year.
"So I think Congress has to pass it, but when and how much time is it going to take?" wonders accountant Ceil Bowers.
The IRS says the delay could have a ripple effect on everyone, not just the people subject to the AMT.
"It's a nightmare, and IRS will most likely get the blame for it, and it's Congress. It's not IRS," said accountant Ceil Bowers.
Congressional Democrats say if the Alternative Minimum Tax is changed, the lost revenue of about $50 billion, needs to be replaced with a tax hike on the wealthiest Americans. The Republicans want to add the $50 billion to the federal budget deficit.
Watch the video: Tax Refunds May Be Delayed