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On December 19th, the House of Representatives yielded to the will of the Senate and the White House and passed an extension of slightly higher AMT exemptions than those that were in effect in 2006, but only for one year, 2007.  A permanent solution to the AMT burden still seems only a remote possibility.

Legislation that would have repealed the individual AMT is stalled in the House Ways and Means Committee with no clear timetable for it to be considered by either legislative body.  Provisions that would have extended a number of other tax breaks and provided revenue to offset the loss related to AMT extension were stripped from the Bill in order to win approval.  The president is expected to sign the Bill before Christmas.

The individual AMT exemptions for 2007 will be $66,250 for married couples filing jointly and $44,350 for single taxpayers.  According to most reports, that will save 20 million taxpayers the bother and cost of being subject to the AMT for 2007.  Traditional early filers, accustomed to having their tax refunds in hand by mid-February should not expect those refunds until at least late March.  The IRS had warned it would take as long as 10 weeks to begin processing returns after any AMT legislation was passed . . . that would be about the first week of March.

"Our people will do everything they can to quickly update our systems for this major change and make this filing season as smooth as possible for everyone," said Linda Stiff, IRS Acting Commissioner.  Tax professionals are less than thrilled by the whole process, and anticipate processing problems even after the IRS completes the patches to its software.  Several Phoenix Arizona practitioners interviewed on December 20th said they were preparing for the worst filing season since 1987 when tax reform legislation made wholesale changes to the tax code in late September of 1986.

To help the tax professional and software communities prepare for the upcoming filing season, the IRS has promised that revised copies of the 11 tax forms impacted by the AMT legislation will be posted to IRS.gov within 72 hours after the AMT patch is signed into law. That's some comfort for filers of paper returns, but no help at all for electronic filers (over 50 percent of all individual returns) who must wait for the IRS to reprogram its computers.

The IRS encourages everyone to visit www.irs.gov for more information. If you have any questions or concerns, contact your Rea advisor today.

-from accountantsworld.com


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