The Internal Revenue Service Oversight Board has sent a letter to the leaders of Congress’s two tax-writing committees urging them to act swiftly to patch the Alternative Minimum Tax to keep it from spreading to millions more taxpayers.
Like what you see? Click here to sign up for Accounting Today's daily newsletter to get the latest news and behind the scenes commentary you won't find anywhere else.
The letter, which was sent Monday to the Democratic and Republican leaders of the Senate Finance Committee and the House Ways and Means Committee, also urged action on passing the so-called “tax extenders,” the dozens of tax breaks that are traditionally extended by Congress year after year.
The IRS Oversight Board letter echoed one sent last week by Acting IRS Commissioner Steven T. Miller to the leaders of the two committees (see IRS Warns AMT Could Affect 60 Million Taxpayers Unless Patched).
"Without an AMT patch, about 28 million taxpayers would be faced with a very large, unexpected tax liability for the current tax year," Miller wrote.
The IRS Oversight Board, which has been closely monitoring the situation, voiced a "greater sense of urgency" to address the need for retroactive extensions to already expired provisions, particularly the AMT. The board's letter, signed by chairman Paul Cherecwich Jr., said that without timely congressional action, approximately 28 million taxpayers face higher tax rates. In addition, the IRS will face "a formidable operational risk" as the agency would have to reprogram its computer systems in the middle of the filing season.
"Due to the magnitude and complexity of the changes, at a minimum, more than 60 million taxpayers might have to wait until late March or later to file their returns and receive a refund," the letter noted.
The board urged Congress not to delay any further and to take immediate action on the AMT patch and tax extenders.
The letter also noted the negative impact on next tax season. “Furthermore, the 2013 filing season would be adversely affected,” Cherecwich wrote. “We do not believe that the IRS has ever faced such a formidable operational risk. The agency would have to reprogram its computer systems in the middle of the filing season. Due to the magnitude and complexity of the changes, at a minimum, more than 60 million taxpayers would have to wait until late March or later to file their returns and receive a refund. Although the tax extenders do not present as much of an operational risk, the opening of the filing season could also be delayed for millions of affected taxpayers.”
The letter was delivered Monday to Senate Finance Committee Chairman Max Baucus, D-Mont., ranking member Orrin Hatch, R-Utah, House Ways and Means Chairman Dave Camp, R-Mich., and ranking member Sander M. Levin, D-Mich.
President Obama met with the Democratic and Republican leaders of the House and Senate last Friday on how to avoid the so-called “fiscal cliff” and expiring Bush tax cuts, and all sides agreed that they had a constructive meeting (see Obama and Congressional Leaders Hold ‘Constructive’ Fiscal Cliff Talks). They plan to come up with a framework for an agreement before the end of the year, although the parameters have not yet been set.