The House has passed a fix for the alternative minimum tax, voting 352-64 to keep up to 23 million taxpayers from falling prey to the AMT.
The temporary patch foregoes the offsets that Democrats had pushed for in the legislation and follows the version passed by the Senate that President Bush had urged Congress to approve.
"I thank the House for taking action today on an AMT patch that will protect millions of Americans from an unexpected tax increase this year," said Treasury Secretary Henry Paulson in a statement. "With legislation now on the way to the president for his signature, the Internal Revenue Service can begin the remaining preparations for next year's filing season."
He noted that there would likely be delays of some refunds, but that the Treasury Department and the IRS would work to keep American taxpayers informed through the course of the upcoming filing season.
Democrats on the House Ways and Means Committee complained about being maneuvered into passing the AMT fix without the pay-go offsets that would have made up for the difference in revenue.
"So, what are our options?" said committee chairman Charles Rangel, D-N.Y., in a statement. "We could stick to our fiscal guns, saying that the right thing to do is not to pass a bill that we cannot pay for and that taxpayers are not really entitled to the benefits of waiving pay-go rules. Or, we could say, why hold 23 million taxpayers hostage because of the irresponsibility of the minority in not being willing to pay for this relief, no matter how many alternatives we give them."
H.R. 3996 would extend for one year AMT relief for nonrefundable personal credits and increase the AMT exemption amount to $66,250 for joint filers (from $62,550 in 2006) and $44,350 for single filers (from $42,500 last year) to keep the AMT from spreading to any additional taxpayers this year.
The IRS said it would make the necessary changes to prepare for the AMT patch. "Our people are doing everything they can to quickly update our systems for this major change and make this filing season as smooth as possible for everyone," said IRS Acting Commissioner Linda Stiff in a statement. "Our goal is to process tax returns accurately and to issue refunds to taxpayers as quickly as possible."
