Treasury Secretary Henry Paulson said Congress should stop dithering on passing a fix for the Alternative Minimum Tax.
Paulson wrote a letter to three members of the House and Senate tax committees urging them to enact an AMT patch quickly. Otherwise, he warned, 21 million more Americans will be forced to pay the AMT than in 2006, bringing the total to 25 million.
"To avoid confusion and delays for taxpayers, it is critical that an AMT patch be enacted by early November," wrote Paulson.
House Ways and Means Committee Chairman Charles Rangel, D-N.Y., has been seeking ways to make up for the loss of revenue from the AMT, promising the "mother of all tax reforms." However, many of his proposals have attracted controversy, and Rangel plans to focus first on patching the AMT.
Paulson doesn't want Congress to wait any longer to pass a fix for the AMT, which has traditionally been "patched" each year to keep it from spreading to too many taxpayers. The deadline is getting close because the Internal Revenue Service needs to start printing tax forms in November.
In a letter to Sen. Charles Grassley, R-Iowa, of the Senate Finance Committee, and Reps. Jim McCrery, R-La., and Thomas Reynolds, R-N.Y., of the House Ways and Means Committee, Paulson warned that an additional 25 million taxpayers, or a total of 50 million, would face refund delays from prolonged IRS processing of tax credits such as the dependent child tax credit. He noted that with a delayed AMT patch, those 50 million taxpayers would experience delays for weeks on $75 billion in refunds. The IRS has 12 tax forms that would be affected by the delays in AMT legislation.
