‘08 tax refunds could be late if Congress stalls
The government could have a 12- to 13-week delay in processing tax returns.
By LAURE CIOFFI
VINDICATOR PENNSYLVANIA BUREAU
HERMITAGE, Pa. — More than 50 million people filing tax returns next year could see delays because Congress failed to act on a patch for a tax that usually applies to the ultra-wealthy, warns U.S. Rep. Phil English of Erie, R-3rd.
English was here Friday to talk to local tax preparers and financial advisers about the problems expected if Congress does not act soon to put a “patch” on the alternative minimum tax.
AMT was a tax created to ensure that the very wealthy did not shield all of their income from the government through tax deductions. It has, however, reached into the middle class, even affecting some who earn less than $100,000 annually. Those who fall under AMT guidelines are subject to a higher tax rate and are not permitted to take the same types of deductions as those who do not fall under AMT.
Each year Congress enacts a patch, or provisions that exempt people from the tax who don’t fall under the traditional group the tax was intended for. This patch usually includes provisions for a number of non-AMT tax credits including the child tax credit and the retirement savings contribution credit.
None of those things have been set yet by Congress.
English contends that Congress’ inability to act by late November will cause delays at the Department of Treasury when it prepares tax forms for everyone.
A letter from Secretary to the Treasury Henry M. Paulson Jr. to the U.S. House Ways and Means Committee, of which English is a member, states that this delay will mean a 12- to 13-week delay for the treasury when processing most tax returns. Paulson wrote that it will take that amount of time to program, test and integrate changes to the computers that process tax returns.
English believes that could mean a delay in getting out $75 million worth of tax returns.
“This is going to affect the entire economy,” English said. “I think Congress should be ashamed of itself.”
The Congressman contends the Democratic controlled House of Representatives is holding the AMT patch “hostage” while they pursue other taxes.
If Congress fails to enact the AMT patch that would mean an estimated 24 million people will fall into that higher taxing category. Last year about 4 million people paid taxes under the AMT, according to Paulson’s letter.
Bob Jazwinski, president of JFS Wealth Advisors in Hermitage, said Congress’ delay is affecting clients who generally meet with their financial advisers before the end of the year to determine their tax liability. He said those who worry that they may fall under the AMT can do some things such as try to affect their income before year’s end to avoid falling into that category.