Delayed Tax Season - Again?!

Last Friday acting IRS Commissioner Steven Miller sent a very clear warning to Congress. Unless an AMT patch is passed (and signed by President Obama) by December 31, the income tax filing season will be seriously impacted. Commissioner Miller states that approximately 60 million taxpayers will be impacted by the delay, and that is almost half the individuals who file a tax return.

Of particular note is that if Congress allows this to slide into 2013, the collision of needed programming changes and the processing of simple returns could delay the ability for these 60 million taxpayers to file their tax returns until late March! It is possible that taxpayers who itemize deductions could be included in that delay. This is presumably because the AMT system treats itemized deductions differently. Thus the processing of itemized deductions (Schedule A) requires "hooks" in the software to capture and treat items differently. Regardless of the details, the interaction is significant enough that we are being warned of a potential delay.

The estimated number of taxpayers that would escape paying AMT if an expected patch is made into law is 28 million.

Last year approximately 130 million individual tax returns were filed. Thus a little more than 1 out of 5 taxpayers have reason to fret over being dragged into "AMT Land" while hoping that Congress will grant a reprieve.

Update: On December 19 Mr. Miller again contacted Congress and updated his information. He now predicts that the number of taxpayers that will be prevented from filing until very late is in the 80-100 million range. This updated number also states about 150 million returns are expected to be filed. Furthermore, in order to guard against fraud, he indicates that all filing may be put on hold until this is resolved.