finance
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photo by steed media service
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black january … income tax
refund delay
As many as 13.5 million income tax filers will have to wait until Feb. 11, 2008, to file their 2007 taxes due to Congress’ delay in passing legislation on the Alternative Minimum Tax. The AMT places a one-year freeze on the tax’s growth to protect middle- and upper-middle income taxpayers. The tax was originally formulated to close the loophole that allowed wealthy families to claim so many deductions and credits that they avoided paying federal income taxes altogether.
Members of ReformAMT, a grassroots organization, deem the AMT inappropriate and unjust to taxpayers who exercise incentive stock options. For example, four million middle class taxpayers were taxed on phantom income when they filed their 2006 taxes. In retrospect, the tax is faulty because it was passed under the Tax Reform Act of 1969 and it doesn’t adjust for inflation.
Ongoing disagreements between the Democratic and Republican Parties caused the enactment of the provision to be delayed until Dec. 19, 2007. The timing was too late for the IRS to update the forms (see Appendix I), relative to AMT and to reprogram its computers in time for the tax-filing season. The IRS predicts that the computer updates will take about seven weeks and they’ll need time to test their system to ensure it can accurately manage the changes.
However, not everyone has to wait until Feb. 11 to file their taxes. Some tax preparers have alternate forms for child and dependent care expenses. For tax filers using any of the other forms, they can wait to claim the blocked credits in an amended return if they choose to file before Feb. 11.
Refunds for those who file electronically on Feb. 11 should be received in 10 to 14 days. Paper filers should expect a refund in six weeks.
- yvette caslin
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