December 27, 2007

IRS: Tax Fix Delays Refunds

By THE ASSOCIATED PRESS

WASHINGTON (AP) — More than 3 million people will have to wait until February to get their tax refunds because of Congress’ late fix to the alternative minimum tax, the IRS said Thursday.

Congress put a one-year freeze on growth of the alternative minimum tax last week, shielding many middle- and upper-middle income taxpayers from first exposure to the tax. But Congress’ late action means the Internal Revenue Service won’t be able to start processing five AMT-related forms until February, delaying potential refunds for those people until that month.

”We regret the inconvenience the delay will mean for million of early tax filers, especially those expecting a refund,” acting IRS Commissioner Linda Stiff said. [JC note: there was no record of laughter following her remarks].

As many as 13.5 million people will have to wait until February 11 to start filing with the five AMT-related forms, but the IRS said filing patterns show only between 3 million to 4 million of those people file during the early tax season anyhow.

The five forms affected by the delay are:

— Form 8863, Education Credits.

— Form 5695, Residential Energy Credits.

— Form 1040A’s Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers.

— Form 8396, Mortgage Interest Credit and

— Form 8859, District of Columbia First-Time Homebuyer Credit.

Source: NYT article