WASHINGTON (AP) — Up to 100 million taxpayers — about two-thirds of all filers — won't be able to file their 2012 tax returns until late March if Congress doesn't adjust the alternative minimum tax by the end of the year, the Internal Revenue Service said Wednesday.
Congress routinely adjusts the AMT to spare millions of middle-income taxpayers from steep tax increases. But the fix for 2012 is caught up in negotiations over the year-end "fiscal cliff" of automatic tax increases and spending cuts.
If Congress doesn't fix the AMT retroactively to the beginning of 2012, the tax would hit an additional 28 million filers, increasing their taxes by an average of $3,700. Millions of others would face filing delays because the annual fix affects their tax credits.
The last adjustment expired at the end of 2011, and the IRS assumed Congress would adjust the tax again when it set up its computer systems for the upcoming filing season, acting IRS Commissioner Steven T. Miller said in a letter to Congress. It would take until late March at the earliest for the agency to re-work its computers, he said.
This scenario would leave taxpayers a small window to meet the April 15 filing deadline. The IRS, however, would not comment on any proposal to extend the filing deadline, agency spokesman Terry Lemons said.
The AMT was first enacted in 1969 to ensure that wealthy people can't use tax breaks to avoid paying any federal taxes. The tax, however, was never adjusted for inflation, so Congress routinely patches it to keep it from hitting middle-income families.
In a November letter to lawmakers, Miller said 60 million filers could face filing delays, if the AMT is not addressed. On Wednesday, he said 80 million to 100 million filers could face delays. The number grew because of millions of taxpayers ultimately may not pay the AMT but will have to do calculations to make sure.