Dec-30-2007

AMT Patch To Delay Tax Filings By 1 Month

(topic overview)
CONTENTS:

Millions of Americans will have to delay filing their tax returns next year until mid-February -- a month later than usual -- because Congress took so long to repair the alternative minimum tax. (More...)
WASHINGTON - 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. (More...)
The IRS owes $266,000 to tax filers in the city of Fresno alone. (More...)
Published December 28, 2007 09:59 pm - Twenty million American families got a Christmas gift from Santa Congress last week with a freeze of their alternative minimum tax bills. (More...)
HATTIESBURG ACCOUNTANT WILLIE SIMS said planning for 2008 tax season savings should begin soon after filing 2007 returns. (More...)
The one-hour program is live and begins at 2 p.m. on the second Tuesday of each month except April and August. (More...)
Earlier, the IRS alerted taxpayers in west Alabama to a scheme that involved improperly claiming Social Security benefits as taxable income. (More...)

SOURCES

Millions of Americans will have to delay filing their tax returns next year until mid-February -- a month later than usual -- because Congress took so long to repair the alternative minimum tax. The Internal Revenue Service said yesterday that as many as 13.5 million taxpayers who use five tax forms related to the AMT will have to wait to file their returns until the agency can reprogram its computers to comply with the new law. It estimated that taxpayers can begin sending in those forms around Feb. 11, nearly a month after the usual start of the filing season. Not all of the 13.5 million taxpayers who use those forms are expected to file in those first four weeks, however. Based on traditional filing patterns, the IRS estimated that 3 million to 4 million taxpayers would probably have to postpone the timing of their filings because of the computer reprogramming. "We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund," said acting IRS Commissioner Linda Stiff. [1] WASHINGTON '''The upcoming tax season is expected to start on time for everyone except certain taxpayers potentially affected by late enactment of the Alternative Minimum Tax '''patch''', the Internal Revenue Service says. Following extensive work in recent weeks, the IRS expects to be able to begin processing returns for the vast majority of taxpayers in mid-January. As many as 13.5 million taxpayers using five forms related to the Alternative Minimum Tax (AMT) legislation will have to wait to file tax returns until the IRS completes the reprogramming of its systems for the new law.[2]

Congress put a one-year freeze on growth of the alternative minimum tax the week of Dec. 17, shielding many middle- and upper-middle-income taxpayers from exposure to the tax. The late action means the Internal Revenue Service will not be able to start processing five AMT-related forms until February, delaying potential refunds for those people until that month. The IRS was able to reprogram its computers to begin accepting seven other AMT-related forms when the tax season opens in early January.[3]

WASHINGTON, Dec. 28 (UPI) -- Up to 13.5 million Americans must wait until mid-February to begin filing tax returns as the IRS scrambles to incorporate late tax-code changes from Congress. Taxpayers who use five forms related to the alternative minimum tax will have to wait an extra month before they're allowed to file so the Internal Revenue Service can reprogram computers, The Washington Post said. The delay affects those filing for tax credits for education, residential energy use, child- and dependent-care expenses, mortgage interest and the purchase of a first home by residents of the District of Columbia.[4] WASHINGTON -- Millions of Americans will have to wait to file their tax returns -- and claim refunds -- because Congress didn't move quickly enough to exempt many middle- and upper-class taxpayers from the so-called alternative minimum tax, the Internal Revenue Service said. The IRS said Thursday it will update its computers to make taxpayer forms available by Feb. 11 that reflect the changes.[5] This just in from the nation's capital: Congress took even longer than usual fixing the alternative minimum tax (AMT) this year. The Infernal Revenue Service is going to need a bit more time to reprogram its computers to account for the changes in tax arcana. Result: Up to 13.5 million taxpayers who file one or more of the five AMT-related tax forms must wait until Feb. 11 to make their 2007 tax filings. The good news here is that if taxpayers hew to their usual procrastinating habits, the IRS estimates that most AMT payers won't even notice the glitch.[6]

Form 8859, District of Columbia First-Time Homebuyer Credit. While these five forms require significant additional reprogramming due to the AMT patch, the IRS has been able to reprogram its systems to begin processing seven other AMT-related forms, including Form 6251, Alternative Minimum Tax ''' Individuals.'' Taxpayers filing these seven forms should not experience delays in filing, and the IRS expects to begin processing those returns starting on Jan. 14. Electronic returns involving those five forms will not be accepted until systems are updated in February; similarly, paper filers should wait to file as well. All other e-file and paper returns will be accepted starting in January. The IRS urges affected taxpayers to file electronically in order to reduce wait times for their refunds.[2] Taxpayers are free to submit tax returns with Form 6251, Alternative Minimum Tax - Individuals and the forms for all other individual tax credits starting on January 14, the first day of electronic filing via IRS e-file. Taxpayers who are not affected by any of the new tax considerations may file as soon as they receive their Form W-2 or access their paperwork using Jackson Hewitt's electronic W-2 download capabilities, helping them to avoid the wait for their paper return in the mail and begin the process toward fast receipt of an anticipated income tax refund.[7]

PARSIPPANY, N.J., Dec 27, 2007 /PRNewswire-FirstCall via COMTEX/ -- With today's IRS announcement, that they expect no delays to the start of the upcoming tax season for the majority of taxpayers and a delay of approximately four weeks for select taxpayers claiming certain tax credits, all due to the new tax law for the Alternative Minimum Tax (AMT), Jackson Hewitt announces that it will be business as usual for its tax preparation customers as well as most tax filers. Jackson Hewitt Tax Service(R), an industry leader providing full service individual federal and state income tax preparation, alerts taxpayers to consult with a tax preparer to determine if they can begin to file in mid- January as normal.[7] "Since most of the AMT related activity - Congress and then the President signing the new law and today's IRS announcement regarding the lack of a delay to the filing season for most tax filers - has taken place during the holiday season, we expect that most tax filers were not aware of all of the details, especially, the possibility of a late start to the season," said Mark Steber, Vice President of Tax Resources at Jackson Hewitt Tax Service. "We anticipate that most tax filers will see the season as business as usual and will begin seeking out their tax preparer for assistance and information in efficiently preparing and filing their individual income tax return. For those taxpayers who are unsure if they are impacted by the AMT, we suggest reaching out to a local, knowledgeable tax preparer and getting the answers soon so that they can better plan for the filing of their returns. All Jackson Hewitt offices can assist these filers now with preparing their returns and placing them in queue for fast submission to the IRS on their filing acceptance date." Taxpayers affected by the delay are only those who are filing for the following five credits. For these filers, the IRS expects to be able to begin receiving their completed tax return beginning on February 11.[7]

As the IRS has said previously, it will take approximately seven weeks after the AMT patch was approved to update IRS processing systems completely. Although as many as 13.5 million taxpayers will not be able to file their returns until Feb. 11, the effect of the delay may be lessened by the fact that under previous filing patterns only between 3 million to 4 million taxpayers file returns with the five affected forms during these early weeks in the filing season. '''We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund,''' said Linda Stiff, Acting IRS Commissioner.[2] The IRS said it would be able to begin processing returns for the vast majority of taxpayers in mid-January. Taxpayers who need to use five forms related to AMT legislation will have to wait until the IRS completes the reprogramming of its systems for the new law before they can file their returns. The IRS said that between 3 to 4 million people who use those forms traditionally file early in tax season. "We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund," said Acting IRS Commissioner Linda Stiff in a statement.[8] The average refund was $2,324, the agency said. "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. As many as 13.5 million people will have to wait until Feb. 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 IRS was able to reprogram its computers to begin accepting the seven other AMT-related forms when the tax season opens in early January.[9]

If you're one of millions of people who file their taxes early, you won't be getting a refund as soon as you may hope. The IRS says more than three-million people will have to wait until February to get their refunds. That's because Congress was late fixing the Alternative Minimum Tax. Last week they put a one year freeze on the growth of the Alternative Minimum Tax, which affects many middle and upper-middle class taxpayers. That means the IRS can't start processing some related forms until February. "It's something that will come up again next year, because it hasn't been solved, it's only been patched," says Francine Sherbert from King Street Tax & Bookkeeping.[10] Internal Revenue Service officials announced Thursday that people who file their income-tax returns early -- probably about 3 million people -- will have to sit tight until February before they get their refunds. Congress once again betrayed the trust and welfare of the people by waiting until last week to slap a freeze on the Alternative Minimum Tax, a tax that would have affected millions of middle- and upper-middle income taxpayers and had them pay an average of $2,000 more per individual in taxes. It's a maddening turn of events. God help the taxpayer who turns in late returns because he or she just didn't feel like doing the work. It's OK for Congress to do this without any penalty. That happens, of course, because members of Congress are far removed by power, position, influence and money from the very real concerns of their constituents. Many people file their income-tax returns as early as possible so that they can get their refunds as early as possible. They need the money, and according to the Internal Revenue Service, the average refund was $2,324 in 2007.[11] We ' re pleased that today Congress was finally able to pass legislation - without raising taxes -- that will protect 21 million additional Americans from being subject to the Alternative Minimum Tax this year. The AMT was never intended to hit these middle-class taxpayers, and the last thing they or the U.S. economy needs is a tax increase. Although passing the legislation this late in the year will make it difficult for the Internal Revenue Service to prepare the appropriate forms so that Americans can get their refunds on time, we know that the IRS will do everything possible to prevent delays.[12] Washington, D.C. (AHN) - Tax refunds for up to 4 million Americans will be delayed until February, according to the Internal Revenue Service (IRS). The IRS traced the delay to a one-year freeze that Congress put last week on the growth of the alternative minimum tax (AMT), shielding many middle- and upper-middle income taxpayers from their first brush with the tax.[13]

The Internal Revenue Service, which had warned of processing and refund delays because of Congress' late passage of the alternative minimum tax bill, said yesterday it will be able to start processing returns for a majority of people as usual in mid-January. "For most taxpayers, it will be no different from how it's been done in the past," said Carol Markman, a partner at Feldman Meinberg & Co., an accounting firm in Syosset.[14] The Internal Revenue Service said the upcoming tax-filing season would start on time in mid-January, except for up to 13.5 million taxpayers who will have to wait until Feb. 11 if they need to file any of five forms affected by the late enactment of a patch for the alternative minimum tax.[8]

Inflation over the intervening decades has pushed income higher, thereby exposing more and more taxpayers to the tax trap set by Congress. Because of the lateness in enactment of the freeze by Congress, the Internal Revenue Service may have difficulty altering its income tax forms until middle to late January and, as a result, taxpayers could see their refunds delayed. Even at that, a delay is better than having 20 million families pay a tax bill that was never intended for them. Congress could and should stop this annual ritual of shielding taxpayers from the AMT by either scrapping it, which would reopen the door to allowing the rich to pay zip in taxes, or finally writing an inflation adjustment into the law. The latter makes sense.[15] Fortunately for many, filing a tax return and receiving a refund will not take two to three weeks longer as was first advised by the Internal Revenue Service. For those taxpayers, the patch will delay filing their returns until Feb. 11. 'We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund,' said Linda Stiff, Acting IRS Commissioner.[16] The Department of Revenue introduced a web site on Thursday that provides information on free tax services that are available across Montana. Officials with the department say that the Internal revenue Service is facing a crunch with paper processed returns this year, which could delay refunds for millions of people. The Department of Revenue says those who file online can expect a refund in about one week while paper filing returns can take six to 10 weeks to process.[17] For tax year 2005, the number of individual tax returns filed increased by just over 2.1 million or 1.6 percent, according to the Internal Revenue Service Web site. When filing 2007 taxes, Better Business Bureau President Bill Moak said residents should be aware of phishing e-mail scams that tell people they are able to receive extra money from a tax refund. "Although the e-mails look very realistic and contain the IRS logo, their message telling recipients that they are entitled to a refund is bogus," he said.[18]

Congress' late action means the Internal Revenue Service won't be able to start processing five AMT-related forms until February, delaying potential refunds. Between 3 million and 4 million people filed last January using those forms, with many expecting a refund, the IRS said.[19] Congress' late action means the Internal Revenue Service won't be able to start processing five AMT-related forms until February. Between 3 million and 4 million people filed in January of last year using those forms, the IRS said Thursday. This site does not necessarily agree with posted comments, they are the sole responsibility of the person posting them.[20]

WASHINGTON - 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. Between 3 million and 4 million people filed in January for their 2006 taxes using those forms, with many expecting a refund, the IRS said. [21] The checks will be held up because of congress' recent action to put a one-year-freeze on the alternative minimum tax. The IRS says it will need until February to reprogram its computers to accept the AMT related forms. The IRS expects three to four million people to file using those forms in January. Those early-filers expecting refunds could receive them in late February.[22]

Sales the week of Dec. 17 rose a slim 2.8 percent compared with the same week last year, the International Council of Shopping Centers and UBS Securities L.L.C. said in a joint statement Wednesday. That prompted them to lower their forecast for combined November and December sales growth to "a tad below" the 2.5 percent they had been predicting. Their figures are for sales at stores open at least a year, a key industry yardstick. "This consumer is spent out," Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York retail consultant, said in an interview. Official tallies will be released this coming week by major retailers and by the government later in January. More than three million people will have to wait until February to get their tax refunds because of Congress late changes to the alternative minimum tax, the IRS said Thursday.[3]

Instead of a couple hundred people falling into the minimum alternative tax bracket, there are now millions. It is estimated that by the year 2010, one out of every five households would fall into the AMT bracket if changes are not permanently made to the current system. For millions of taxpayers, the delays in their refunds should be a welcome treat, since it is after all due to the fact that they will be able to avoid falling into the alternative minimum tax bracket. For now it looks like the moves by Congress will only affect the 2007 tax year, but lawmakers have also stated that Congress will look at a permanent fix to the problem next month when they reconvene after the holiday break.[23] Why? The main reason for the upcoming delays is a recent law change by Congress relating to the nation's alternative minimum tax. Delays pushed the changes to the end of the year, and with the action coming so close to tax season, the IRS is now struggling to reprogram its computers to deal with the changes. For those of you unfamiliar with the alternative minimum tax (or AMT), it was instituted in 1970 as a way to ensure that upper-income families couldn't avoid paying taxes through their legal deductions.[23]

The IRS has targeted Feb.11 as the potential start date to begin filing the five AMT-related forms. They are Forms 8863 (Education Credits), 5695 (Residential Energy Credits), 1040A's Schedule 2 (Child and Dependent Care Expenses for Form 1040A Filers), 8396 (Mortgage Interest Credit), and 8859 (District of Columbia First-Time Homebuyer Credit). The IRS has been able to reprogram its systems to begin processing seven other AMT-related forms, including Form 6251 (Alternative Minimum Tax - Individuals). The IRS expects to begin processing returns with those seven forms starting on Jan. 14. Electronic returns involving the five affected forms will not be accepted until the IRS updates its systems in February.[8] The forms include: Form 8863, Education Credits (Hope & Lifetime Learning Credit); Form 5695, Residential Energy Credits; Form 1040A's Schedule 2, Child and Dependent Care Expenses for Form 1040A filers; Form 8396, Mortgage Interest Credit (for certain low-income filers), and Form 8859, District of Columbia First-Time Homebuyer Credit. Relatively few people claim these credits, said Alan Dlugash, a partner at Marks Paneth & Shron, an accounting firm with offices in Woodbury and Manhattan. He's relieved the IRS will be able to process Form 6251, Alternative Minimum Tax-Individuals, on time because that would have affected many more filers. Tax software companies TurboTax and H&R; Block, which offers TaxCut, said they would have the updated forms as soon as the IRS makes them available.[14]

More than 100 million people got refunds during the last tax season. An executive at Kansas City, Mo. -based H&R; Block Inc., the nation's largest tax preparer, suggested there might be ways for people to increase the speed of their refunds. "We can help taxpayers claiming the child and dependent care credit avoid the delay by using alternative forms to file their return," said Tim Gokey, group president of H&R; Block Tax Services. "Taxpayers can also file their return earlier by not claiming the credits being blocked until Feb. 11, and then filing an amended return later to claim the additional credits."[9] E-file with direct deposit gets refunds in as little as 10 days, while paper returns take four to six weeks. '''E-file is a great option for everyone, especially if they are affected by the AMT,''' said Richard Spires, IRS Deputy Commissioner for Operations Support.'' '''Filing electronically will get people their refunds faster, and e-file greatly reduces the chances for making an error on the AMT or other tax issues.''' Taxpayers filing electronically should make sure to update their tax software in order to get the latest AMT updates. Taxpayers with $54,000 or less in Adjusted Gross Income can use Free File to electronically file their returns for free.''[2] E-filers with direct deposit gets refunds in as little as 10 days, while paper returns take four to six weeks. 'E-file is a great option for everyone, especially if they are affected by the AMT,' said Richard Spires, IRS Deputy Commissioner for Operations Support. 'The IRS is going to continue to do everything it can to make this a fully successful filing season for the nation's taxpayers,' Stiff said.[16]

The impact of the delay may be lessened by the fact that under previous filing patterns only between 3-4 million taxpayers file returns with the five affected forms during the early weeks in the filing season. 'We hope the impact of this is as minimal as the Service has said,' Jeffrey Long, Branson CPA said about the patch to the IRS software. 'I have heard in seminars and read it could take up to ten week for the Service to reprogram their computers. 'Please understand that this situation is not the fault of the IRS. Congress delayed in passing this patch until a week ago.[16]

The IRS states that refunds are generally issued about six to eight weeks after the IRS receives a paper return, and approximately half that time if taxpayers file electronically and choose to receive a refund by direct deposit. Taxpayers also need to be aware that the IRS has already printed the basic Form 1040 as well as the Instructions for Form 1040 - both key documents needed for preparing a tax return.[7] The IRS, however, cautioned that taxpayers using tax software should make sure to download updates. Those using paper returns should go to the IRS Web site, irs.gov, to get updated forms. While some taxpayers may be tempted to file in January to get their refund checks quickly, Markman said they should hold off until the end of February if they expect any 1099 forms detailing dividends and capital gains from brokerage houses. That's because these firms sometimes send amended 1099s, which would force early filers to update their returns.[14] Free File will only be available by visiting the official IRS web site at IRS.gov. In all, 90 million taxpayers qualify for this free service. Taxpayers who use tax software to print out paper copies of tax forms should make sure they update their software before printing out forms.''[2]

IRS officials suggest that people file electronically to get faster refunds. People who file electronically and get direct deposits into their accounts can expect refunds in 10-14 days, while those who file with paper forms can expect a wait of as long as six weeks. The IRS is also working with tax professionals and the makers of tax preparation software to make sure their information is as up-to-date as possible. "Early filers can get their refund as quickly as possible by easily completing and submitting their return to TurboTax," said Bob Meighan, vice president for Intuit Inc.' s TurboTax tax preparation software.[21] The IRS said paper filers should wait to file as well. All other e-file and paper returns will be accepted starting in January. The IRS is urging all the affected taxpayers to use electronic filing to reduce the wait times for their refunds.[8] The deadline for filing a 2007 tax return remains the same - midnight on April 15, 2008. Because the IRS will be delayed in processing both electronic and paper tax returns for select taxpayers affected by the law change, some taxpayers may experience a delay in receiving a tax refund, if they are entitled to one.[7] The show's panel of experts will discuss business tax return issues for small business and self-employed taxpayers, as well as recent tax law changes and updates for 2007, IRS regulations, business credits, common errors and processing issues that impact filing business returns for the 2007 tax year. Many small business owners do their own taxes and it's a big part of the time they must devote to their business. Others use tax professionals the business owners rely on to have the most up-to-date information regarding IRS regulations and filing processes. My husband maintains all of his tax records throughout the year for our small business and pays quarterly estimated taxes both for the business and our personal taxes. At the end of the year, however, he gathers all the paperwork up and takes it to the tax professional who puts together our returns. The Tax Talk Today program might help you smooth out this process. It is informative and participants are encouraged to watch and submit questions.[24]

"We saw a great deal of tax changes at the end of 2007; in addition to the AMT patch, Congress passed the Mortgage Indebtedness Relief Act of 2007 and the IRS released a clarification on allowed dependent exemptions concerning an unrelated child," explains Steber. "Because of this, we expect to have more taxpayers with questions about these late changes. This is one reason why now more than ever, it helps to seek out a tax preparer who can provide assistance in understanding and applying these considerations and can help taxpayers with accurate tax preparation and free electronic filing (IRS e-file), ideally leading to faster processing and receipt of a refund, if one is anticipated."[7] The tax packages include cautionary language to taxpayers that late legislation was pending. The IRS is also working closely with tax professionals and the tax preparation software community to make sure they can help taxpayers with all of the latest developments on the enactment of the AMT patch and other tax changes. '''The IRS is going to continue to do everything it can to make this a fully successful filing season for the nation'''s taxpayers,''' Stiff said.'' '''We will continue to work to keep taxpayers up to date and make this situation as easy as possible for everyone.'''[2]

The IRS has targeted Feb. 11, as the potential starting date for taxpayers to begin submitting the five AMT-related returns affected by the legislation. The February date allows the IRS enough time to update and test its systems to accommodate the AMT changes without major disruptions to other operations related to the tax season.[16]

The IRS also reminds taxpayers that printed tax packages, which will begin arriving in the mail around New Year'''s, went to the printer in November before the AMT changes were enacted.''[2]

The IRS estimates that the change will affect up to 4 million taxpayers who typically file early. "We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund," acting IRS Commissioner Linda Stiff told the Post.[4] Congress completed action on the legislation amending the alternative minimum tax on Dec. 19. "We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund," acting IRS Commissioner Linda Stiff said.[5]

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.[20] Congress approved the one-year change to the alternative minimum tax last week.[4]

Jackson Hewitt has tax preparers available around the country to assist taxpayers in learning about the Alternative Minimum Tax, changes to filing, and other important information needed for the 2008 tax season.[7] The alternative minimum tax, or AMT, was enacted in 1969 to prevent about 150 of the wealthiest families from escaping all taxes. Because it wasn't adjusted for inflation, it now affects millions of taxpayers by limiting their ability to lower taxes through certain deductions and credits.[5] The Alternative Minimum Tax law was put in place nearly 40 years ago to ensure that a handful of rich Americans could not use loopholes to avoid paying any income taxes.[25] Washington, DC (AHN) - The income tax refunds of over 3 million Americans will be delayed until February due to the freeze on the alternative minimum tax.[26] The alternative minimum tax was passed in 1969 and was aimed at that time at about 155 high-income households that used deductions to avoid paying any federal income tax.[3]

Unfortunately, over the years, more and more middle-income Americans have been caught in the AMT snare simply because Congress has failed or refused since 1969 to include an adjustment provision for inflation. What this latest one-year AMT freeze will mean is that many taxpayers won't have to pony up an extra $2,000 or so for Uncle Sam at income tax time in April. The fact that no permanent changes were made in the structure of the tax also will ensure that Congress will have to wrestle with this issue again next year.[15] Last week, Congress approved a one-year repair, or "patch," of the AMT, which had threatened to increase taxes on about 20 million middle- and upper-middle-income households. The levy was never meant to hit that group but rather was designed in 1969 to make sure the nation's richest individuals would have to pay at least some federal income tax even though they could otherwise find ways to eliminate their tax liability. Lawmakers struggled all year to approve the AMT patch because a new rule required them to offset the $50 billion in lost revenue it would cost the U.S. Treasury. Lawmakers could not agree how to pay for that large a loss, President Bush threatened to veto the tax increases that were being contemplated, and Congress voted to waive its pay-as-you-go rule and passed the patch without an offset.[1]

The tax packages that will start arriving in the mail beginning after New Year's Day were printed in November, before the AMT fixes were approved by Congress. The IRS has created a special section on its Web site, http://www.irs.gov, with updated copies of AMT forms.[9] Taxpayers in Louisiana and Mississippi were warned about the scheme 10 days ago, and the IRS says the problem has spread to Alabama. The IRS urges taxpayers to follow procedures described on its Web site to make accurate requests for the one-time telephone excise tax refund.[27]

The IRS has seen some problems with returns from tax preparers that may indicate incorrect returns and, in some instances, criminal intent. Earlier this year, the IRS Criminal Investigation Division served search warrants at tax preparation businesses in Florida, Georgia, Louisiana, Texas and California. It also opened investigations on a number of other tax return preparation businesses across the nation. Taxpayers who request more of a refund than they are entitled to receive will likely have their refunds held and they may be subject to an audit, the IRS said. This material may not be published, broadcast, rewritten or redistributed.[27] The agency said it is taking steps to prevent abuse by tax preparers. The IRS has monitored telephone excise tax refund requests for problems since taxpayers began submitting their 2006 returns early this year.[27]

BIRMINGHAM, Ala. (AP) - The Internal Revenue Service is warning citizens, especially the elderly about a new tax scam that focuses on the Telephone Excise Tax refund. Most taxpayer were allowed to request the refund on their 2006 tax returns. Apparently, some unscrupulous tax preparers advised clients to file tax returns requesting larger refunds than they were entitled to receive -- sometimes hundreds of dollars more.[28] The Internal Revenue Service says Alabama taxpayers need to beware of a scam related to the Telephone Excise Tax Refund that could be claimed on 2006 returns.[27]

Each year, millions of dollars in refund checks are returned to the Internal Revenue Service and the California Franchise Tax Board as undeliverable.[29]

Several federal court decisions held that the tax does not apply to long-distance service as it is billed today, the Internal Revenue Service Web site reports.[18] Tax Talk Today is an Internal Revenue Service program that can help. The program is a free, live, monthly interactive Web cast aimed at educating tax professionals and their clients on the most contemporary and complex tax issues.[24]

The law pours billions of dollars into federal coffers; had a temporary bill not been passed last week, the AMT would have resulted in an additional $50 billion in revenue. Many lawmakers had to grit their teeth to vote in favor of the reprieve. The Associated Press reports that the delay has wreaked havoc on the Internal Revenue Service, which says it needs seven weeks to reprogram its computers to process returns.[25]

Please do not take any frustrations out on your tax preparer or the Service. Write your Congressman and Senator,' Long advised, adding that most of the taxpayers his office sees, who are in a minimum tax position, have more involved returns and generally do not have all of their information by early February and would experience little effect from the delay.[16] Folks file their taxes early in hopes of getting back their tax refunds as early as possible, but this year may prove to be a bit frustrating, as around 3 million taxpayers could see delays in their refunds.[23] Any taxpayer using those forms will have to wait until February to file their taxes, the agency said. The IRS will begin processing those forms on Feb. 11, and the first refunds for those people will start going out 10 to 14 days later.[9] The IRS said it is unable to start processing five AMT-related forms until February, delaying potential refunds until then. Between 3 million and 4 million people filed in January for their 2006 taxes using the forms.[13] The snowball effect generated by that means the refunds will be later than usual for many people. According to the IRS, up to 13.5 million people will have to wait until Feb. 11 to start filing if they're using the five AMT-related forms.[11]

• Form 8859, District of Columbia First-Time Homebuyer Credit. The IRS is to begin processing these forms Feb. 11, and refunds for people filing them are to start going out 10 to 14 days later.[19]

While as many as 13.5 million people will have to wait until Feb. 11 to get the appropriate forms, the IRS said most of them normally don't file in January to get an early refund. The IRS said from 3 million to 4 million taxpayers in that group usually file early, and they are the ones who would be delayed in getting refunds.[5] As many as 13.5 million taxpayers will have to wait to file their forms until the IRS reprograms its computers to accept five AMT-related forms. The agency hopes to update its systems by Feb. 11, so at most only 4 million early filers who use these forms would be affected.[14]

The IRS says it will be able to begin accepting the seven other AMT-related forms when the tax season opens in January.[19] 'We've taken extraordinary steps to figure out a way that we can start the filing season on time for most taxpayers, including some using AMT-related forms.[16] Part 2 of Getting Ready for the Filing Season, to be aired Jan. 8 at 2 p.m. will target business filings. The program will provide a head start to tax professionals, their clients and small business owners on business filings.[24]

Retirement credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs, 401(k) plans and similar workplace retirement programs. Hattiesburg resident Charles Arinder said he takes advantage of every possible tax break to ensure he saves when filing taxes. Because he also just opened a business - Caliente Grill, Arinder said he uses an accountant to make sure he's not missing any business tax breaks. "I will have a loss at the first of the year, as every business does," he said.[18]

The preparers may falsely claim some percentage of the benefits as tax withholding or claim the Earned Income Tax Credit, thereby generating a refund. In the most recent scheme, the IRS says unscrupulous tax-return preparers are advising clients to file tax returns requesting more in telephone excise tax refunds than they're entitled to - sometimes hundreds of dollars more.[27] The increase was due in part to the Telephone Excise Tax Refund, the one-time payment available on 2006 federal income tax returns.[29]

The AMT was originally aimed at about 155 very wealthy families who used deductions to avoid paying any federal income tax. It had no factor for inflation adjustment, so over the years many more people, including middle-income taxpayers, have been subjected to it.[19] Congress put a one-year freeze on growth of the AMT last week, shielding many middle- and upper-middle income taxpayers from first exposure to the tax.[19]

The Associated Press reported on Dec. 1 that the IRS Oversight Board was warning that taxpayers could expect refund delays because Congress hadn't acted on an AMT fix.[21] As a taxpayer, it means one of three things: (1) Nothing (2) "Congratulations! You're rich enough to have to worry about the AMT!" or (3) The last-minute extra work for the IRS might end up'' delaying your refund.[6]

The IRS has created a special section on IRS.gov to provide taxpayers with additional information and copies of updated forms affected by the AMT.''[2] In recent days, the IRS has posted updated copies of all forms affected by the late enactment of the AMT patch by Congress.[2] Neither will have the AMT patch provisions, but the IRS has stated that the instructions for Form 1040 and other forms affected are being revised and that additional supplemental guidance will be made available.[7]

As the IRS has said previously, it will take approximately seven weeks after the AMT patch was approved to update IRS processing systems completely.[16]

The IRS owes $266,000 to tax filers in the city of Fresno alone. 'We want to return this money as quickly as possible,' said IRS spokesman Jesse Weller. [29] The IRS says some of the erroneous refund requests appear to be for the entire amount of the phone bill, rather than just the 3 percent tax charged on long-distance services.[27] The refund is still available to qualifying taxpayers who did not take advantage of it last year. Other than that, Hattiesburg certified public accountant Willie Sims Jr. said married couples should remember tax laws have eased their combined taxable income. "The tax laws have been changed to remove the marriage penalty," he said.[18] Our goal has always been to make sure we can accurately process tax returns while getting refunds to taxpayers as quickly as possible.'''[2] Millions of early taxpayers will have to wait until at least February to receive tax refunds.[22]

Five forms will have to be held back until Feb. 11. They involve tax credits for education, residential energy use, child- and dependent-care expenses, mortgage interest and the purchase of a first home by residents of the District. Stiff said she was proud her agency was able to find a partial solution despite a "difficult environment." She warned that taxpayers will "experience some confusion."[1] The AMT was passed in 1969 to prevent 155 very wealthy families from using deductions to avoid paying any federal income tax. It disallows certain types of deductions and credits.[26] Jackson Hewitt Tax Service Inc. (NYSE: JTX), with over 6,500 franchised and company-owned offices throughout the United States during the 2007 tax season, is an industry leader providing full service individual federal and state income tax preparation.[7]

To speak with Jackson Hewitt's Vice President of Tax Resources, Mark Steber, about the AMT law, the delay and its affects, as well as the other tax law changes that have been put into place, please contact Melissa Connerton at 212-455-8001 to schedule an interview.[7] As an investor in Intuit (Nasdaq: INTU ), H&R; Block (NYSE: HRB ), or Jackson Hewitt (NYSE: JTX ), it means you should get ready to see at least some drop-off in revenues for the quarter ending Jan. 31. For Intuit, that means fiscal Q2 revenues could take a hit as some taxpayers delay, pushing their filings into fiscal Q3.[6] President Bush signed the AMT fix into law on Wednesday after congressional Democrats and Republicans finally agreed to pass a version of the bill that did not contain any offsets to make up for the loss in revenue from preventing the AMT from spreading to another 23 million taxpayers.[8]

Taxpayers using paper forms can also visit IRS.gov to get updated copies of AMT forms.[2] Between 3 to 4 million Americans filed on January 2006 returns using the AMT-related forms.[26] Because of the laggard Congress, the IRS won't be able to process five AMT-related forms until February.[11]

Published December 28, 2007 09:59 pm - Twenty million American families got a Christmas gift from Santa Congress last week with a freeze of their alternative minimum tax bills. [15] Through the years there has been one major problem with the alternative minimum tax: inflation, or more specifically, the fact that the tax law has not been adjusted to deal with inflation.[23]

HATTIESBURG ACCOUNTANT WILLIE SIMS said planning for 2008 tax season savings should begin soon after filing 2007 returns. [18] Sims said planning for 2008 tax season savings should begin soon after filing 2007 returns. "You should sit with an accountant and plan for the upcoming year to make a guide as to how to plan for the following year," he said.[18]

The one-hour program is live and begins at 2 p.m. on the second Tuesday of each month except April and August. The IRS considers this Web program to be one of the most exciting products it offers to tax professionals and the public. [24] While there are many reasons, the most common is that people move and fail to provide the IRS and state with a forwarding address. 'People notify their bank, their credit cards, even their magazine subscriptions, but they forget to notify us,' said John Barrett, spokesman for the state Franchise Tax Board.[29] Although it may be too late to trim your taxes, there are credits that can be used to increase that 2007 refund - including the telephone tax credit.[18] The tax refunds that will be mailed after New Year's Day were printed in November, prior to the Congressional action freezing the AMT for one year.[26] The tax packages that will start arriving in the mail beginning after New Year's Day were printed in November, before the AMT fixes were approved by Congress, The Associated Press reported.[13] Congress passes legislation every year to keep the tax from expanding. The fix this year was delayed by an argument between Republicans and Democrats over whether some taxes should rise to offset the cost of correcting the AMT.[21] Last year, some 4 million people had to pay extra. For this year's income taxes that are due in April 2008, about 20 million people would have to pay an extra $2,000 on average just because of the AMT. Members of Congress have been dragging their feet on dealing with this injustice by eliminating or sharply changing the AMT ' because of money, of course.[25]

No one could fault what the AMT was intended to do: Make certain that the very rich don't escape through various loopholes and tax havens from paying at least something in federal taxes.[15] "Taxes are what we pay for civilized society.'' ' Oliver Wendell Holmes, Jr., U.S Supreme Court Justice said, but while some would quibble over the state of our society ' tax time approaches.[16] Business owners find tax paperwork to be among their least favorite chores, and as they near the end of the year, getting it all reconciled for filing time is the part of the chore that looms ahead.[24]

The forms affected are for education credits, residential energy credits, child and dependant care expenses, and mortgage interest credit. As many as 13.5 million people will have to wait until February 11th to start filing those forms.[10] The lengthy debate, however, pushed approval of the patch so late into the year that the IRS warned that the filing season would be disrupted.[1] Nationwide, the IRS is looking for 115,478 taxpayers who are due refund checks worth about $110 million. The refund checks, averaging about $953, can be claimed as soon as taxpayers update their addresses with the IRS. Some have more than one check waiting. Weller said the list of taxpayers due undeliverable refunds rose about 21 percent this year, up from 95,746 last year.[29] More than $26 million in unclaimed state and federal tax refund checks are waiting for their rightful owners in California.[29] Federal officials authorized a one-time refund of the excise tax collected on service billed during the previous 41 months, stretching from March 2003 to July 2006.[18] Barrett said the state automatically reissues unclaimed refund checks once a new address is received. He also urges tax filers to sign up for direct deposit for a faster and more reliable way to get their refund.[29]

Tax forms that will begin arriving in the mail next month were printed in November.[5] Based on personal exemptions ranging from $30 to $60, the 2006 telephone tax credit was established after the government stopped collecting the long-distance excise tax in August 2005.[18] Barrett said the state refund checks range from $1 to $123,000. 'It makes it well worth it to log onto our Web site and check it out,' Barrett said.[29]

Earlier, the IRS alerted taxpayers in west Alabama to a scheme that involved improperly claiming Social Security benefits as taxable income. [27]

SOURCES

1. AMT Patch To Delay Tax Filings By 1 Month - washingtonpost.com
2. IRS: Tax Patch To Delay Millions Of Refunds
3. Holiday surge failed to salvage retail hopes | Philadelphia Inquirer | 12/30/2007
4. Tax season delayed for millions - UPI.com
5. Alternative minimum tax changes will delay returns - Pittsburgh Tribune-Review
6. Snap! AMT Bites Tax Preparers
7. Jackson Hewitt Notes that for Most Taxpayers it's 'Business as Usual' as IRS Announces its Expectation to Kick Off the Official Filing Season in Mid-January
8. WebCPA - AMT Patch to Delay Millions of Filers for a Month
9. The Associated Press: IRS: Late Tax Fix Delays Refunds
10. WKBT La Crosse, WI-NewsChannel 8, La Crosse Weather, La Crosse News, La Crosse SportsTax Refunds May Come Later
11. El Paso Times - Late refunds: Congress betrays its constituents
12. PR-USA.net - Statement by the Press Secretary
13. Tax Refund Delayed For Up To Four Million Americans | December 30, 2007 | AHN
14. IRS says late AMT law won't hold up tax refunds -- Newsday.com
15. The Joplin Globe, Joplin, MO - In our view: Congress should modify AMT
16. Branson Daily News :: News :: IRS: 'Patch' will delay some tax returns
17. Montana's News Station - Fair. Accurate. To the Point. -IRS web site providing info on online tax services
18. Hattiesburg American - www.hattiesburgamerican.com - Hattiesburg, Miss.
19. Tax refunds to be delayed for millions
20. Delay by Congress to delay tax refunds : National-World : Albuquerque Tribune
21. IRS: Late tax fix delays refunds
22. 14 WFIE, The Tri-State's News Leader: Early taxpayers may have to wait for refunds
23. For some Americans, the wait for tax refunds could be longer than expected - BloggingStocks
24. Cumberland Times-News - Business tax help just a computer click away
25. The Post-Journal, Jamestown New York
26. Freeze On Alternative Minimum Tax Delays IRS Refunds Until February | December 30, 2007 | AHN
27. IRS warns Alabama taxpayer about phone tax refund scam- al.com
28. IRS says scammers targeting elderly - NewsFlash - al.com
29. Old addresses make tax refunds undeliverable | MyDesert.com | The Desert Sun

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