November 10th is Saturday. That’s normally the day the IRS sends all of the forms and schedules to the printer. There’s a problem, though: Will Congress enact an AMT patch for 2007?
The House is scheduled to vote on a patch tomorrow. The Senate will likely take up the bill next week. However, President Bush is threatening to veto the legislation. Besides the AMT relief the measure extends 38 expiring tax provisions.
There are reasons why the President is threatening a veto. First, the bill has revenue offsets that the President doesn’t like. The measure would increase taxes on carried interest paid to financial managers and deferred compensation paid to some foreign hedge fund managers. Second, the bill would repeal the private debt collection efforts used by the IRS. President Bush is also upset that Congress has waited to the last minute to address AMT and other issues.
Remember how this year some deductions weren’t noted on the tax forms (e.g. the sales tax deduction), and that the IRS sent out a supplemental mailing? This also delayed refunds to those impacted by these tax breaks because the IRS had to reprogram their computers. Expect a similar situation this year.
I expect that eventually we’ll see an AMT patch that both Congress and the President can live with. The AMT impacts individuals in “Blue” states more than “Red” states. However, I expect some of the 38 tax breaks that need to be extended won’t be and will expire. And I won’t be shocked if President Bush does veto the initial legislation, and that Congress will then pass something the President would (and will) sign.
