Amt Patch

[GTS1101]

I am sure you are all aware of the possible delay to the beginning of this tax season because of the stalling between the democrats and republicans to pass an AMT fix and extend certain tax breaks for the 2007 tax season. I have been preparing taxes for 14 years and I can't ever remember a tax season that was delayed. How likely do you feel that this tax season will be delayed till Jan 28th or in February. I heard that another bill may get passed this week. I am concerned as I am going back to doing my tax business full time. Any idea if we will be able to process returns before the 28th if it gets pushed back or will we have to wait until the 28th to begin preparing and processing returns? Thanks for your opinions.

GTS1101

[taxea]

AMT Patch

Everything I have read and heard indicates that the IRS will need 7 to 8 weeks to update the necessary forms should the AMT change. Should this occur I heard that they will be delaying e-filing of returns from 1/12 to later in January.
Your clients' option is pay prep fees to file return and pay additional prep fees to file amended return or wait until the correct forms are available before filing.
I see no reason to delay preparing the returns if you use a computer program. At least you won't be bogged down with preparing by waiting for the corrected forms. With a computer program the adjustments will be made automatically by the program once the update is installed.
I plan on preparing the clients returns and waiting for the correct forms prior to elfing.
taxea

[DonPriebe]

Seems like only yesterday ...

I have been preparing taxes for 14 years and I can't ever remember a tax season that was delayed.

Not a whole season, but certainly the season for some returns. Wasn't it only last year that the IRS would not accept returns with certain deductions (e.g. sales tax, educator expenses) until February 1 and others (education credits) until March 1? Or maybe it was the year before.

Any idea if we will be able to process returns before the 28th if it gets pushed back or will we have to wait until the 28th to begin preparing and processing returns?

The last time the IRS would reject any e-files containing these deductions received before the processing date, and would stockpile any paper returns in that category.

Your clients' option is pay prep fees to file return and pay additional prep fees to file amended return or wait until the correct forms are available before filing.

Based on past history, the IRS will NOT correct and reissue any forms that have already been released (e.g. 1040, Sch A, B, C, D, E, F, SE, 6252), but will provide work arounds. They will simply delay the release of forms likely to be modified from last year (e.g. 6251)

[ChEAr$]

Good old paper returns

may be sent in in January you know.
Just not any that may include affected forms or possibly be
subject to AMT.

[joanmcq]

From what I've heard, if the processing season is delayed, paper returns will not be processed. So you've got the choice of holding onto the return if none of the affected items are on it, or letting it sit in a big pile at the IRS.

[DaveinTexas]

I hear that the child tax credit and the dependent care

credits will also be affected and any 1040s with these credits will not be processed. The IRS stated that this will only affect 36 million returns. No big deal, right!

Also, paper returns will not be accepted as long as these forms are not updated.

This is going to be a mess.

[ChEAr$]

Postponement

Yes Joan, I just heard that, too, from another EA who has a source within the IRS.

Only bright side I can see is that banks will have to wait longer for their money, and
thus increase the RAL fees! (grin)

Not that that matters to me, of course.

[KBTS]

AMT Patch

From RIA this morning:

Compromise on AMT relief appears in sight

On Dec. 6, shortly after a 46 to 48 Senate vote defeated a cloture motion on the House-passed AMT bill (H.R. 3996), Senate Majority Leader Harry Reid (D-NV) offered to amend that bill to provide one-year AMT patch without offsets. He would move that proposed AMT amendment as a stand-alone bill, leaving the extenders package without a vehicle to move it. At the close of business on Dec. 6, Senate Republicans leaders were in the process of hotlining Reid's offer to call up the Senate revised AMT package. By a vote of 88-5, the Senate passed a no-offset, straight AMT patch by inserting an amendment (S.A. 3804).

The House-passed H.R. 3996, “the Temporary Tax Relief Act of 2007,” carries a one-year AMT patch, extensions of numerous expiring tax breaks, plus home mortgage debt forgiveness relief and would fully offset these provisions with revenue raisers, including controversial provisions such as taxing carried interest as ordinary income, and basis reporting by brokers on sales of securities. The House Democratic leaders must accede to the Senate amendment and waive their PAYGO commitment to get a bill to the President's desk in short order to prevent the AMT problem from delaying the 2008 tax season.

[Larmil]

"The House Democratic leaders must accede",

From RIA this morning:

Compromise on AMT relief appears in sight

On Dec. 6, shortly after a 46 to 48 Senate vote defeated a cloture motion on the House-passed AMT bill (H.R. 3996), Senate Majority Leader Harry Reid (D-NV) offered to amend that bill to provide one-year AMT patch without offsets. He would move that proposed AMT amendment as a stand-alone bill, leaving the extenders package without a vehicle to move it. At the close of business on Dec. 6, Senate Republicans leaders were in the process of hotlining Reid's offer to call up the Senate revised AMT package. By a vote of 88-5, the Senate passed a no-offset, straight AMT patch by inserting an amendment (S.A. 3804).

The House-passed H.R. 3996, “the Temporary Tax Relief Act of 2007,” carries a one-year AMT patch, extensions of numerous expiring tax breaks, plus home mortgage debt forgiveness relief and would fully offset these provisions with revenue raisers, including controversial provisions such as taxing carried interest as ordinary income, and basis reporting by brokers on sales of securities. The House Democratic leaders must accede to the Senate amendment and waive their PAYGO commitment to get a bill to the President's desk in short order to prevent the AMT problem from delaying the 2008 tax season.

But they probably won't. The following is a quote from a news article on NationalJournal.com: "The House is expected to add offsets to the Senate package and send it back early next week, according to a House Democratic aide."

Any added offsets will be rejected in the Senate IMHO.

[susieq]

Return processing delay

If the processing time is delayed due to implementation time - do you think they will extend the formal due date beyond 4/15/08?

Guess it doesn't make much difference since so many extensions are filed any hoo.

Have a special weekend planned 4/25 - hope I don't have to work !!!

[JohnH]

You shouldn't need to work extra days

You can always tell your clients that for you, the filing deadline is still Apr 15, regardless of what the IRS does. I always begin filing extensions on anything coming in after mid-March anyhow in order to take Apr 15 off the table as a special date of any sort. Nothing should really change significantly with respect to deadlines, even if they did extend the filing date, if you handle things up front.