A flurry of last-minute year-end legislative action by the first session of the 110th Congress included a bill that postpones by a year expansion of the alternative minimum tax to millions of taxpayers–from four million to 25 million, according to the White House. The House approved the Senate version of the AMT patch–the Tax Increase Prevention Act of 2007–by a vote of 352-64, and President Bush signed the bill into law on Dec. 26. However, the bill does not include any revenue-raising measures to offset the anticipated loss of tax revenue from the bill, which the Democratic leadership had made its rallying cry after gaining control of both houses of Congress.
The bill increases the amount of income exempt from the AMT from $42,500 in 2006 to $44,350 in 2007 for individuals, and from $62,550 to $66,250 for married filers.
As of December 27, the IRS said it would be able to begin processing tax returns for the “vast majority of taxpayers” by mid-January. However, it said then that as many as 13.5 million taxpayers must wait until February 11 at the earliest to begin filing five AMT-related forms to allow the IRS to “update and test its systems to accommodate the AMT changes without major disruptions to other operations related to the tax season.” The IRS attempted to soften the blow by pointing out that historically only three to four million taxpayers file returns with those five forms during “these early weeks in the filing season.”