Discussion:AMT Patch

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.

I'm sure our software vendors already have an update written. (I received my Drake early-bird version on November 30th this year and am already working with it - training, etc.)

I would like to be in charge of balancing the budget. I'd start at the top. Mr President, you don't need this, you don't need that, and we are cutting these perks because we need the cash.

Congresspeople, all you do is posture and fight. We're cutting your number in half in both houses, because we sure don't need more of you, and even the current number is too many, and we're also reviewing your perks too. Because we need the cash and you all clearly can't handle the financial responsibilities, so we're taking over that task.

And review all the bills and throw back every one with any pork.

Then move on down from there.

These guys don't want to give anything back. They'd probably be happy if it could be paid for by lowering the 15% bracket to 40K for married couples.

Funny how Congress doesn't allow non profits to go over budget year after year without some sort of assurance or audit to keep the status, but our lovely government can be deficient in billions and nobody says a word.....

I will NOT vote this coming election if there is no body who is worthwhile voting for. I vote every year, but the nominees are going to be dumb and dumber I am afraid....

The problem is that no one watches over them except us as individual voters with one vote each. And people vote according to their individual needs and the needs of their community, which encourages pork spending. What is the solution?

What's the solution? Involvement. One person really can make a difference.

Once you tell a client that they have to wait until the end of Feb to file a return, then 6 weeks for a refund, e-file loses it appeal. Shaving a few weeks off of that has little appeal and a lost sense of urgency. This year's client reminder/tax news letter will certainly be different. I don't want my early birds waiting to drop off returns until late Feb. It's going to be business as usual.

Meanwhile, Democrats are losing ground in their year-long bid to require that Congress pay for new tax cuts. A key test comes this week as the House and Senate work out their differences on a $50 billion "fix" to the Alternative Minimum Tax (AMT), which is now set to hit 22 million new taxpayers in the 2007 tax year. The House is requiring offsets; the Senate is not.

At issue is whether the atmosphere on Capitol Hill is now so partisan that Congress can't make the trade-offs needed to handle long-term fiscal challenges. By dealing with big-ticket items such as the AMT fix and the costs of the war, now about $10 billion a month, outside the normal budgeting process, Congress is shirking the hard choices needed to get America's fiscal house back in order, say budget watchdogs. Read on->

But the Blue Dog Democrats, so far with the backing of the House Democratic leadership, say they are not about to bend that rule for the AMT. "If you start picking and choosing," said Rep. Allen Boyd, D-Fla., "you might has well throw the whole thing out the window." Read on->

Our forefathers never meant for politics to be a career. The Federalist Papers are rather illuminating and term limits are discussed in a broad sense in Paper #52. They were concerned about too much power and said, "It is a received and well-founded maxim, that where no other circumstances affect the case, the greater the power is, the shorter ought to be its duration; and, conversely, the smaller the power, the more safely may its duration be protracted."

But read the collection of Federalist Papers and I think you'll see that the authors (Hamilton, Madison and Jay) thought that members of the Legislative branch would come from a wide range of citizenry who would serve their country then return to private life. That's not what happenes anymore. I believe our forefathers would be stunned at the power of incumbancy in modern-day politics and how extraordinarily difficult it is to extract a member of the House of Representatives once elected.

Interesting enough Papers #30- #36 are discussions about taxation. It should be required reading annually for members of Congress.

Polls show that the vast majority of us want term limits, even with their obvious disadvantages, but we just don't get them. Living here near the District, I can see that once Congresspeople get here, no way they want to go back to Omaha (apologies to Nebraskans). Life's too good - the fancy restaurants, special parking spots, expense allowances, groupies, etc. The day they get into office, they start raising funds for their next campaign. As Bottom Line says, why would they put themselves out of a job?

JAD - good point about balancing the budget. Unfortunately, I think it's not going to happen. Congress seems to be like the college student flooded with credit card offers, who keeps on partying until there's simply no more credit available, after which he's forced to live within his means (apologies to college students for comparing them to Congresspeople). At some point, the market for federal debt may simply dry up. It could get ugly when us Baby Boomers are all retired and want not only our Social Security, but also unlimited medical care.

But, I remain optimistic and have confidence in the ability of the public to have the resourcefulness and resilience to adjust and adapt to whatever conditions occur, as facilitated by the freedom thing we have going on. I just hope I live long enough to see how it all turns out!

Thanks y'all for letting me vent.

(RIA)"To satisfy the “pay-for” rule (revenue losing provisions must be offset by revenue raising provisions) that House Democrats have insisted on, Rangel's bill would include the following revenue offsets:

Close a loophole that allows hedge fund managers to defer compensation in certain offshore accounts."

Like Smokeytax, I live near DC. I worked near Capitol Hill for a few years. Power is definitely seductive. Like Smokeytax says, the perks are great. You get special treatment, trust me.

It was estimated back when Robert Byrd was Senate Majority Leader, it cost the US taxpayer $1 billion dollars to West Virginia (for pork barrel projects) before any legislation would be considered in the Senate. I am sure the longest-serving Senator in US history (and former Klansman) is still throwing his considerable weight around.

For years, Congress conveniently exempted itself from laws. For example, certain types of legislation, such as labor and wage regulations, Congress conveniently exempted themselves from the laws, but yet your business, my business, your clients, etc. all had to jump through the hoops. However, Congress didn't make those laws apply to themselves. My father, who wrote personnel legislation for the federal government for over 30 years, thought that was one of, if not the greatest, hypocrisy Congress committed. One day a national news reporter did a story about it and Congress, while I believe they still do it to some extent, was caught with their pants down and for a few years, changed their tune.

Here's what they should do for term limits, in my humble opinion:

In the Senate, your term is 6 years, you should be limited to 5 terms or 30 years.

Since Representatives run every 2 years, they should be limited to 15 terms, again another 30 years.

It seems ridiculous these guys make a career out of politics.

Tom

30 Years!!!! How many people wouldn't kill for a career that would last 30 years?

I'd limit senators to a single term of eight years (althought i'd accept it being 10 years). and I'd limit representatives to a single term of four years (althought i'd accept it being 5 or 6. I think the president should be limited to a single 6-year term.

Tom

December 18, 2007

“There’s no deal” with the Blue Dogs, he said. Read On ->

http://news.yahoo.com/s/ap/20071219/ap_on_go_co/congress_taxes

Both Weiner and Lifson said they believe Congress will pass another one-year extension. But the IRS has said it would take them 10 weeks to reprogram their computers. So that means the IRS probably would not be able to process millions of tax returns until the end of February or even early March, instead of the middle of January, Lifson said. Continue->

The Internal Revenue Service has said that it will take seven weeks from the time the bill is signed into law to reprogram and test forms, going well past the planned mid-January start of the 2008 filing season.

The IRS said Tuesday that it has yet to decide whether certain delays in processing returns and sending out refunds will affect AMT taxpayers or all taxpayers. Continue->

http://news.yahoo.com/s/ap/20071227/ap_on_bi_ge/tax_hit

IR-2007-209, Dec. 27, 2007

WASHINGTON — The Internal Revenue Service announced today that 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.”

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. However, 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.

• Form 8863, Education Credits.

• Form 5695, Residential Energy Credits.

• Form 1040A's Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers.

• Form 8396, Mortgage Interest Credit and

• Form 8859, District of Columbia First-Time Homebuyer Credit.

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.

Here is something I posted in another discussion group, related to AMT unpatched in 2012 impact. Let me know if numbers seem out of whack. I am focusing here on taxpayers who ALREADY are subject to AMT under 2011 tax law.

   Comparison of 2011 vs. 2012 AMT

   Single taxpayer, no dependents, wage income only.

   Schedule A: $15K state tax withholding, $30K mortgage

   It's not until we get up to $215K of wage income that this person would be affected by both the 2011 patched AMT and the 2012 unpatched AMT (this is my target subset - those who are already paying AMT).

   This person has $3,822 net increase in total tax liability on $166K of regular taxable income, a 9.5% increase from 2011.  He is already in the AMT exemption phaseout range for both 2011 and 2012.

   Put wage income at $250K, this person now has $4,116 net increase in total tax liability on $201K regular taxable income, a 7.9% increase from 2011.  He is still in exemption phaseout range both 2011 and 2012.

   Put wage income at $340K, this person now has [edit] $0 net increase in total tax liability on $291K regular taxable income (zero increase), and is completely phased out on the exemption for both 2011 and 2012.