Internal Revenue Service Commissioner Douglas Shulman has warned tax-writing lawmakers in the U.S. House and Senate that although the agency's computers have been programmed to assume that Congress will pass a fix to the alternative minimum tax (AMT) by December 31, at lawmakers’ request the computers do not assume that any other tax breaks that have already expired will be extended.
The tax breaks include deductions that educators claim for their expenses, the additional deduction for real property taxes for individuals who claim the standard deduction, deductions for tuition fees and expenses, and deductions for state and local sales taxes.
Shulman urged Congress to vote on extending these deductions and credits as soon as possible to avoid “an unprecedented and daunting operational challenge” that would strain the IRS and potentially require millions of taxpayers to file amended returns.
Congress passed the AMT patch and extended other tax breaks late in 2007, requiring the IRS to reprogram their computers in January.
Shulman did not refer to the debate over the Bush-era tax cuts to individual tax rates, which do not expire until the end of 2010. Congressional action on these rates will not affect taxpayers until 2011 and will not impact the coming tax season.
Lawmakers from both parties had advised the IRS in a letter sent last month that they planned to do “everything possible to enact AMT relief legislation in a form mutually agreeable to the Congress and the President.”
Congress has not yet agreed to extend the other tax breaks this year that Shulman refers to because members are debating whether these breaks should be paired with revenue measures, according to Bloomberg.
Some deductions due to be extended, including the research and development credits and deductions for state and local sales taxes, are commonly extended as part of a year end tax bill that fixes the AMT. Others, including the deduction for real property taxes for taxpayers who claim the standard deduction, are more recent and have never been extended.