Congress dragged their feet once again on a proposal to extend the Alternative Minimum Tax patch. The purpose is to prevent middle class taxpayers from having to pay additional taxes originally levied on the wealthy.
Now, it appears that the IRS may need up to 7 weeks to reprogram their systems. This could delay tax refunds by up to a month.
The IRS has stated that it takes approximately 7 weeks to implement the changes. They are scrambling to update their computer systems and to print their affected publications.
The delays will also affect some consumer tax products, as many software programs need to be updated. That is not the real issue, though.
The hardest hit will be the millions of poor taxpayers that depend heavily on the Earned Income Tax Credit (EITC). This refundable credit represents one of the most effective welfare tools ever created.
Meanwhile, it appears that the predatory refund anticipation loans will be even more attractive to poor taxpayers as they try to get their money sooner. EITC advocates are pushing for a faster fix, hoping that the impact on the poor will be minimal.
Poor taxpayers face paying for holiday expenses without their refund. Many experience high heating costs during this time of year. Others depend on this income to replace failing vehicles. One thing is for sure–Congress failed to act quickly enough. The impact could be severe.
Tags: alternative minimum tax delays, AMT delays