Tax refunds will be delayed for millions of middle-income taxpayers next year because of late action by Congress to limit the widening reach of the so-called alternative minimum tax, the Internal Revenue Service said Thursday.
Until lawmakers passed a one-year "patch" last week, the alternative tax, once aimed at wealthy filers, had threatened to ensnare about 23 million Americans for the first time -- including about half of the taxpayers earning $75,000 to $100,000 a year.
Because the patch was adopted so late, the IRS has been scrambling to revise a dozen affected forms and to revamp its computer systems to deal with the changes. The agency has done this work on seven of the forms but says it will take until mid-February to finish the remaining five.
The 13.5 million taxpayers who need to file one or more of those five forms, including parents who claim write-offs for paying college tuition or day-care expenses, won't be able to file their returns until Feb. 11. Because it typically takes 10 days to six weeks to get a refund, that means the affected taxpayers probably won't be able to get their refunds until late February or March.
"People are going to be frustrated and angry," said Elliott Kajan, a Beverly Hills tax attorney. "If they are, they should direct their anger at Congress, not the IRS.
"Congress knew this was going to happen, and instead of fixing it, they put a Band-Aid on it," he added. "That Band-Aid is going to wear away again next year, which could leave us in the same boat a year from now. They are always pushing the problem off to next year, and that becomes incredibly problematic."
The Treasury Department and tax watchdog groups had warned Congress for months about the risk of delaying tax legislation. At one point, the IRS Oversight Board predicted that the filing season might be postponed for everyone.
"We regret the inconvenience the delay will mean for millions of early tax filers, especially those expecting a refund," said Linda Stiff, acting IRS commissioner. "We will continue to work to keep taxpayers up to date and make this situation as easy as possible for everyone."
How might this glitch affect you and what should you do about it? Here are some questions and answers:
Am I affected by this delay?
You're affected if you intended to file your return before Feb. 11 and claim one of the following credits, for which the IRS forms won't be updated until then:
