Nation & World

<< Previous   of   Next >>   ADVERTISEMENT   Bills in brief Alternative minimum tax Congress sent President Bush legislation blocking the growth of the alternative minimum tax for a year. The main beneficiaries of the tax relief would be those in the $75,000 to $200,000 income level. The AMT was created to ensure very rich people did not totally avoid paying taxes. But the tax, which applies more stringent rules for using deductions in calculating tax obligations, was not adjusted for inflation. Without the fix, those subject to the tax would have risen from 4 million in 2006 to about 25 million in 2007, with an average levy of $2,000 a taxpayer. The bill increases the AMT exemption amount to $66,250 for couples filing jointly and $44,350 for single taxpayers for the 2007 tax year. If Congress hadn't acted, it would have dropped to $45,000 for couples and $42,500 for single filers. Budget battle Congress sent President Bush a $70 billion bill to fund military operations in Iraq and Afghanistan well into next year. The money is inside a $555 billion spending bill that combines the war money with funds through September for 14 Cabinet departments. The spending legislation affects virtually every part of the government other than the Defense Department's core programs. Guns Congress approved legislation that would make it easier to flag prospective gun buyers who have documented medical problems. The legislation clarifies what mental health records should be reported to the National Instant Criminal Background Check System, which gun dealers use to determine whether to sell a prospective buyer a firearm. The bill requires federal agencies to notify people flagged as mentally ill and disqualified from buying a gun and to notify people when or if they have been cleared. It also allows the attorney general to penalize states beginning after three years if they do not meet compliance targets. Heat aid The government's Low Income Home Energy Assistance program, which provides heating and cooling subsidies for the poor, would get roughly $409 million more in a year-end budget bill sent to Bush. Millions of poor and elderly people on fixed incomes rely on heating assistance to help pay their heating bills. Children's insurance Congress sent an extension, through March 2009, of a popular health insurance program for children to Bush. Lawmakers supported a $35 billion expansion of the State Children's Health Insurance Program. Bush vetoed two bills that would have provided the additional money but is expected to sign this version. Toy safety The House approved a bill that lawmakers hope will make children's toys safer and increase the powers of the Consumer Product Safety Commission. Under the bill, anything more than a minute amount of lead would be banned in toys meant for children under 12. The bill also bans the sale and export of recalled products. The legislation goes to the Senate.   Related Stories • Federal money for Naval Station Everett, U.S. 2 in bill 12/20/07   CONTACT THE HERALD Do you have a news tip? newstips@heraldnet.com | 425.339.3400   Published: Thursday, December 20, 2007 Congress OKs temporary relief from alternative minimum tax About 20 million households will be able to avoid an extra tax, but Congress' late vote may result in delayed refunds. The Washington Post and Newsday WASHINGTON -- Congress gave final approval Wednesday to a bill that would protect about 20 million households from a tax increase caused by the alternative minimum tax. The House voted 352 to 64 to prevent middle- and upper-middle-class taxpayers from being hit by the AMT, which was designed in 1969 to target the very rich. President Bush was expected to quickly sign the bill. The main beneficiaries would be people in the $75,000 to $200,000 income level: Nearly half of taxpayers in that range would have been affected without Congress's patch, according to the congressional Joint Committee on Taxation. Congress next year must patch the AMT again or force millions of families to pay more tax. And the legislation passed so late in the year that 15 million Americans will probably have to wait longer than usual to get their refunds in 2008. The Internal Revenue Service had urged lawmakers to act sooner, warning that the longer they waited to repair the AMT, the more disruption taxpayers would encounter when they filed their 2007 tax returns. The rules governing the AMT affect not just people who are forced to pay the levy but also almost all taxpayers who itemize deductions. Without the AMT fix, those subject to the tax would have risen from 4 million in 2006 to about 25 million in 2007, with the average levy of $2,000 a taxpayer. The bill increases the AMT exemption amount to $66,250 for couples filing jointly and $44,350 for single taxpayers for the 2007 tax year. If Congress hadn't acted, it would have dropped to $45,000 for couples and $42,500 for single filers. The savings could be thousands of dollars. For instance, couples who would have fallen into the AMT with a $45,000 exemption amount but now avoid the alternative tax will be spared a $5,000 tax hike, said Alan Weiner, senior tax partner at Holtze Rubenstein Reminick in New York. Now fewer than 2 percent in that range will have to pay the tax. The AMT was meant to prevent the very wealthy from using deductions, credits and other shelters to avoid paying taxes. But its income thresholds did not rise with inflation, gradually bringing more and more middle-income people into its net. The IRS has said it needs seven weeks from the patch's enactment to adjust its computers to the change. Given the lag time, as many as 15.5 million tax refunds totaling $39 billion will be delayed next year, the IRS's oversight board has estimated. In other words, 11 percent of 140 million filers will probably have to wait a little longer to get their money back from the IRS. "The filing season usually starts the second week in January," said William Fleming of PricewaterhouseCoopers, an accounting firm. But the delay in passing the patch, he said, "could cause a delay in early filing by as long as a month and a delay in getting refunds by the same period of time." Democrats had promised all year not just to fix the AMT but also to pay for revenue losses connected to the change. Democrats pledged to make up the patch's $50 billion loss by raising taxes or cutting spending. In the end, they did neither.

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