WASHINGTON, April 5 (Reuters) – The commissioner of the U.S.
tax-collecting Internal Revenue Service warned on Thursday of “a
real disaster” for taxpayers next year should Congress miss a
Dec. 31 voting deadline to renew major tax provisions.
Congress is expected to wait after Election Day, Nov. 6, to
take up whether to extend the individual income tax cuts passed
under former president George W. Bush that expire at the end of
the year.
Democrats want to extend the cuts only for the poor and the
middle class, while Republicans want them extended for the
wealthy as well – setting up a contentious period that may not
be resolved quickly.
Allowing tax provisions to be unsettled as 2013 begins will
cause confusion for taxpayers, said Douglas Shulman, IRS
commissioner, speaking at the National Press Club in Washington.
“We’re going to have real risk in the system,” if Congress
delays, Shulman said.
“You could have a real disaster in the filing season where
there’s total confusion,” especially for the alternative-minimum
tax “patch,” he said.
The alternative minimum tax is a parallel tax system that
applies to higher-income taxpayers. A legislative fix to index
it for inflation must be approved before year’s end to prevent
the tax from hitting taxpayers in lower income brackets.
In the absence of congressional action by Jan. 1, the IRS
might be forced to delay the tax-filing season, which begins
promptly with the new year, Shulman said.
As it is, Congress faces a huge workload for the two-month
“lame-duck” period after the elections when about $650 billion
of tax and spending provisions expire.
(Reporting by Patrick Temple-West; Editing by Howard Goller and
Philip Barbara)
