As many as 100 million taxpayers may be unable to file their returns until late March and would face refund delays if Congress fails to reach a fiscal cliff deal by Dec. 31 that includes an Alternative Minimum Tax fix.
That's the latest estimate from the IRS, which would have to do some serious system reprogramming in the absence of an AMT provision.
Here's the problem: Income exemption levels under the "wealth tax" -- as the AMT is known -- were never adjusted for inflation since it was enacted decades ago. So Congress has regularly passed an AMT "patch" to correct for that by raising the exemption levels.
Except that lawmakers have so far failed to do so for 2012. And tax filing season begins in less than two weeks.
Without a patch, $45,000 for joint filers and $33,750 for single taxpayers is exempt from the AMT. But adjusted for inflation, those levels would jump to $78,750 and $50,600 in 2012, according to bills in the House and Senate.
No AMT fix would mean "lengthy delays of tax refunds and unexpectedly higher taxes for many taxpayers, who will be unaware that they are newly subject to AMT liability," IRS Acting Director Steven Miller said in a letter to House and Senate tax writers on Wednesday.