Congress should repeal the individual alternative minimum tax (AMT) or at least reform it, said Joseph W. Walloch, incoming chair of the AICPA’s technical resource panel on individual income tax. Walloch, along with other CPAs and taxpayers, testified in March before a House Ways and Means subcommittee to the AMT’s complexity and widening reach, with an estimated one-fourth of individual taxpayers subject to it this year unless Congress acts. David A. Lifson, president-elect of the New York State Society of CPAs, also called for repeal or overhaul, and Jon A. Nixon, CPA, a partner in Katzman Weinstein and Co. LLP of Bethpage, N.Y., described how the AMT fetters small businesses.
Short of abolishing the AMT, Walloch told Congress, it should adopt AICPA recommendations, including:
Increase and index for inflation the AMT brackets and exemption amounts, eliminate phase-outs and exempt regular-tax adjusted gross incomes under $100,000.
Set a single AMT tax rate below the regular-tax 25% bracket.
Allow certain regular-tax deductions, exemptions and credits barred or limited by the AMT, including the standard deduction, personal and dependent exemptions, and itemized deductions for medical expenses and state and local taxes.
Exclude the AMT from the estimated-tax penalty.