American Institute of Certified Public Accountants Supports Repeal of Alternative Minimum Tax

Endorses Bill Introduced by Rep. Phil English

WASHINGTON, May 23 /PRNewswire/ -- The American Institute of Certified Public Accountants (AICPA) supports repeal of the individual and corporate alternative minimum tax (AMT) and has endorsed H.R. 1186, The Alternative Minimum Tax Repeal Act of 2005, which is sponsored by Rep. Phil English (R- PA).

The AMT was created to ensure that all taxpayers pay a minimum tax because there was a growing trend in which some high-income taxpayers were able to significantly reduce or eliminate their regular tax by taking advantage of our tax laws, which give special treatment to certain types of income and which allow special deductions for certain expenses.

"Initially targeted at the wealthiest taxpayers, the tax is now clipping even lower-middle income Americans," Tom Purcell, Chair of the AICPA Tax Executive Committee and Associate Professor of Accounting and Professor of Law at Creighton University in Omaha, said. When the law was passed, the number of targeted taxpayers was very small -- approximately 0.1 percent of all individuals, he noted.

Now, he said, the number of taxpayers facing potential AMT liability is expanding exponentially due to "bracket creep" caused by inflation and the growth in incomes and by the classification of commonly used exemptions and deductions as "tax preferences." While approximately 3.5 million individual taxpayers were subject to the AMT in 2004, estimates indicate that the AMT will affect 33 million taxpayers by 2010.

The corporate AMT "suffers from the same infirmities as the individual AMT," he said. It requires corporations to keep at least two sets of books for tax purposes; imposes a myriad of other burdens on taxpayers; and has the perverse effect of taxing struggling or cyclical companies at a time when they can least afford it.

"We appreciate the efforts Rep. English and the other cosponsors of H.R. 1186 are making to repeal the AMT," Purcell said. "The narrowing of the differential between AMT and regular tax rates results in the AMT being a ticking time bomb for 'ordinary' taxpayers with few or no AMT preferences or adjustments. Furthermore the complexity of this tax is beyond what many affected taxpayers can cope with on their own," he said.

"We also commend the Senate Finance Subcommittee on Taxation and IRS Oversight for holding a hearing today on the AMT," Purcell added.

"We welcome the support of the AICPA for our bill," said Rep. English, a member of the House Ways and Means Committee which has jurisdiction over tax issues. "By forcing taxpayers to pay the alternative minimum tax, which should be called the 'kick-em-when-they're-down' tax, we contradict the very purpose of the tax policies that have resuscitated this economy and helped working families."

The American Institute of Certified Public Accountants (http://www.aicpa.org/) is the national, professional association of CPAs, with approximately 350,000 members, including CPAs in business and industry, public practice, government, and education; student affiliates; and international associates. It sets ethical standards for the profession and U.S. auditing standards for audits of private companies; federal, state and local governments; and non-profit organizations. It also develops and grades the Uniform CPA Examination.