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Senate Passes Alternative Minimum Tax “Patch”

On December 6, the Senate passed, 88-5, the Tax Increase Prevention Act (H.R. 3996), after adopting, by unanimous consent, a substitute amendment by Sen. Max Baucus (D-MT). The House cleared a similar measure, the Temporary Tax Relief Act (H.R. 3996), on November 9 (see The Source, 11/9/07).

The Senate version of the bill would provide a one-year “patch” for the Alternative Minimum Tax (AMT), which would prevent the provision from affecting an estimated 21 million taxpayers in tax year 2007. Unlike the House version of the measure, the Senate bill does not require offsets for the one-year fix or increase the amount above which the AMT would apply.

Also unlike the House-passed bill, the Senate measure does not include extensions of several tax provisions that are set to expire at the end of the year, including the $100 per day excise tax on group health plans that impose limits on mental health benefits that are not imposed on medical and surgical benefits; the rule permitting servicemembers to include their combat pay when determining their eligibility for the Earned Income Tax Credit (EITC); the “above-the-line” deduction for qualified education expenses for teachers who pay for school supplies using their own money; and the Qualified Zone Academy Bonds program, which grants $400 million to state and local governments for school modernization, equipment purchases, and teacher training. The Senate measure also does not include an expansion of the refundable child tax credit, which was included in the House counterpart.

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