The House Committee on Ways and Means today passed H.R. 3996, the Temporary Tax Relief Act of 2007, which included a bipartisan amendment introduced by Congressman Chris Van Hollen (D-MD) that would correct a severe inequity in the AMT tax system and resolve the ongoing AMT Incentive Stock Option (ISO) crisis. The Van Hollen Amendment – patterned after the AMT Credit and Fairness Act (HR 3861) - would eliminate the injustice imposed upon hardworking Americans caused by the unintended and unanticipated effects of the AMT as it relates to Incentive Stock Options. H.R. 3996 passed today on a vote of 22-13 and is expected to be considered by the full House next week.
The AMT tax treatment of ISOs has had a devastating impact on countless employees, often resulting in a tax burden exceeding 300 percent of these employees’ annual salaries. Workers are being forced to pay millions of dollars in tax prepayments on projected income they never received.
"The families currently being devastated by the wildly disproportionate tax liability the AMT imposes on phantom income they never received cannot afford to wait for a complete repeal of the AMT," said Van Hollen. "As Congress works to extend AMT relief for an additional year, I am gratified members on both sides of the aisle recognized the urgency of resolving the ISO AMT crisis now, once and for all."
Under Van Hollen’s bill, all employees and families will pay a fair tax on money actually made, and employees and families who have been unable to pay the severely disproportionate ISO AMT liability will be relieved of that liability, related interest and penalties.