Does your incorporated business pay alternative minimum tax [“AMT]? If
so, there is a 93% chance you have been overpaying your taxes by an
average of $11,000 a year according to the Treasury Inspector General.
The Office of the Treasury Inspector General for Tax Administration was
created in 1999 to oversee the IRS. One of the duties of the Treasury
Inspector General is to study and report the efficiency of the tax
payment system, particularly the accuracy of tax collection efforts.
Many of the studies conducted by the office reveal starting results,
particularly when it comes to businesses overpaying their taxes.
As part of this oversight, the Treasury Inspector General is reporting
that many small business corporations are incorrectly paying AMT. The
AMT was enacted in the late 1990s, but proved to be a huge burden on
small businesses. The tax was confusing and the paperwork was
incredibly complex. An amendment was subsequently added to give small
business corporations relief from the AMT. Section 55(e) of the
Internal Revenue Code now contains language exempting small business
corporations from paying the AMT.
Small business corporations can claim an exemption from the AMT if
gross revenues average $5 million or less for the initial three years
of business. Thereafter, the business can continue to claim the
exemption as long as revenues average $7.5 million or less of each
subsequent three year period.
According to the Inspector General, companies that fail to claim an
exemption to the AMT are overpaying taxes by an average of $11,638 each
year. 93% of small business corporations qualify for the exemption.
Since the IRS has no duty to notify taxpayers of overpayments, many
small business corporations have no idea they are overpaying taxes and
are due refunds.
All taxpayers have the right to file amended tax returns for the past
three calendar years. Contact us now to find out if you failed to claim
the exemption to the AMT and are due a refund for 2001, 2002 and 2003.
If you failed to claim the AMT exemption, you may be due a refund
totaling over $33,000.
