Declare the Pennies on Your Eyes

Jesse Walker | March 19, 2007

Jay Hancock visits some victims of the Alternative Minimum Tax:

Remember all the paper profits you lost when the Nasdaq crashed? Don't feel too bad. The Millers not only lost their dot-com quicksilver; thanks to the AMT they owe tax on it, too....

The IRS doesn't just want the $117,000 the Millers are supposed to owe on income that never existed. It wants more than $200,000, including interest and penalties, and it has rejected every settlement offer they have made....

The Millers are especially exasperated because the IRS owes them almost as a much money as they owe the agency. The credits they're due for AMT tax liabilities on VeriSign stock that later collapsed are $115,000; the principal balance of their delinquent tax is $117,000. Why not just call it a wash?

No, the IRS said. Pay the tax and penalties now, it said, and take the credits year by year, in thimblefuls, over the next three decades.