What should IRS do in the countdown to an AMT patch?

The 2007 tax forms were scheduled to go to the printer yesterday, so they probably did. The House has scheduled a Friday vote on an AMT patch for 2007, essentially a retroactive tax cut. Senate action is uncertain, as is the outcome over whether the AMT patch should be offset by new taxes, and if so which ones. Obviously the AMT patch will have a big effect on the forms, as well as on IRS processing of returns. How should very late legislation affect what IRS has to do?

There's a difference of opinion, Tax Analysts ($) reports:

Acting IRS Commissioner Linda Stiff, echoing her predecessor, former IRS Commissioner Mark Everson, has maintained that the IRS must prepare its forms and processes for the filing season strictly according to current law, regardless of impending tax legislation. Stiff has said the IRS will need 10 weeks from the date of any currently pending tax bill's enactment to begin processing returns. Late enactment will affect return processing for up to 50 million taxpayers and will delay up to $75 billion in refunds, Stiff said.

But [National Taxpayer Advocate Nina] Olson said at a National CPA/IRS Tax Issues Meeting in Washington that she has received no satisfactory response after repeatedly requesting clarification on what prevents the IRS from preparing for the filing season by anticipating legislation.

Olson acknowledged that 'putting odds on what Congress will do is very, very difficult.' However, the heads of the congressional taxwriting committees have written to the IRS outlining the parameters of alternative minimum tax relief they intend to pass before the end of the year. Olson said it makes sense, given the circumstances, to program the systems in anticipation of the law changes.

I can't agree with Olson's assessment. It might make sense to do nothing, to suspend the printing of the forms, to avoid incurring costs that will almost certainly be wasted, and perhaps to focus Congressional attention on the urgency of the situation, but relying on the heads of the taxwriting committees for preparing tax forms would be foolish.

BTW, the House draft includes an "extra standard deduction" for those taxpayers who own their homes and pay real estate taxes but don't itemize their deductions. Married taxpayers would get a $700 bump. You gotta love that tax simplification.