BOSTON – Senator John Kerry today announced that the Senate passed his legislation to address the Incentive Stock Option Alternative Minimum TAX (ISO AMT) crisis.

Due to a flaw in the current tax code, tens of thousands of workers in Massachusetts and across the nation were assessed an AMT that was too high based on their actual annual salary. This occurred because the AMT requires prepayments meant to approximate tax owed on future income received. However, the income never materialized due to the 2001 downturn in the stock market. For the past several years, many workers have had no possible way to pay what has amounted to disproportionate taxes on phantom income.

Kerry’s legislation provides relief to these families by accelerating the refund of AMT overpayment credits and stopping the assessment of interest and penalties on unpaid taxes on the phantom income. Everyone will pay a fair and proportional tax on actual income, but those who have been unable to pay taxes on the phantom income will be relieved of any liability or penalties.

“This legislation will help thousands of hard-working Massachusetts taxpayers who were unknowingly and unfairly affected by a glitch in the AMT. Due to the flaw, many families in our state had to pay the AMT on phantom income, income that often far exceeded their actual salaries. People were faced with immediate and debilitating hardship. This legislation will facilitate refunds to those who were unfairly burdened,” said Senator Kerry.

“My family and I want to thank Senator Kerry for his leadership in fixing this terrible situation,” said David Gottesfeld, a lab technician at EMC Corp. in Hopkinton. “For years, our family has struggled to survive under the incredibly stressful cloud of owing hundreds of thousands of dollars in taxes to the IRS, despite never receiving the money on which we were taxed. Even with liquidating our accounts, taking a second mortgage, and paying every dollar we could, we were unable to even keep up with the interest and penalties. This legislation restores justice to our family and to thousands of other families in Massachusetts, and allows us to once again live a normal and productive life, and invest in our family and children’s education.”


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