We’re all waiting on Congress to address the fiscal cliff, which will have a significant impact not only on taxes but also on the economy. The expiration of last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, the end of the tax cuts from 2001-2003, and the spending cuts agreed upon as part of the debt ceiling deal of 2011, will all begin to go into effect.

The fiscal cliff is a big deal, but if Congress doesn’t start acting soon, there’s another element that will have a much more immediate effect. The IRS has warned Congress that the start of tax season could be delayed for millions of taxpayers if the alternative minimum tax (AMT) patch, which expired at the end of 2011, is not renewed.

The IRS Oversight Board has written a letter urging Congress to act, saying, “We do not believe that the IRS has ever faced such a formidable operational risk.”

If the patch is not renewed, the IRS estimates that 28 million more taxpayers will be subject to the AMT tax, making them liable for a much larger tax bill than they had expected. In the letter, the IRS also points out that the ordering rules dictating how tax credits apply to regular income tax and AMT have also expired and need to be fixed.

An article by Sally P. Schreiber of AICPA, outlines why the issue has come about so suddenly. She explains,

“Because twice in the past when the AMT patch has expired, it has been reinstated retroactively, the IRS made the decision this year to maintain its tax filing systems “as-is” for the 2013 filing season. As a result, if the AMT patch and tax credit ordering rules are not enacted, the IRS warns of significant delays in the upcoming filing season. The programming changes it would have to make to its processing systems would mean it would have to notify 60 million taxpayers that they may not file a tax return or receive a refund until late in March 2013 and possibly later.”