The IRS may delay the start of its filing season if AMT is not addressed.

The Internal Revenue Service is looking hard at delaying the start of its filing season, set to kick off on Jan. 14, if Congress fails to pass legislation in the next two weeks. At issue is how to handle what could be a dramatic increase in the number of people facing a higher alternative minimum tax.

If there is a delay and it extends into mid-February, it would slow nearly 38 million refunds worth a total of about $87 billion, the IRS Oversight Board predicts.

The board, an independent advisory group, said in a report to lawmakers last week that it is "gravely concerned about the serious risks" to the filing season if Congress does not make timely changes to the tax. They include more mistakes by both taxpayers and the IRS and more people failing to pay taxes because of uncertainty about what they owe.

The alternative minimum tax was passed in 1969 and was aimed at about 155 very wealthy families who used deductions to avoid paying any federal income tax. The AMT disallows certain deductions and credits. It was not adjusted for inflation; as a result, over the years it has hit a growing number of middle-income taxpayers.

More than 4 million were subject to it in the 2006 tax year, and that could soar to 25 million this year without congressional action.

Congress also must pass a temporary fix to the AMT to prevent 20 million taxpayers from getting hit with tax increases averaging $2,000. House Democrats insist on paying for the AMT fix with revenue increases elsewhere. Republicans have promised to block that approach in the Senate. The common wisdom holds that any AMT fix will ultimately add to the deficit.

Even if the AMT is fixed, Democrats are likely to take a political hit. Delays in addressing the minimum tax are keeping the IRS from preparing tax forms and computer programs for the upcoming filing season, which means million of taxpayers counting on early refunds will be getting them later.

"The Internal Revenue Service set a Nov. 16 deadline to finalize forms and instructions for the 2008 tax-filing system. But Senate Majority Leader Harry Reid, D-Nev., said earlier this week that he won't move an AMT patch before Thanksgiving.

By missing the Friday deadline, lawmakers will mess up the timely issuance of tax refunds for millions of taxpayers. The IRS and Treasury Department estimate a patch not passed by early December could delay issuance of $75 billion in refunds to taxpayers who file 2007 tax returns before March 31, 2008. Additionally, 12 tax forms — one for the AMT and 11 others for various tax credits — would be affected by the delay.