The Coalition for Tax Fairness (CTF), an organization working to resolve the Incentive Stock Option Alternative Minimum Tax (ISO AMT) crisis, today announced a favorable U.S. Tax Court decision for its members Ron and June Speltz. The IRS had moved for Summary Judgment in the Speltz case, to allow the IRS to immediately collect the full tax due (over $220,000) on stock that the Speltzes sold for $1,600, at a loss of $32,000. Because of ISO AMT liability, the Speltzes owe eleven times the typical tax rate for their income level - resulting in significant over payments on unrealized gains.

The recent judicial decision called for further briefing on the IRS Motion for Summary Judgment. Statements from the Court suggested that in considering the Speltzes' offer in compromise (OIC) for their year 2000 ISO AMT liability, the IRS should be taking a more expansive interpretation of "hardship" and should consider the proportionality of the tax to actual income received.

Congress has shown interest in resolving the problems in the OIC program, and numerous Members of Congress have requested that the IRS properly consider the Effective Tax Administration prong of the OIC program when addressing ISO AMT cases. Furthermore, in September, the Senate Finance Committee launched an inquiry into the OIC program, with a specific emphasis on the IRS' policy towards the compromise of ISO AMT cases. Unsatisfied with the IRS' response, Senator Chuck Grassley (R-IA), Chairman of the Senate Finance Committee and Senator Max Baucus (D-MT), Ranking Member of the Senate Finance Committee called for an investigation of the program by the Government Accountability Office.

"We were very encouraged by the results of the Hearing, which gives us hope that, after almost four years of struggle, relief is in sight," said Ron and June Speltz. "We hope the IRS will listen to what the Court and Congress are saying and adopt a more flexible and fair approach toward compromising these huge tax liabilities that are totally disproportionate to any gain received from the stock."

"Congress did not intend for citizens like the Speltzes and other ISO AMT victims to pay disproportionate amounts of tax based on unrealized income," stated Tim Carlson, President of the Coalition for Tax Fairness. "The bottom line is that taxpayers can't, and shouldn't have to, pay taxes on phantom income. Effective Tax Administration review by the IRS would allow for partial relief. As a follow-up to this partial relief, both taxpayer compliance and revenue generation will be heightened by correcting this ISO AMT tax law in a way that ensures everyone pays their fair share."

CTF is working to address the growing ISO AMT crisis, which is causing extreme financial hardship for countless Americans. The AMT tax on ISOs has impacted many employees of small and large companies across America, often resulting in taxes up to and exceeding 300-400 percent of these employees' annual salaries. Unfortunately, the AMT tax on ISOs continues to subject taxpayers, both today and from past years, to egregious tax scenarios, requiring taxpayers to pay tens of thousands, hundreds of thousands, and even millions of dollars in overpayments of taxes on "phantom" income. CTF is working together with individuals and organizations such as ReformAMT, through education, legislative initiatives, and grassroots efforts to help reform this outdated tax law and alleviate this catastrophic situation.

CTF is proposing a bill that encompasses the following provisions to remedy unfair ISO AMT tax burdens and help prevent similar situations in the future:

-- Creates reasonable tax provisions that ensure ISO AMT taxpayers don't incur a disproportionate tax rate if stock values drop after exercise;

-- Puts in place compliance provisions to ensure everyone pays their fair share of AMT taxes, thereby helping to generate increased tax-related revenue; and

-- Accelerates return of the AMT credit to help level the playing field for current ISO AMT victims.

About the Coalition for Tax Fairness

The Coalition for Tax Fairness (CTF) is a non-partisan, non-profit organization that is coordinating a new legislative initiative to fix the current Incentive Stock Option Alternative Minimum Tax (ISO AMT) crisis. This growing problem was brought on by outdated laws unfairly affecting an unprecedented number of citizens, resulting in extremely high taxes on income that was never realized. Through a combination of education, legislation, and grassroots efforts, CTF is seeking to raise awareness about the current crisis, and is proposing a principled legislative approach that helps ensure tax equity and fairness. CTF was founded by ISO AMT victims and is managed by a group of national volunteers. For more information, visit www.fair-iso.org.