Having been one of the leaders of the group that has fought for [alternative minimum tax (AMT) relief for incentive stock option exercises] the past eight years, I would like to correct the language you use to describe the recent relief granted to AMT-incentive stock option taxpayers. Debts were not forgiven. What happened was that the offsetting AMT credit that we all had (in addition to the AMT liability) is being returned to us over the next two years rather than trickled out over the next 70 years or so. Collection on current unpaid AMT liabilities is stopped and interest and penalties (recognized as being a little crazy since the government had our credit which offset the amount of our liability) were abated. In the end, Congress finally realized there was no debt to forgive. The credit basically offset the liability and we paid only the amount we really should have on whatever real profit we made (in most cases little or none).

There is a huge difference between forgiving a debt and realizing a debt never occurred. I’m a little sensitive to this because I lost my house and all my life savings because the government did not allow us to use the AMT credit to offset the liability. It’s all rather complex but I do know that I didn’t have any debt forgiven, because in a sane tax environment there was no debt to begin with.

One insight from the Hill that speaks volumes is the fact that the support for this incentive stock option correction and relief was universal. Democrat, Republican, House, Senate, all were united and working for this relief for their constituents and families across the Country. Even more telling is the fact that this relief had the full and united support of the Senior Leadership tax writers on both sides of the aisle and in both chambers. Chairman Baucus, Ranking Member Grassley, Chairman Rangel and Ranking Member McCrery all fully supported, along with many other tax writers including the Senate and House sponsors. [There was] no partisanship or cross-Hill rivalry or rifts, just a mutual desire to correct a horrible wrong.

Finally, this support came after quite literally years of education and work on the Hill, so it isn’t like this legislation was “slipped in” and nobody knew what was happening. Instead, this was very high profile and received intense scrutiny and evaluation by all parties prior to signing on in full support. All these tax writers (along with many others) reached the conclusion that the tax code went very awry in this situation and wasn’t fulfilling any legitimate purpose whatsoever.

So, from a pure “cold” tax analysis, the incentive stock option AMT tax provision wasn’t working as intended, and that resulted in such broad and universal support.

But, most importantly, this situation was not merely about correcting a mistaken and unintended consequence of a tax provision, but was about the real people with real families, and helping those families that were being destroyed by this unintended situation. I had the privilege of being on the Hill this Monday (the first business day after the legislation passed) with a family from Iowa who wanted to meet with their Representative and Senator just to thank them. As the husband was telling their story and expressing his gratitude from being freed from this horrendous burden, he broke into tears – a man in his 60s. Both the husband and wife talked about how they weren’t able to provide for their children’s education the way they wanted to, because of incentive stock option AMT, and that they both had to scale back their work and make severe life choices because of the overwhelming burden placed on them because they were taxed on money they never received.

Three articles written by different writers across the Country also show how journalists reacted when they researched and began to understand the situation.

Finally, here’s a great summary that someone wrote about how they are feeling a few days after the legislation passed:
Now that the weekend has passed I’m just reflecting on what happened on Friday and how I feel. Everything just feels so much lighter and sweeter. It is hard for me not to dance! I just feel like shackles have been taken from my feet! It feels like a fantasy! I think this must be better than winning the lottery. Not that there is going to be so much money coming in; it will take a while to recover. But the sense of freedom, the hope for the future! It just feels so wonderful. All that ugliness will be over and we will be better able to handle all the rest that life has in store for us.
This is legislation that did the right thing and restored justice to a situation where the tax code didn’t work right, and that Republicans and Democrats alike can and do feel proud of passing.

And all of us can feel comforted that the system worked; a law wasn’t working right and was destroying hard-working, honest Americans, and the system righted that wrong.

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