Taxpayer Advocate Delivers More of the Same
Every year at about this time comes the annual report to Congress by the “National Taxpayer Advocate.” And every year we wonder why – in particular, why things never change and the annual recommendations relative to fixing this mess of a tax system seem to always be more or less the same.
Item: The Advocate’s report designates the complexity of the tax code as the #1 most serious problem facing taxpayers and recommends that Congress take significant steps to simplify it.
“The existing tax code makes compliance difficult, requiring taxpayers to devote excessive time to preparing and filing their returns,” quoth Advocate Nina E. Olson. “It obscures comprehension, leaving many taxpayers unaware how their taxes are computed and what rate of tax they pay; it facilitates tax avoidance by enabling sophisticated taxpayers to reduce their tax liabilities and provides criminals with opportunities to commit tax fraud; and it undermines trust in the system by creating an impression that many taxpayers are not compliant, thereby reducing the incentives that honest taxpayers feel to comply.”
Heard any of that before? Notice any action by Congress to change any of it?
The Advocate notes that individuals and businesses spend about 6.1 billion hours a year complying with tax filing requirements. “If tax compliance were an industry, it would be one of the largest in the United Sates…..To consume 6.1 billion hours, the ‘tax industry’ requires the equivalent of more than three million full time workers.”
And what do you propose to fix any of this, Ms. Advocate?
- “Lay the groundwork” for tax reform by holding meetings with constituents to discuss the complexity of the existing tax code and the trade-offs between tax rates and tax breaks that tax reform will require.
- Apply a “zero-based budgeting” approach to comprehensive tax reform that starts out with the assumption that all tax benefits will be eliminated and then adds a benefit back only if Members conclude that, on balance, the public policy benefits of providing that benefit through the tax code outweigh the complexity it imposes on taxpayers.
Of course, the Advocate again finds a way to impress upon all that IRS budget is
just too darned low. “When taxpayers are attempting to comply with laws that require them to turn over a significant portion of their incomes to pay our nation’s bills, they have a right to expect that their government will do a better job of taking their telephone calls and answering their letters.”
We have no comment on the IRS budget, but Advocate Olson did get this last point right. Overall, though, we think we’ve heard this song before – like last year and the year before in the annual Advocate’s report.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.