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Report: Tax code complexity places heavy burden on IRS
A convoluted and confusing tax code contributes to an ever-growing workload at the Internal Revenue Service, according to a new report from the national taxpayer advocate.
"Complexity drives inadvertent error and fraud, which drive increased enforcement or new legislation, which drives additional complexity," said advocate Nina Olson in a letter presenting the report. "This cycle can only be broken by true tax simplification, followed by ongoing legislative and administrative discipline to avoid subsequent 'complexity creep.' "
The tax code should be "simple enough so that IRS telephone assistors can fully and accurately answer taxpayers' questions," Olson said. She also suggested laws that allow individual filers to compute their tax liability on a single form.
Refundable tax credits, if included in a simplified tax code, should be "administrable," the report stated. Procedures for direct deposits of income tax refunds should be changed so that the IRS is more involved in resolving deposit errors, the advocate said.
Her call for tax reform accompanied an assessment of the most serious problems facing taxpayers. An IRS shift from focusing on services to concentrating on investigation and enforcement topped the list.
The report, submitted to Congress on Tuesday, cited an IRS effort to move increasing numbers of taxpayers from human to electronic services, in part to reduce service expenditures and devote more resources toward growing enforcement needs.
But noting the link between service and compliance, the report called on the IRS to assess the types of assistance most useful to taxpayers and to identify groups that would lose out in a shift to electronic platforms.
The National Treasury Employees Union commended the report. The union has campaigned vigorously over the last year against service cuts, including a reduction in the hours and scope of assistance available through toll-free lines, as well as a proposed consolidation of walk-in services that would have resulted in the closure of 68 taxpayer assistance centers.
"It has long been clear to NTEU and many others that most taxpayers want to comply with the tax code, but they need help to do that," said Colleen Kelley, NTEU's president, in a statement. "Cutting off that help will not increase compliance."
Olson's report noted some areas in which the IRS has tried to make taxpayers' obligations more clear. The Earned Income Tax Credit, for instance, is claimed on only 17 percent of individual tax returns, but is a factor in 48 percent of the IRS' individual examinations and is among the most litigated tax issues.
But Olson commended the EITC program office and examination staff for "working hard to improve the program by analyzing and redesigning its procedures, learning about the characteristics and limitations of the EITC's target population and applying that learning to its processes."
COMMENTS
- Wouldn't this be a great place for viewers to express themselves in ways that provided ideas/solutions that ultimately resolve the topic issues rather than slandering others. Surely you view discriminating against a person’s political affiliation as one in the same as discriminating against a person’s ethnicity, culture, religion, or economic situation? Federal tax and the IRS are different than your state income and sales tax. There isn't one solution to fix the IRS and state tax issues. For the federal tax system, wouldn't a flat tax work? What if The federal tax had a cafeteria style plan, e.g. everyone starts at a base tax rate, for the sake of the example let's say 20 percent. If you want to participate in Social Security/Medicare/Medicaid, you contribute another percentage of your income, let's say 2- to 3 percent. The taxpayer essentially would have the option to select the tax plan that was most appropriate for their situation and have the responsibility of managing it. Congress/Senate could only make changes to the tax percentages based on certain economic criteria. The government runs on tax revenue. In order to increase tax revenue, the citizen income would have to increase. When citizen income increases we generally spend more. When we spend more we pay more in state sales tax. The amount in state taxes is derived from what the citizens pass via initiatives, levies, bonds, etc. At the state level, people generally vote on items that are important to them. Getting a politician to quit spending tax revenue is just as hard as getting a welfare recipient off public assistance. Sometimes it just takes tough love and a desire to promote the greater good. What's your solution? Mr. Orwell Posted January 24, 2006 6:31 PM
- This is for the guru who called "Fed" a "brain-dead right-wing talking point parrot." An accusation such as that only serves to show what a myopic liberal twit you are. I'm sure there are a few conservatives that take a handout but it pales in comparison to the vast majority of socialist losers feeding from the government trough which has been perpetually stocked by the Democrats for decades. The Democrats are the leaders in "give-away" programs and, in the process, have created a welfare state consisting of all these dweebs who were brainwashed to vote for them because they're all promised a space at the government udder. The reason why is because they can't think for themselves or are too lazy to do what it takes to make it like the rest of us. As far as rewriting the tax code, do you honestly trust your comrades to do it? If so, I'll save you some time and trouble -- just get yourself one of Mao's Little Red Books; that's what it will amount to. GovExec.com reader Posted January 25, 2006 9:33 AM
- It's true that necessities don't have to be taxed, but all too often they are. I don't live in the same state as you. Food and clothing are still taxed, and I'm sure houses are too, though I haven't bought one yet. As for the senator who says a sales tax is fairest, do you really want to depend on the honesty of politicians? :) And Fed, we all know no true conservative would ever take a government handout. Seriously, shut up, you're a brain-dead right-wing talking point parrot. At least try thinking for yourself for a change. Come on, everybody. Do you really trust the current crop in Washington to competently rewrite the tax code? Or any group of politicians in the history of the planet? GovExec.com reader Posted January 24, 2006 9:41 AM
