A report from the IRS’ own taxpayer advocate has found that the tax code is apparently too complicated for many ordinary filers.
Nine of 10 Americans rely on outside services to prepare their tax returns — 60 percent of taxpayers hire paid professionals, while the other 30 percent rely on software products.
In total, it takes U.S. taxpayers — including both individuals and businesses — more than 6.1 billion hours to complete their tax filings.
The Office of the Taxpayer Advocate was created in 1996 under the Taxpayer Bill of Rights. The office replaced the Office of Ombudsman within the IRS. The office is headed up by the National Taxpayer Advocate, Nina E. Olson.
The report, issued by the office of National Taxpayer Advocate Nina E. Olson, describes the tax code as a “significant, even unconscionable, burden” for American taxpayers.
The report faults the complexity of the Internal Revenue Code, the Alternative Minimum Tax (AMT) and an underfunded IRS.
Olson estimates that it cost individuals and corporate taxpayers $168 billion to comply with the tax code in 2010.
On average, a new rule is added to the tax code daily. The code currently contains approximately 4 million words.
“It is ten times the size of the Bible, with none of the Good News,” said Dave Camp, the chairman of the House ways and means committee.
Olson was critical in the report on the across-the-board budget cuts that would affect the IRS if implemented in March.
“It is ironic and counterproductive that concerns about the deficit are leading to cuts in the IRS budget, when those cuts are making the deficit larger,” she wrote in the report. “No business would fail to fund a unit that, on average, brought in $7 for every dollar spent. Shareholders would rebel and bring lawsuits, or at least oust the management or board of directors.”
The advocate’s report is issued to the ways and means committee each year, without prior review by the IRS commissioner, treasury secretary, or the Office of Management and Budget.
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