Lawmakers need to overhaul the tax code completely to reduce the
“significant, even unconscionable, burden” placed on taxpayers just to
file a tax return, the Internal Revenue Service’s ombudsman told Congress on Wednesday.
In her legally required annual report to Congress,
the national taxpayer advocate, Nina E. Olson, estimated that
individuals and businesses spend about 6.1 billion hours a year
complying with tax-filing requirements. That adds up to the equivalent
of more than three million full-time workers, or more than the number of
jobs on the entire federal government’s payroll.
And filing is only becoming more complicated as lawmakers haggle over new tax breaks.
Since 2001, Congress has made nearly 5,000 changes to the United States
tax code, or more than one a day on average. Nine in 10 taxpayers now
pay money, for professional preparers or often-expensive commercial tax
software, to figure out how much money they owe the government.
One of the advocate’s suggestions for streamlining the tax code was to repeal the alternative minimum tax,
a parallel tax system intended to make sure rich Americans pay a fair
amount in taxes, which is increasingly engulfing middle-class taxpayers.
Another was to reduce the number of income exclusions, deductions and
credits, known collectively as “tax expenditures,” that clutter up the
tax code.
For the current fiscal year, the Joint Committee on Taxation has
estimated that these tax expenditures total about $1.1 trillion, whereas
individual income tax revenue will be about $1.4 trillion.
The national taxpayer advocate, an independent position with the I.R.S.
that Congress created to assist taxpayers in resolving problems, also
criticized Congress’s recent budget cuts to the I.R.S.
On a budget of $11.8 billion in the 2012 fiscal year, the I.R.S.
collected $2.52 trillion, meaning it brought in $214 for every dollar it
spent. On the margin, the I.R.S. is estimated to bring in about $7 for
every additional dollar it spends or, put another way, it costs the
federal government $7 for every dollar that is cut from the I.R.S.’s
budget. The I.R.S. will receive even less money if Congress allows
across-the-board spending cuts to materialize in March as currently
scheduled.
“It is ironic and counterproductive that concerns about the deficit are
leading to cuts in the I.R.S. budget, when those cuts are making the
deficit larger,” Ms. Olson 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 I.R.S. already lacks money sufficient to meet taxpayer needs, the
report said. In the last fiscal year, the I.R.S. answered just
two-thirds of calls from taxpayers, and the average person who got
through had to first spend 17 minutes on hold.
Among the more serious problems for which taxpayers need assistance is tax-related identity theft. This occurs when criminals steal Social Security
numbers and then use them to claim other people’s tax refunds, which
average $3,000. Stolen Social Security numbers are also used to gain
employment under false pretenses.
Tax-related identity theft has risen 650 percent over the last four
years, and the I.R.S. had almost 650,000 identity theft cases in its
inventory as of Sept. 30, 2012. I.R.S. employees are currently advising
identity theft victims that it will take 180 days to resolve their
cases.
“The I.R.S. has established numerous task forces and Lean Six Sigma
teams focused on improving identity theft processes,” Ms. Olson wrote in
her report, which attacked the I.R.S.’s decision to decentralize its
identity theft investigation efforts. “Despite all of this attention,
victims who need their tax accounts corrected quickly and effectively
still face many of the same issues they did five years ago — a labyrinth
of procedures and drawn-out time frames for resolution.”
The report criticized other I.R.S. practices, including its failure to
provide tax refunds to many people whose preparers initially stole their
refunds, and its high audit rate for taxpayers who claim the adoption
tax credit.
These posts are for informational use only to educate people about their online income taxes
and the financial world around them. If you found this helpful, share
the original article or this one, and help spread the word! With tax season rapidly approaching let us get you the best income tax return you can possibly have by e-filing! Leave us a comment if you want to give your opinion.
Visit our site: http://www.onlinetaxpros.com
And our blog: http://www.onlinetaxprofessionals.blogspot.com
Please like us on Facebook: http://www.facebook.com/onlinetaxpros
and follow us on Twitter: @onlinetaxpros
No comments:
Post a Comment