Thursday, January 8, 2009

Taxpayer Advocate Report 2009

Nina Olson is the National Taxpayer Advocate. She runs the Taxpayer Advocacy Service (TAS), which serves taxpayers who have run into a bottleneck of one sort or another in dealing with the IRS.

Each year, Ms. Olson is charged with the task to issue a report to Congress about what needs to be done to fix the tax system. The biggest single problem Ms. Olson identifies is the complexity of the tax system.

--> According to a TAS analysis of IRS data, U.S. taxpayers and businesses spend about 7.6 billion hours a year complying with the filing requirements of the Internal Revenue Code. If tax compliance were an industry, it would be one of the largest in the United States. To consume 7.6 billion hours, the “tax industry” requires the equivalent of 3.8 million full-time workers.

--> TAS estimates that the costs of complying with the individual and corporate income tax requirements in 2006 amounted to $193 billion – or a staggering 14 percent of aggregate income tax receipts.

The [Tax] Code has grown so long that it has become challenging even to figure out how long it is. A search of the Code conducted in the course of preparing this report turned up 3.7 million words. ... the number of words in the Code has more than tripled since 1975. Tax regulations, which are issued by the Treasury Department to provide guidance on the meaning of the Internal Revenue Code, now stand about a foot tall.

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