We have all recently filed our income taxes (or at least we should have!) and we know how time consuming it was, personally, to gather the appropriate records and receipts, fill out and file the forms, or work with professionals to do the filing for us. What is the impact of this complexity nationwide? National Taxpayers Union Foundation (NTUF) has just published its annual report on this topic, Tax Complexity 2017: As the Burden Grows, Taxpayers’ Patience Shrinks, by NTUF Director of Research Demian Brady. Unfortunately, the conclusion is that the burden of paying our taxes continues to rise. Here are some of the findings from the NTUF report:
- The instruction booklet for IRS Form 1040 and its corresponding schedules is 241 pages for the 2016 tax year, up from 211 pages for the 2015 tax year.
- The IRS publishes 199 different forms related to the income tax, and 230 different business tax forms.
- The Internal Revenue Code is 4 million words, and is 10,928 pages long.
- The Internal Revenue Code has seen revisions to 6,896 sections since 2000, an average of 406 per year, or more than one per day.
- More than half (56 percent) of filers use the help of a paid preparer to file. The average fee charged by H&R Block was $233 for the 2016 tax year, up from $27 in 1980 and $101 in 2000.
The one bright spot NTUF’s Brady points out is that for those taxpayers that called the IRS with tax filing questions, the time spent on hold waiting to speak to someone was reduced, from an average wait time of 23 minutes last year, to an average wait time of 11 minutes for this tax year. While that is an improvement, the wait time on hold was reduced because the IRS acquired additional full-time equivalent personnel to help answer the 114 million calls to the IRS this tax year, which is an additional cost to the taxpayers. And, as Brady pointed out with the following example, being able to more easily speak to the IRS does not always help:
NTU Foundation President Pete Sepp contacted the IRS with a basic question regarding how to properly account for an employee use of an automobile for work. He waited on hold for some 40 minutes only to be told that the question could not be answered.
Paying our income taxes continues to be taxing for the taxpayers filing the nearly 150 million tax returns to the IRS this tax year. The complexity continues to grow, and with greater complexity comes more hours and more resources going toward paying taxes rather than more productive or worthy endeavors. The NTUF report indicates that it required 1.9 billion (yes, billion!) hours just to fill out the IRS 1040 forms for those 150 million tax returns. If one includes the time spent on record keeping, calculating figures, seeking guidance or assistance, and submitting the forms – all the steps necessary to comply with the Tax Code – the burden on taxpayers grows to more than 6 billion hours. Brady provides the following to provide some perspective:
Think of it this way: the amount of time spent is equal to over 291 million days and over 797,000 years. It would take 68,386 American workers, who begin employment at age 18 and labor every single work-week of their lives with no days off, until reaching the full Social Security retirement age of 67, to account for that much time.
A final example from Brady highlights just how cumbersome our tax system has become:
Perhaps as a symptom of how unwieldy the tax system has become, one of the nation’s largest tax preparer firms has teamed up with IBM’s Watson to assist filers this year. Perhaps it’s fitting that an artificial intelligence technology be enlisted to help citizens understand the tax laws, since they seem to be beyond the comprehension of the human mind. Regrettably, this is the current state of affairs, but ideally taxpayers should not have to consult a supercomputer to properly fill out their taxes!
Amy K. Frantz is Vice President of Public Interest Institute.
The views expressed herein are those of the author and not necessarily those of Public Interest Institute or Tax Education Foundation. They are brought to you in the interest of a better-informed citizenry.