Tuesday, April 14, 2015

Have You or Your Tax Preparer Read All 70,000 Pages of the Federal Tax Code Yet?

Last year, about 170 million Americans had to file a tax return at a cost of 1.35 billion (billion with a "b") man hours in preparing those returns.  On average, that's about 8 hours per person or the equivalent of one long business day per filer spent putting numbers in little boxes, adding them up, and checking off things he or she may not understand.  Then, at the end, you sign and date the thing swearing that its totally correct or you may be subject under penalty of law.

Up until ObamaCare, only those who reasonably made any income had to file tax returns.   But, this year, because of the new healthcare law, even those, who in the past, made too little to pay taxes  must file a return anyway in order to prove they have official ObamaCare approved health insurance and avoid paying a penalty.  According to the nation's leading tax service, H and R Block, only about 1 in 4 low income families even knows this; leaving 3 out of 4 in violation of IRS rules and regulations by not filing the up to 3 forms associated with proof of insurance.  Of course, the friendly IRS has whipped up a handy 21-page single-spaced guide to help you understand how to fill out those three forms.  Unfortunately, for most people reading the guide, it will seem like it was written by some alien being; especially for low income families with limited education.  Of course, this means millions more tax returns and it also means thousands of new IRS agents to handle all that new paperwork.

In 1989, when the tax code was about 30,000 pages long, the LA Times found that the IRS help line was 30.8% wrong in the advice they gave someone with regard to their tax preparation. Today, with more than 70,000 pages of tax code, it's anyone's guess how accurate (or inaccurate) the help line is.  But, this we do know.  The IRS has already said that it will only be able to handle half the calls to its help line and 87% of those who do get connected will have to wait 2-1/2 hours for the call to be answered.

My purpose in explaining all this is to say that the current tax code is beyond human comprehension.  It would be like remembering page-by-page every book you ever read plus all future rewrites.

Simply, the tax code needs to be abolished and a simplified system installed in its place.  After all, the original income tax was a flat tax.  Then, it morphed into a progressive tax in which the more money you made the higher your taxes were.  Ever since then, each political party has attempted to curry favor by modifying the code to give special exemptions to garner votes.  Taxes have become both punishing and incentivizing; always with the voter in mind. No one should have to wait 2-1/2 hours to get an answer about trying to pay their taxes without the threat of fines or jail time.


The Cost of Tax Compliance: http://taxfoundation.org/blog/cost-tax-compliance

H&R Block: ‘No One Can Understand’ New Obamacare Tax Code: http://dailycaller.com/2015/01/19/hr-block-no-one-can-understand-new-obamacare-tax-code/

IRS seeks 4,000 agents, $303 million for Obamacare: http://www.washingtonexaminer.com/irs-seeks-4000-agents-303-million-for-obamacare/article/416051

IRS Help Line Has Error Rate of 30.8% - Los Angeles Times:  http://articles.latimes.com/1989-03-11/business/fi-777_1_irs-employees

The IRS will answer less than half your calls this filing season: http://www.washingtonpost.com/blogs/wonkblog/wp/2015/01/14/the-irs-will-answer-less-than-half-your-calls-this-filing-season/

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