NCPA - National Center for Policy Analysis

Tax Reform Could Improve Tax Filing Process

April 21, 2015

By April 15th, all American taxpayers should have filed their taxes with the Internal Revenue Service (IRS). This year, two issues gained prominence in the filing process.

  • First, this year's tax returns included a new section addressing the individual health care mandate created in the Patient Protection and Affordable Care Act.
  • Second, between budget cuts and internal issues, the IRS claims it is woefully understaffed and underfunded, making it difficult for the agency to complete its statutory duties with respect to revenue collection.

In reality, both problems are the result of an overly burdensome tax code that makes compliance difficult, with excessively high administrative costs. The most effective solution requires a fundamental rethinking of tax policy, with an eye toward revamping today's tax code and making it simpler, fairer, and flatter. Despite this, the IRS claims:

  • Because of budget cuts, 2015 will be a less efficient and slower tax season, with the potential for delays, especially on paper returns. The average four weeks wait for a refund may jump to seven weeks.
  • The IRS will not answer 50 percent of the calls it receives, and of those who do get through, the average wait time will be 30 minutes - and much longer during peak hours.
  • For some 15 million late taxpayers, the IRS will not be answering any tax law questions, leaving puzzled taxpayers to resolve their concerns on their own.

With a tax code that runs 4 million words and has been changed over 4,680 times since 2001, it is not surprising that taxpayers and even the agency enforcing the code struggle to keep pace. Congress can pass fundamental tax reform to create a simpler, fairer tax code, eliminating complexity and reducing the workload at the IRS.

Source: Wayne Brough, "The Tax Code Has the IRS Understaffed, Not a Tight Budget," Real Clear Markets, April 20, 2015. 

 

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