Friday, April 23, 2010
Monday, April 19, 2010
National Taxpayer Advocate
My previous post mentioned an article I found in the economist called "The Joy of Tax." In that article, the author mentioned a department of the IRS called The National Taxpayer Advocate. I have been a tax paying citizen for more than 20 years, and yet I had never heard of this group. Perhaps if they promoted it in a similar fashion as they do the Census...but I digress.
A little search on Wikipedia uncovered the following:
"The Taxpayer Advocate Service (TAS) consists of approximately 2,000 employees. About 1,400 of these are Case Advocates, who personally assist taxpayers in resolving their problems with the Internal Revenue Service...
In addition, the TAS identifies systemic problems that exist within the Internal Revenue Service and, to the extent possible, propose changes in the administrative practices and identify potential legislative changes which may be appropriate to mitigate such problems. These observations and proposals are presented to Congress each year in the National Taxpayer Advocate's "Annual Report to Congress."
OK. So I did a little web search and found the 2009 Annual Report to Congress. (By the way, the report is just that, a report. The TAS has no power to influence change as far as I can tell.)
The first thing that struck me about this report appeared on page 7 regarding a specific IRS goal:
"During a time of great need for taxpayer assistance, the IRS’s goal for fiscal year (FY)2010 is to answer 71 percent of the calls from taxpayers who want to speak with an assistor (not a recording), down from 83 percent in FY 2007. In other words, the IRS is planning to be unable to answer about three out of every ten calls it receives. Moreover, those taxpayers that are able to get through to an assistor will have to wait, on average, twelve minutes."
Customer service at its best.
At the risk of making this my longest post ever, I wanted to spread the word about a specific point this document addresses. Please pay particular attention to the length of time this has been going on, and the direction Congress has gone.
Quote from the document:
"Fundamental Tax Simplification Is Desperately Needed."
"In several prior reports, I have designated the complexity of the tax code as the most serious problem facing taxpayers and the IRS alike. The need for tax simplification is not highlighted as a separate discussion in this year’s report to avoid repetition, but the omission of a detailed discussion in no way suggests the lessening of its importance.
As I detailed in last year’s report, TAS analysis of IRS data shows that U.S. taxpayers and businesses spend about 7.6 billion hours a year complying with the filing requirements of the Internal Revenue Code. It would require 3.8 million workers to consume 7.6 billion hours, effectively making the “tax industry” one of the largest industries in the United States. U.S. taxpayers deserve a simpler and
less burdensome tax system.
Sooner or later, tax reform will come. And while the Office of the Taxpayer Advocate generally refrains from becoming involved in tax policy discussions, we have sought to make a contribution by presenting a taxpayer perspective on tax simplification and by addressing the tax administration implications of certain aspects of tax reform.
In 2004, we presented recommendations to streamline the bewildering array of education and retirement savings incentives in the tax code. In 2005, I made a presentation to the President’s Advisory Panel on Federal Tax Reform and suggested that emphasis be given to six taxpayer-centric core principles. We also presented a proposal to reform the rules governing married persons filing joint returns and the taxation of community property. Last year, we recommended simplifying the “family status” provisions in the tax code, reducing the use of “tax sunsets,” reducing the use of income “phase-out” provisions, and simplifying worker classification determinations. Last year’s report also contained a comprehensive set of recommendations to simplify the penalty provisions in the tax code. This year, we present two studies in Volume 2 that should assist in developing tax reform – one on principles for running social benefit programs through the tax code and one
discussing administrative considerations that should be kept in mind if the U.S. decides to adopt a Value Added Tax-like tax. Our office does not take a position on whether running social programs through the Code or adopting a VAT is good policy, but we do believe that policymakers should be aware of these concerns if these policies are adopted.
We will continue to do our part to encourage support for fundamental tax simplification and to offer a taxpayer perspective on what tax simplification should look like."
Well, somebody's talking, but is anybody listening?
A little search on Wikipedia uncovered the following:
"The Taxpayer Advocate Service (TAS) consists of approximately 2,000 employees. About 1,400 of these are Case Advocates, who personally assist taxpayers in resolving their problems with the Internal Revenue Service...
In addition, the TAS identifies systemic problems that exist within the Internal Revenue Service and, to the extent possible, propose changes in the administrative practices and identify potential legislative changes which may be appropriate to mitigate such problems. These observations and proposals are presented to Congress each year in the National Taxpayer Advocate's "Annual Report to Congress."
OK. So I did a little web search and found the 2009 Annual Report to Congress. (By the way, the report is just that, a report. The TAS has no power to influence change as far as I can tell.)
The first thing that struck me about this report appeared on page 7 regarding a specific IRS goal:
"During a time of great need for taxpayer assistance, the IRS’s goal for fiscal year (FY)2010 is to answer 71 percent of the calls from taxpayers who want to speak with an assistor (not a recording), down from 83 percent in FY 2007. In other words, the IRS is planning to be unable to answer about three out of every ten calls it receives. Moreover, those taxpayers that are able to get through to an assistor will have to wait, on average, twelve minutes."
Customer service at its best.
At the risk of making this my longest post ever, I wanted to spread the word about a specific point this document addresses. Please pay particular attention to the length of time this has been going on, and the direction Congress has gone.
Quote from the document:
"Fundamental Tax Simplification Is Desperately Needed."
"In several prior reports, I have designated the complexity of the tax code as the most serious problem facing taxpayers and the IRS alike. The need for tax simplification is not highlighted as a separate discussion in this year’s report to avoid repetition, but the omission of a detailed discussion in no way suggests the lessening of its importance.
As I detailed in last year’s report, TAS analysis of IRS data shows that U.S. taxpayers and businesses spend about 7.6 billion hours a year complying with the filing requirements of the Internal Revenue Code. It would require 3.8 million workers to consume 7.6 billion hours, effectively making the “tax industry” one of the largest industries in the United States. U.S. taxpayers deserve a simpler and
less burdensome tax system.
Sooner or later, tax reform will come. And while the Office of the Taxpayer Advocate generally refrains from becoming involved in tax policy discussions, we have sought to make a contribution by presenting a taxpayer perspective on tax simplification and by addressing the tax administration implications of certain aspects of tax reform.
In 2004, we presented recommendations to streamline the bewildering array of education and retirement savings incentives in the tax code. In 2005, I made a presentation to the President’s Advisory Panel on Federal Tax Reform and suggested that emphasis be given to six taxpayer-centric core principles. We also presented a proposal to reform the rules governing married persons filing joint returns and the taxation of community property. Last year, we recommended simplifying the “family status” provisions in the tax code, reducing the use of “tax sunsets,” reducing the use of income “phase-out” provisions, and simplifying worker classification determinations. Last year’s report also contained a comprehensive set of recommendations to simplify the penalty provisions in the tax code. This year, we present two studies in Volume 2 that should assist in developing tax reform – one on principles for running social benefit programs through the tax code and one
discussing administrative considerations that should be kept in mind if the U.S. decides to adopt a Value Added Tax-like tax. Our office does not take a position on whether running social programs through the Code or adopting a VAT is good policy, but we do believe that policymakers should be aware of these concerns if these policies are adopted.
We will continue to do our part to encourage support for fundamental tax simplification and to offer a taxpayer perspective on what tax simplification should look like."
Well, somebody's talking, but is anybody listening?
The Joy of Tax
I have found the economist to be a pretty objective source when it comes to political views. Here is an article I found interesting.
The Joy of Tax
The Joy of Tax
Friday, April 9, 2010
I Love Tax Day...NOT!
At a time when our latest health care legislation just increased the power and control of the IRS, I saw this and couldn't help but spread the word...
In “Washington Whispers” by US News and World Report
Top Ten Things Wrong with the Income Tax System
by: Ken Hoagland
1. It’s too complicated. Even a degree in rocket science won't save you from 67,500 pages of all but indecipherable tax code regulations. It confuses the IRS, the Secretary of Treasury and even the former Chairman of the House Ways and Means Committee. It’s an annual nightmare that has spawned a tax industry based on complexity created by our own government.
2. It’s too expensive. The complexity of the code costs a lot of money—more than $310 billion last year on the paperwork alone. Small businesses often pay more in paperwork expenses than the taxes they pay. Can any law be just, much less efficient, that costs so much to obey?
3. It’s unfair. Income is commonly double and triple taxed, married people pay a higher rates than singles living together and Congress’ mistake in failing to index the Alternative Minimum Tax for inflation now threatens to define as “wealthy” those with as little as $80,000 a year income. How just can a tax be that rewards those who hide income either here or offshore or have tax lobbyists to broker special deals?
4. It damages the economy. Income taxes are levied on work, savings and investments. In essence, the government grows by taking money from what makes the economy grow. Such a system retards capital formation, job growth and a higher savings rate and, as such, stymies economic growth or recovery.
5. It’s been corrupted. More than a billion dollars a year is spent lobbying the tax code. Congress has sold off two to three tax breaks a day every day they've been in session for the last 20 years. It makes Congressmen powerful and lobbyists rich and creates a tax system with more loopholes than Swiss cheese. It’s very lucrative for those in Washington and very bad for those without a lobbyist.
6. It undermines American companies. Foreign governments often forgo domestic taxes on products for sale overseas. American companies don't get that break and carry the second highest corporate tax rate in the world, employee FICA taxes and significant tax compliance costs as the cost of doing business here. It puts the “Made in America” label at a significant producer price disadvantage and drives jobs overseas.
7. It hides the cost of government. Taxes are withheld from paychecks, hiding from plain sight the cost of federal spending and its relationship to our own earnings. For many Americans, federal spending mistakenly seems like “free money”. The resulting tenuous connection between personal wealth and government profligacy allows politicians to promise more and more from the Treasury to win elections and satisfy their own political ambitions. That's destructive.
8. It’s intrusive. Once upon a time it was no one’s business how much money we made or how we spent it. Today it is the right and duty of the federal government to track every penny we earn, save or spend. It has created a system where every business decision is weighed against tax consequences and where pastors are told what they can and can't say from the pulpit to keep their non-profit status.
9. It hurts consumers and workers. Business taxes don't come out of CEO’s personal accounts but are paid for by consumers when taxes are “embedded” in wholesale and retail prices. When competition with foreign producers won't allow a higher price point to cover taxes, employee’s wages and benefits take the hit.
10. It makes us into modern day serfs. We get what’s left over in our paychecks after the federal government has taken its share. That means the fruits of our labors belong first to our government. That’s backwards and not at all what the Founding Father’s had in mind.
In “Washington Whispers” by US News and World Report
Top Ten Things Wrong with the Income Tax System
by: Ken Hoagland
1. It’s too complicated. Even a degree in rocket science won't save you from 67,500 pages of all but indecipherable tax code regulations. It confuses the IRS, the Secretary of Treasury and even the former Chairman of the House Ways and Means Committee. It’s an annual nightmare that has spawned a tax industry based on complexity created by our own government.
2. It’s too expensive. The complexity of the code costs a lot of money—more than $310 billion last year on the paperwork alone. Small businesses often pay more in paperwork expenses than the taxes they pay. Can any law be just, much less efficient, that costs so much to obey?
3. It’s unfair. Income is commonly double and triple taxed, married people pay a higher rates than singles living together and Congress’ mistake in failing to index the Alternative Minimum Tax for inflation now threatens to define as “wealthy” those with as little as $80,000 a year income. How just can a tax be that rewards those who hide income either here or offshore or have tax lobbyists to broker special deals?
4. It damages the economy. Income taxes are levied on work, savings and investments. In essence, the government grows by taking money from what makes the economy grow. Such a system retards capital formation, job growth and a higher savings rate and, as such, stymies economic growth or recovery.
5. It’s been corrupted. More than a billion dollars a year is spent lobbying the tax code. Congress has sold off two to three tax breaks a day every day they've been in session for the last 20 years. It makes Congressmen powerful and lobbyists rich and creates a tax system with more loopholes than Swiss cheese. It’s very lucrative for those in Washington and very bad for those without a lobbyist.
6. It undermines American companies. Foreign governments often forgo domestic taxes on products for sale overseas. American companies don't get that break and carry the second highest corporate tax rate in the world, employee FICA taxes and significant tax compliance costs as the cost of doing business here. It puts the “Made in America” label at a significant producer price disadvantage and drives jobs overseas.
7. It hides the cost of government. Taxes are withheld from paychecks, hiding from plain sight the cost of federal spending and its relationship to our own earnings. For many Americans, federal spending mistakenly seems like “free money”. The resulting tenuous connection between personal wealth and government profligacy allows politicians to promise more and more from the Treasury to win elections and satisfy their own political ambitions. That's destructive.
8. It’s intrusive. Once upon a time it was no one’s business how much money we made or how we spent it. Today it is the right and duty of the federal government to track every penny we earn, save or spend. It has created a system where every business decision is weighed against tax consequences and where pastors are told what they can and can't say from the pulpit to keep their non-profit status.
9. It hurts consumers and workers. Business taxes don't come out of CEO’s personal accounts but are paid for by consumers when taxes are “embedded” in wholesale and retail prices. When competition with foreign producers won't allow a higher price point to cover taxes, employee’s wages and benefits take the hit.
10. It makes us into modern day serfs. We get what’s left over in our paychecks after the federal government has taken its share. That means the fruits of our labors belong first to our government. That’s backwards and not at all what the Founding Father’s had in mind.
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