How the IRS Took 27 Hours from Your Life This Year
Today, Tax Day, everyone understands that it is not just paying the taxes that is painful, it is getting together all the information and filling out the forms. The cost is time as well as money, time that could be far better spent.
This is not just an upper- or middle-income problem. Low-income individuals who expect an Earned Income Tax Credit have to file to receive it.
In May 2013, scholars at the Mercatus Center estimated the costs of tax compliance to be at least $215 billion a year.
A 2008 study by the Taxpayer Advocate Service at the IRS estimated that Americans spend 3.5 billion hours a year preparing their individual income tax returns. With 134.6 million filers at the time, this averaged to each individual spending 26.4 hours complying with the tax code.
Since the Taxpayer Advocate study was conducted, the tax code has only grown more complex. Wolters Kluwer, the global information services and publishing company, estimated the length of the U.S. tax code to be 67,204 pages in 2007. Their 2013 estimate showed 9 percent growth, to nearly 74,000 pages.
Because of the growing complexity of the tax code, taxpayers likely now average more than 27 hours on their individual income tax returns per year.
Here are twelve things you could do with 27 extra hours of free time:
Drive the entire length of Interstate-95, from Miami, Florida to the Canadian border at Houlton, Maine.
Watch all eight Harry Potter movies.
Play 117 holes (6.5 rounds) of golf with 2014 Masters Champion Bubba Watson.
Watch 13 movies on your Netflix list. Or, just browse Netflix for 27 hours and add a hundred new ones.
Watch the longest tennis match ever, twice (Isner vs. Mahut at Wimbledon 2010).
Take the SATs (3.75 hours), the GREs (3.75), the DATs (4.5), the MCATs (4.5) and the LSATs (3.5), all in one sitting, plus have 7 hours for breaks.
Read Game of Thrones, the 694 page novel by George R.R. Martin. Or, watch the first three seasons of the HBO series of the same name.
Ride the entire length of all five WMATA Metrorail lines more than five times.
Watch at least three seasons of your favorite half-hour sitcom: Friends, The Office, Big Bang Theory, etc.
Fly around the world twice in the Lockheed SR-71 Blackbird. The discontinued military aircraft has held the airspeed record (2193 mph) since 1976.
Listen to the complete Beatles discography, twice.
Write a dozen columns for E21.
Whatever your tastes, you would benefit from a simpler code.
Note: This was originally posted earlier this week on the website for Economic Policies for the 21st Century and is republished here with permission.
More from Americans for Tax Reform
Missouri Shows Strength On Tax Reform
Yesterday, the Missouri House voted in favor of SB 509, a bill which cuts the income tax by $620 million annually. The legislation would cut Missouri's individual income tax rate for the first time in almost a century, by gradually lowering the state's highest income tax rate to 5.5% starting in 2017. The bill also includes a 25% tax break for small business owners.
''This is a broad-based tax reform that would make our state more competitive and cuts taxes for every Missourian that pays a tax,'' said Rep. Andrew Koening, R-Manchester. With this tax cut, Missouri joins the group of states such as Wisconsin and Kansas which have cut taxes since the recession.
Last year, Missouri Governor Nixon vetoed a proposed tax cut and hinted he would do the same this year. SB 509 passed with 104 votes and 109 votes are needed to overturn a veto. ATR encourages you to call Gov. Nixon’s office (573-751-3222) and tell him to sign SB 509, much needed tax relief for Missouri.
Photo credit: David Shane
On Tax Day, Americans for Tax Reform’s Director of Budget and Regulatory Policy Mattie Duppler spoke with Chris Salcedo on WBAP’s Chris Krok Show. Mattie joined the Dallasradio show to discuss how Obama’s progressive budget plan and complex tax code has led to a weakened economy. Hear Mattie explain why taxpayers need a simpler tax code that stimulates the economy and promotes American job growth:
Networks Fret Over IRS Budget Cuts, No Mention of Ongoing Scandal
On Monday, all three network morning shows found time to worry about IRS budget cuts meaning fewer audits and longer wait times for taxpayer assistance, but not one mentioned the ongoing scandal embroiling the agency, including Congress issuing a criminal referral for former IRS official Lois Lerner. [Listen to the audio or watch the video after the jump]
On ABC's Good Morning America, news anchor Amy Robach warned: "More tax evaders could slip through the cracks this year....we are learning the IRS will have the fewest agents auditing returns since the 1980s due to budget cuts and new IRS responsibilities." On Friday, ABC's World News covered the same story – while ignoring the House Ways and Means Committee calling for Lerner's prosecution.
On Monday's NBC Today, co-host Savannah Guthrie described the reduction in audits as "good news," but cautioned: "...beware, cutbacks also mean taxpayer services are taking a hit. Which means if you have to call the IRS, you're probably going to be waiting on the phone a long time."
CBS This Morning brought on business analyst Jill Schlesinger to offer a full report on the topic: "1.4 million folks were audited last year. That is the lowest level since 2005 and it has a lot to do with the budget cuts that we've seen at the IRS. We've seen the budget slashed by about 8% from 2010. So really deep cuts there."
Like Guthrie, This Morning co-host Gayle King saw the lack of audits as a positive: "What's the downside of the budget cuts? Because to hear that there are going to be less audits does not seem like a downside."
Schlesinger emphasized the reduction in taxpayer services:
The downside is, if you need service, you're in trouble. The IRS gets a hundred million phone calls, okay? That's just astounding. And of those phone calls, only 61% of people got through. That's down dramatically. 87% got through ten years ago. How about the average hold time? You call the IRS, your average hold time, it's 17.6 minutes. Ten years ago, it was 2.6 minutes.
At the end of the segment, Schlesinger lamented the unlikelihood of the IRS budget being increased: "And you know what? The funny thing is that the President is trying to argue for an increase to the IRS budget. And he's arguing for a 10% increase in that budget. Do you know what the chances are of that going through? I'm going to guess. Okay, zero."
Schlesinger didn't bother connecting the dots between IRS corruption and Congress being unwilling to increase the tax agency's budget.
Similarly, the ABC, NBC, and CBS Sunday shows all skipped the latest developments in the IRS scandal.
Here is a full transcript of Schlesinger's April 14 report:
7:33 AM ET
NORAH O'DONNELL: Now to taxes. Just one day left before this year's tax filing deadline, but now the IRS says your chance of an audit is lower than it's been in years after nearly $1 billion in budget cuts in 2010. CBS News business analyst Jill Schlesinger is with us. Jill, good morning.
JILL SCHLESINGER: Good morning.
[ON-SCREEN HEADLINE: Taxing the IRS; Budget Cuts Mean Fewer Audits, Less Help]
O'DONNELL: So with fewer dollars and fewer people at the IRS, who are they going to target?
SCHLESINGER: They're going after the wealthier taxpayers. So if you make more than a million bucks, your chance of an audit is at 11%. If it's over $200,000, 3.3%. But for everyone else, it's actually less than 1%. In fact, 1.4 million folks were audited last year. That is the lowest level since 2005 and it has a lot to do with the budget cuts that we've seen at the IRS. We've seen the budget slashed by about 8% from 2010. So really deep cuts there.
GAYLE KING: What's the downside of the budget cuts? Because to hear that there are going to be less audits does not seem like a downside.
SCHLESINGER: I know, you're sort of like, "Woo hoo!" Okay, how about-
KING: And I'm a taxpaying citizen, too.
SCHLESINGER: Yes, and proud and patriotic.
KING: Yes, all of that.
SCHLESINGER: The downside is, if you need service, you're in trouble. The IRS gets a hundred million phone calls, okay? That's just astounding. And of those phone calls, only 61% of people got through. That's down dramatically. 87% got through ten years ago. How about the average hold time? You call the IRS, your average hold time, it's 17.6 minutes. Ten years ago, it was 2.6 minutes.
CHARLIE ROSE: So, what does it-
KING: And they say, "Your call is important to us."
SCHLESINGER: Yeah, I know it.
KING: I love that line.
ROSE: So what should one do if they're having trouble getting in touch with the IRS and they have serious questions?
SCHLESINGER: Well, I think the first thing is, you have to go to the website. And it is a robust website. They've got a searchable, very good site there.
Now, if you are a taxpayer and you really need help, there is a program that I want to talk about. It's called VITA, the Volunteer Income Tax Assistance program. This is geared towards folks who make less than $52,000 a year, disabled people, people who may not speak English as their first language. The VITA program is very helpful. People should seek it out. And, of course, be patient if you're gonna call.
O'DONNELL: And of course there would be less phone calls if they would just simplify the tax code.
SCHLESINGER: Well, there's that problem, too. I mean, the tax code has actually gone crazy.
And you know what? The funny thing is that the President is trying to argue for an increase to the IRS budget. And he's arguing for a 10% increase in that budget. Do you know what the chances are of that going through? I'm going to guess. Okay, zero.
So we would expect that you're going to wait longer and you'll have to really be patient.
O'DONNELL: Thank you.
KING: Thank you, Jill. Good to see you.
Read more over at NewsBusters.org
About the Author: Kyle Drennen is a news analyst at the Media Research Center.
More from Americans for Tax Reform
Top Seven Reasons the IRS Shouldn't Do Your Taxes for You
There has been the usual tax day-related glut of articles from liberal publications urging a federal takeover of the tax preparation business. As always, the ultra-left wing blog Pro Publica took the lead, followed predictably by outlets such as Slate, Vox, and Tax Analysts, as well as respectable news outlets like Bloomberg View and Yahoo!.
The basic argument is always the same: the IRS has all this information on you anyway, so wouldn't it just be easier and better if they simply prepared your taxes for you? Wouldn't that be better than having to pay some rent-seeking middleman? This flawed line of thinking fools many a reporter this time of year, but it's refuted pretty easily once you scratch beneath the surface.
Below are the top seven reasons the IRS should not prepare your taxes for you:
1. There already is a "Free File" program that most taxpayers are eligible for. This is the dirty little secret that the wonky Left doesn't want you to know. Since 2003, the IRS has partnered with the tax preparation industry to give away tax prep software--for free--to that large bulk of Americans with straightforward tax returns. This "Free File Alliance" can be used for over 100 million tax returns every year, should people want to use it. In its history, it's been used over 40 million times, with a 98% customer satisfaction rate. In fact, 23 states have created their own Free File programs. As an indication of the program's success, use of the IRS Free File program is up 11% this tax season over last year according to IRS numbers.
If the liberals pushing the IRS socialized tax prep idea were actually interested in a public policy solution, one which is already up and running and requires no new laws or regulations to implement, they would be recommending Free File every year. The fact that they don't should tell you a lot about what their true motives are (i.e., having the IRS be a tax preparer who also has the stick of tax collection).
2. The IRS commissioner has said the agency can't do it--twice. On two occasions just this year, IRS Commissioner John Koskinen has publicly stated that the IRS isn't interested in preparing people's taxes, because it can't:
On April 26, 2014, he told a Congressional committee, "We're not doing anything with that. It would take a long time to be able to do that."
Just today in Politico, he is quoted as saying, "We don’t have any plan to do that. (He laughed) We’re challenged enough with the things we have to do now, so there’s no work going on here at the IRS in that direction."
That's pretty good evidence that the IRS preparing your taxes is not only not possible--it's probably not a very good idea.
3. The biggest tax prep software company supports a radically-simplified tax system. The underlying subtext of all these stories is that the tax preparation industry, and DIY software giant Intuit in particular, has been keeping down the obviously good idea for the IRS to prepare most people's taxes for them. The reason, of course, is that the Intuits of the world want a complicated tax system so people have to keep buying their product every year.
Except that's not true. Back in February, Intuit endorsed House Ways and Means Chairman Dave Camp's (R-Mich.) tax reform plan, saying, "Intuit is committed, like the chairman, to see the tax code simplified, reducing the burden on American taxpayers and small businesses. This is a national policy imperative and Intuit looks forward to working with him and other policymakers of both parties across the Congress as the tax reform process moves forward."
The Camp plan, incidentally, would result in a system where 95 percent of families would be able to claim the standard deduction (up from about 70 percent today). Presumably, a similar percentage would be eligible for Free File.
This should put to lie the sub-textual assumption that the tax preparation industry is against IRS tax preparation because they have an interest in a complicated tax code. If these tired annual hobby horse articles were honest, they would acknowledge this and stop casting aspersions on companies that just aren't true.
If you want a simplified tax system, the solution is not the IRS preparing your tax return--the solution is for Congress to reform the tax code.
4. Have you noticed how much the IRS has begun to resemble the tax arm of a banana republic? Lois Lerner's contempt of Congress citation. Taxpayer-funded IRS conventions featuring Star Trek videos. Agency targeting of non-profit applications that have "Tea Party" in the name. Agency regulations of political speech by conservative non-profits.
It's not as if the IRS had a lot of goodwill to build off of before this year's filing season. But the last year has arguably been the worst one in the history of the agency. Public confidence in the IRS took several devastating body-blows in the past year.
On what planet does it make sense for an agency that is daily redefining "politicized abuse of power" to also take over tax preparation for most of the country? And against the explicit wishes and counsel of the guy who runs the place?
5. From the people who brought you healthcare.gov...The old joke used to be that, "if you like the Post Office, you'll love government-run healthcare." The spectacular failure of healthcare.gov has proven that quip a bit of an understatement.
Combine this with just the latest bureaucratic overreach/unintended consequence/abuse of individual rights: the Social Security Administration trying to collect generations-old debts from the descendants of the long-dead targets of collection.
And these folks think it's a good idea to build off this success and have the IRS prepare taxes for tens of millions of families? No thanks.
6. Speaking of Obamacare, the IRS will soon be a partner in your healthcare. Many people don't realize that the IRS is the agency with the second-biggest role in implementing Obamacare. That's not only a very scary intrusion to people's lives (begging the question as to why it would also be a good idea to make them the nation's tax preparer, too)--it also costs money.
Every year for the past several years, the Obama Administration has asked Congress for a few billion dollars for the IRS to implement Obamacare. That's not surprising, since the GAO reports that there are 47 Obamacare items on the IRS to-do list. Congress, quite understandably given the Republican opposition to Obamacare and the IRS' squandering of its existing resources, has instead chosen to freeze the IRS budget at less than $12 billion annually. It's likely to remain that way for the foreseeable future.
The thing is, Obamacare IS going to get implemented by the IRS. It's the number one public policy goal of the Obama Administration. With Obamacare resources crowding out everything else, there simply isn't any money left over to do a brand new system of IRS tax preparation, even it was a good idea (which it's not). And have you heard of Free File?
7. The IRS has sent you a friend request. Marketplace this week reported that the IRS has begun to do aggressive data mining of social networking sites like Facebook, Twitter, Instagram, and others. The goal is for them to find out as much information about taxpayers as possible to help with audits. So, that's great.
People with good memories might remember a similar story from last year, when the IRS wanted to read all your email messages.
Needless to say, the IRS is not looking for extra tax deductions for you when they're doing this. Their goal is to increase tax revenue collections for the Treasury, plain and simple.
The bottom line. These tired, annual articles from white collar lefty pseudo-academics living in the Beltway all ignore the really big story here: namely, that it's a giant conflict of interest for the IRS to determine your tax liability, and then to be able to seize your wages and assets in order to collect that tax liability. To ignore that is to be criminally-naive about the way the IRS goes about its business. It betrays either a lack of knowledge of how the tax system actually works, or it's a giant con job by people whose common cause with the IRS is growing the size of government.
Demonizing the tax prep industry doesn't change any of the arguments from above. It does, however, provide a thin shield of self-righteousness for what is otherwise a fool's errand.
You forgot that they can't even answer correctly the questions they get from taxpayers. If they don't even know the tax code how could they possibly be qualified to prepare someones taxes for them?
CA-07 Update: GOP Candidates Make Written Commitment to Oppose Higher Taxes
Americans for Tax Reform congratulates CA-07 candidates Elizabeth Emken, Doug Ose, and Igor Birman for signing the Taxpayer Protection Pledge to oppose any and all income tax hikes. All three candidates are vying for the opportunity to challenge Rep. Ami Bera (D-Calif.) in November.
Cook Political Report rates this a “Toss Up” race with a PVI of EVEN while the Rothenberg Political Report rates this race “Lean Democrat.” First-term incumbent Bera defeated Dan Lungren in 2012 (51%-49%) after redistricting altered the district.
The NRCC rates all three Republican challengers as Contenders in their Young Guns program. Reaching the level of Contender means, “candidates have completed a stringent program of metrics and are on the path to developing a mature and competitive campaign operation.”
Candidates running for office like to say they won’t raise taxes, but often turn their backs on the taxpayer once elected. The Pledge requires them to put their rhetoric in writing and provides an additional layer of accountability to the taxpayer.
More from Americans for Tax Reform
Obamacare’s Top Five Middle Class Tax Hikes
President Obama and his Democrat allies often claim they want to raise taxes only on those Americans they deem “rich.” What they forget to mention is that among the 20 new or higher taxes in Obamacare, at least seven directly hit families making less than $250,000 per year. Below are the top five worst:
1. Obamacare Flexible Spending Account Tax: The 30 - 35 million Americans who use a pre-tax Flexible Spending Account (FSA) at work to pay for their family’s basic medical needs face a new Obamacare cap of $2,500. This will squeeze $13 billion of tax money from Americans over the next ten years. (Before Obamacare, the accounts were unlimited under federal law, though employers were allowed to set a cap.) Now, a parent looking to sock away extra money to pay for braces will find themselves quickly hitting this new cap, meaning they would have to pony up some or all of the cost with after-tax dollars.
Needless to say, this tax will especially impact middle class families.
There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. Nationwide there are several million families with special needs children and many of them use FSAs to pay for special needs education. Tuition rates at special needs schools can run thousands of dollars per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. This Obamacare tax increase will limit the options available to these families.
2. Obamacare High Medical Bills Tax: Before Obamacare, Americans facing high medical expenses were allowed a deduction to the extent that those expenses exceeded 7.5 percent of adjusted gross income (AGI). Obamacare now imposes a threshold of 10 percent of AGI. Therefore, Obamacare not only makes it more difficult to claim this deduction, it widens the net of taxable income.
According to the IRS, approximately 10 million families take advantage of this tax deduction each year. Almost all are middle class: The average taxpayer claiming this deduction earned just over $53,000 annually. ATR estimates that the average income tax increase for the average family claiming this tax benefit will be $200 - $400 per year.
3. Obamacare Medicine Cabinet Tax: Because of Obamacare, since 2011 millions of Americans have not been able to purchase non-prescription, over-the-counter medicines using pre-tax Flexible Spending Accounts or Health Savings Accounts dollars. Examples include cold, cough, and flu medicine, menstrual cramp relief medication, allergy medicines, and dozens of other common medicine cabinet health items.
4. Obamacare Individual Mandate Non-Compliance Tax: Anyone not buying “qualifying” health insurance – as defined by President Obama’s Department of Health and Human Services -- must pay an income surtax to the IRS. The Congressional Budget Office has estimated that six million American families will be liable for the tax, and as pointed out by the Associated Press: “Most would be in the middle class.”
Americans liable for the tax will pay a percentage of their adjusted gross income or a set dollar figure, whichever is higher:
5. Obamacare 10 Percent Excise Tax on Indoor Tanning: This Obamacare tax increase has the distinction of being the first to go into effect (July 2010). Slipped into the bill by Sen. Harry Reid (D-Nev.) behind closed doors in the middle of the night, this tax hike replaced the planned Obamacare “Botax” on cosmetic surgery. This petty, burdensome, nanny-state tax affects both the business owner and the end user. Industry estimates from the Indoor Tanning Association show that 30 million Americans visit an indoor tanning facility in a given year, and over 50 percent of salon owners are women. There is no exception granted for those making less than $250,000 meaning it is yet another tax that violates Obama’s “firm pledge” not to raise “any form” of tax on Americans making less than this amount.
Making matters worse: According to a Treasury Inspector General for Tax Administration report, the Obama IRS didn’t bother to issue compliance guidelines until three quarterly filing deadlines had passed: “By the time [IRS] notices were issued, tanning excise tax returns had been due for three quarters." This was an early warning sign that the Obama administration was ill-prepared for Obamacare implementation.
Photo credit: Barack Obama
In Europe they keep prices for health services low, also medicine, because they put some caps on the markets. Without that - markets go mad.
I know people don't like that.
101 Years of the Federal Income Tax
The 101-year history of the federal income tax has been marked by more and more taxpayers paying higher and higher amounts of tax.
"The American income tax is perhaps the most dramatic example of how government grows at the expense of liberty," said Grover Norquist, president of Americans for Tax Reform. "Slowly. Constantly. Inexorably."
As Americans finish yet another tax filing season, let’s take a look at how the income tax became the raw deal it is today:
Whenever some liberal politician suggests a new tax on "The Rich" it should be pointed out how many taxes that started out that way now hit the middle class - and lower. Alternative minimum tax, income tax, so called luxury taxes. The list goes on and on ....
Gov never to spend within their supposed budgets & alway wanting more of YOUR $'s
Running amok for all these years.