Too intimidated to fill out your tax return without help? Join the club.
At nearly four million words, the US tax law is so thick and complicated that businesses and individuals spend more than six billion hours a year complying with filing requirements, according to a report Wednesday by an independent government watchdog.
That's the equivalent of three million people working full-time, year-round.
"If tax compliance were an industry, it would be one of the largest in the United States," says the report by Nina E. Olson, the National Taxpayer Advocate.
The days of most taxpayers sitting down with a pencil and a calculator to figure out their taxes are long gone, Olson said. Since 2001, Congress has made almost 5,000 changes to US tax law. That's an average of more than one a day.
As a result, almost 60 per cent of filers will pay someone to prepare their tax returns this spring. An additional 30 per cent will use commercial software. Without the help, Olson says, most taxpayers would be lost.
"On the one hand, taxpayers who honestly seek to comply with the law often make inadvertent errors, causing them to either overpay their tax or become subject to Internal Revenue Service (IRS) enforcement action for mistaken underpayments," Olson said. "On the other hand, sophisticated taxpayers often find loopholes that enable them to reduce or eliminate their tax liabilities."
Olson ranks complexity as the most serious tax problem facing taxpayers and the IRS in her annual report to Congress. She urges lawmakers to overhaul the nation's tax laws, making them simpler, clearer and easier to comply with.