National Taxpayer Advocate Releases 2004 Report to Congress

WASHINGTON -- National Taxpayer Advocate Nina E. Olson Tuesday released a report to Congress that identifies the complexity of the Internal Revenue Code as the most serious problem facing taxpayers and the IRS alike, according to a press release.

“Without a doubt, the largest source of compliance burdens for taxpayers and the IRS alike is the overwhelming complexity of the tax code, and without a doubt, the only meaningful way to reduce these compliance burdens is to simplify the tax code enormously,” Olson writes.

The report cites the alternative minimum tax (AMT), the earned income tax credit (EITC), and the large number of provisions designed to encourage taxpayers to save for education and for retirement as key illustrations of the problems of complexity wrought by the 1.4 million-plus word tax code.

The report praises the IRS for making major strides in several areas. With respect to the EITC, the report compliments the IRS for developing a positive strategic vision for administering the program, for discontinuing its use of confusing “combination letters” in EITC correspondence audits, and for improving the quality and clarity of its letters and notices.

It states that the IRS has continued to improve its toll-free phone service. It also finds that the IRS has initiated important innovations in correspondence imaging that should significantly reduce the number of lost or misplaced taxpayer submissions and lead to quicker processing and responses.

At the same time, the report notes that the IRS is trying to compensate for budget constraints by expanding its use of centralized and automated examination and collection processes and limiting processes that require human intervention or contact.

Read the full report here: http://www.irs.gov/advocate/article/0,,id=133967,00.html.

-- NYSSCPA.org News Staff

Posted on 1/12/05