At the request of National Taxpayer Advocate W. Val Oveson, the AICPA tax executive committee recently provided a list of the 24 most serious problems encountered by U.S. taxpayers.
Complexity of the current tax law topped the list. We dont need a new tax code, said David A. Lifson, chairman of the tax executive committee. We need a tax code that is simpler.
Reiterating a position that the AICPA tax division has held since the late 1980s, the executive committee called for simplification of the code, saying that its complexity is the source of often overwhelming confusion and frustration for taxpayers. Simplification of the tax law should be everyones responsibility: lawmakers, regulation writers, judges and administrators.
| Top Taxpayer Gripes |
The AICPA recently named the most serious problems taxpayers encounter. |
Tax law complexity
Standards for raising an issue in an IRS examination
Problems with notices
Procedures for examination
Power of attorney issues
Unrestricted extensions of the statute of limitations
Delays in case resolution
Inconsistency in implementing IRS policies
Lack of notice of intent to offset
Misapplied estimated tax and other payments
Interest computations
Penalty administration
Retroactivity of regulations
Offer in compromise issues
Slow response on freedom of information requests |
IRS employees lack of training, practical business sense and understanding of taxpayer viewpoints
Reluctance of practitioners to contact the local taxpayer advocate for fear of reprisals
Lack of adequate representation in small cases before the Tax Court
Need for further safeguards for divorced or separated spouses and married persons in community property states
Inability to take certain employee plan/exempt organization issues to the Appeals Office
Rigid policies regarding technology
Delays in expansion of IRS test programs
Unified audit procedures issues
Lack of cross-communication between functions within the IRS | | |
From a policy standpoint, however, the link between equity and complexity in the tax code makes simplification difficult.
Simplicity and fairness are tradeoffs, explained William Stromsem, a director in the AICPA tax division. The fairer you make the tax code the more complex it becomes. The simpler you make the tax code the rougher the justice.
Lifson also offered an explanation of the dilemma: There is an eternal triangle in Congress consisting of the conflicting goals of fairness, simplification and economic policy, which all get in the way of one another.
There are hundreds of rules dispersed throughout the code that attempt to give tax benefits to particular groups, he said. The more targeting you do the more complex the tax system becomes.