Tax Talk
Tax Talk
Time to Simplify Taxes
Wow!
I knew that the IRS had a tough year and received lots of calls — over a thousand a second at some point in the tax season. That was shocking enough and then I saw the actual numbers.
The IRS actually answered more calls than in past years. They have always struggled to answer all the calls, but when the calls are 3 and 10 times the numbers from past years, there is no way they could have handled it.
Looking at the phone line for 1040 questions, this does not mean that 7.89 million people needed help in 2018. It means that the phone rang that many times. Remember that 2018 was just weeks after Congress changed the tax law and people were struggling with the new rules. Assuming 20% of the individuals were able to get through to an IRS person the first time they dialed a number, that means that 80% had to dial again. Continuing with the 20% success rate assumption, then 64% needed to dial a third time and 51% a fourth time. I suspect many people gave up after a while but 2.4M were helped.
For 2021, the number of calls was nearly 10 times the number in 2018. This was not just the same 2.5M calling multiple times. Clearly, millions more were looking for help. Looking at my own practice, it likely included people asking how much they were paid in stimulus, what happened to their 2019 tax return, why was their 2020 refund delayed, what do they do about unemployment, how do they handle PPP loans, and much more.
Many in Congress have screamed for a more simplified tax code. The reasons vary from the burden on taxpayers to the removal of loopholes and credits and deductions for people and businesses with lobbyists. I whole heartedly agree that we need a simplified tax code.
During the 2016 Presidential election, many candidates promised to simplify the code, even promising a postcard. (As I discussed in my book “The Voters’ Guide to Tax Policy,” a postcard will not be possible, but simplicity can be.) Instead, these same candidates passed the Tax Cuts and Jobs Act which added complications. While those were Republicans, the Democrats added complications in the American Rescue Plan Act. Together, both parties added complications during the pandemic with the CARES Act.
We are now facing a crisis in administration as evidenced by the number of calls looking for help. Congress needs to either simplify the tax code for both individuals and businesses and remove sections that are for special interests or seriously staff up the IRS and require finance and tax education in high schools. It seems to me that the former is easier and more efficient.
Friday, July 9, 2021
From IRS website