How bad is the tax code? Really bad. Don't take our word for it. Here is what
the IRS's own Taxpayer Advocate Service has to say: "The most serious problem
facing taxpayers — and the IRS — is the complexity of the Internal Revenue Code
(the “tax code”)."
Since 2001, Congress has made nearly 5,000 changes to the tax code--more than
one per day on average. The result of their handiwork is a four million word
monstrosity that nobody fully understands.
The Taxpayer Advocate says that, among other things, the tax code's
- makes compliance with the tax laws too difficult and time
consuming--individuals and businesses spend about 6.1 billion hours a year
complying with tax code filing requirements at a cost of $168 billion in lost
man-hours--a staggering 15% of aggregate income tax receipts
- requires a large majority of taxpayers to hire tax preparers or purchase tax
preparation software--the median cost for preparation of an individual tax
return is $258
- makes taxes impossible to understand, leaving many taxpayers unaware of how
their taxes are computed and what rate of tax they pay
- helps wealthy and sophisticated taxpayers avoid taxes, thereby contributing
to the tax gap estimated at over $385 billion
- undermines trust in the system by creating an impression that many taxpayers
do not pay what they owe--in a recent survey 73% of taxpayers said the wealthy
use means to avoid taxes that are unavailable to the not as wealthy, and
- overburdens the IRS by generating tens of millions of telephone calls to the
agency each year--last year, the IRS answered just two-thirds of calls from
taxpayers, and the average person who got through had to spend 17 minutes on
In 2012, the Taxpayer Advocate Service conducted a national survey of over
3,300 taxpayers who operate businesses as sole proprietors. Only 16% said they
believe the tax laws are fair. Only 12% said they believe taxpayers pay their
fair share of taxes. The Taxpayer Advocate said: "this extraordinary lack of
public trust in the method by which our government is funded is profoundly
To many beleaguered taxpayers, that might seem like an understatement.
To learn more about the tax code and find new deductions you can take, see Nolo's Tax area.