The Internal Revenue Code is astonishingly complex, and the new policy changes are raising some of the greatest challenge facing taxpayers in the upcoming tax season. The complexity of the tax code also poses serious problems to the IRS, as recent congressional reports have uncovered challenges that the agency faces to administering and enforcing increasingly-complex rules. And unfortunately, it appears that politics are only making a burdensome bureaucratic process even more inefficient and difficult to comply with.
The Complexity of the Tax Code
There are no two ways around it: the federal tax code is extremely complicated. And unfortunately, it’s only getting worse. Congress has made nearly 5,000 individual changes to the Internal Revenue Code since 2001. That calculates out to a change occurring at least once per day.
The reason for so many changes is partly the work of policymakers and regulators working hard to try and craft effective fiscal policy. These representatives have to fund government activities through some avenue or another, and new or added taxes are one of the most common ways the government raises money for its operations.
The tax code is composed of nearly 4 million words spread across thousands of pages. This is far too much material for the average person to read and completely understand without having committed a career to the subject. With this many changes being implemented, taxpayers may find compliance a heavy feat to undertake without the assistance of a CPA.
The vast number of changes and the enormous size of the tax code have caused problems for taxpayers in the past and in the present. The IRS has implemented policies and procedures to help alleviate some of the problems associated with enforcing such a massive text, and one of its primary goals is improving voluntary compliance. However, it’s all too easy to be confused by the tax code, which is still undergoing changes as Congress and the IRS work together to refine tax policy.
Combating Confusion by Simplifying the U.S. Tax Code
It’s a fact, the tax code gets more and more complicated every year. Before long, many of us will be looking for professional assistance just to be able to file taxes in full compliance with all of the applicable codes and regulations. But even for those of us who tend to prefer to file our taxes on our own, a tax professional will become increasingly important for helping us sift through the important financial details of our annual returns.
Almost daily, politicians add new rules about claims, deductions, and exemptions, and various other things to the tax code. The National Taxpayer Advocate recently urged Congress to simplify the tax code immensely. Many of these recommendations require reducing the number of income exclusions, exemptions, deductions, and credits. But this is not the only way to reduce the taxpayers’ filing burdens. The IRS can boost compliance and the public confidence in just by reaching out to the public, holding meetings with constituents to discuss the complications presented by the existing tax code and find ways to address the issues already pointed out. However, doing all of this would be far easier if there weren’t so many political games being played out using the tax code.
Political Games Raise New Challenges
The innate complexity of the tax code is not the only concern for taxpayers. Policy makers and legislators also play their own games with the tax code by implementing new tax-related policies to benefit the interests of their states. In fact, some policymakers actually add to the flaws and complexities within the federal tax code. Crafty politicians play their own games with the existing tax code, weaving complicated intricacies and earmarks to provide funding for projects or industries that need attention in constituent communities.
In general, policymakers have to work within the existing tax laws to bring in capital to fund projects to benefit areas that are in desperate need of funding, like schools, roads, healthcare, and infrastructure. While many of these manipulations to the tax code are made with the truest intentions at heart, they also result from unnecessary challenges in complying with the tax code. As a result, the constant changes and manipulations of tax-related policies make compliance harder and harder.
Skip the game: work with a professional
The tax code has become increasingly complicated this year, due to the new tax policy reform passed at the beginning of the current presidential administration. Many taxpayers who had previously handled tax filing on their own or with the help of tax prep software may want to investigate some of these tax changes before taking on the personal responsibility and liability of preparing and filing their own taxes. Most of them will find that unless they are filing a simple W-2 with minimal exemptions, hiring a tax professional may be a better choice to avoid unintentional mistakes and a resulting audit.
Taxpayers attempting to honestly comply with tax policies have often fallen victim to unintentional error. This leads them to overpay on their tax bill or worse, becoming subject to an audit or enforcement action from the IRS for an accidental underpayment. An audit is something most taxpayers want to avoid, and working with a reliable professional is an effective way to protect oneself in the event of an audit.
When seeking out good tax help, many people who are used to going at it alone may not want to deal with the inconvenience and frustration of making an appointment and heading over to a tax preparers office. Instead, they can work with a Happy Tax CPA in the comfort of their own homes, which means they can get the assistance they need without the unnecessary inconvenience of the typical tax preparation service.
There are many complexities to the tax code, and at times such complexities have even stumped and frustrated the IRS. Over time, growing complexity and political games have made compliance with the tax code a tricky endeavor. As a result, more and more taxpayers are turning to qualified professionals like the licensed tax preparers at Happy Tax. Happy Tax’ services are so valuable and convenient, pretty soon they all smile when it’s time to file!