From the department of “duh” department TaxNews.Com reports that National Taxpayer Advocate Nina Olson has criticized the way the IRS processes income tax and information returns, which, the report warns, leads to more overpayments and underpayments of tax than there need to be (emphasis added):
Under current procedures, the IRS processes income tax returns before it processes most information returns, including Forms W-2, Wage and Tax Statement, and Forms 1099, which report interest, dividends, and other payments. This sequence, Nina E. Olson’s report concludes, “makes little logical sense”.
The report highlights that, from the taxpayer point of view, the sequence leads to millions of cases where taxpayers inadvertently make overclaims that the IRS does not identify until months later, exposing the taxpayer not only to a tax liability but to penalties and interest charges as well.
[T]his sequence creates opportunities for fraud and requires the IRS to devote resources to recovering refunds that should not have been paid, and that it often cannot recover.
The article reminds readers of President Obama’s pledge to simplify the tax code:
Simplifying tax compliance so that the vast majority of individual filers can prepare their tax returns in as little as five minutes is one of President Obama’s tax policy goals, and he made several references to it during his election campaign in 2008. Indeed, he used a press briefing on the April 15 tax filing deadline day last year to reiterate his pledge to “greatly simplify” the U.S. tax code in the long-term.
So far, these remain aspirations rather than concrete policy, although the administration and Congress are expected to turn their attention towards tax reform in the coming months.
A five minute tax return? Good luck with that one, Mr. President. By the way, maybe the new iPhone tax preparation app would work for that.
Finally, here’s the Taxpayer Advocate’s recommendation:
[Ms. Olson] recommends that Congress direct the Treasury Department to prepare a report identifying the administrative and legislative steps required to allow the IRS to receive and process information reporting documents before it processes tax returns.
Olson calls for the appropriate administrative and legislative steps that will make pre-populated tax returns possible to be made within six years.
Related Posts:
- I Heart Nina Olson
- IRS Failed to Answer 22 Million Taxpayer Calls
- 5 Secrets the IRS Doesn’t Want You to Know
- National Taxpayer Advocate, Nina Olson, Delivers Report, Congress Pandiculates
- Taxpayer Advocate Scolds Unenrolled Preparers, Favors Regulation
- Taxpayer Advocate’s Recommendation: Go Easier on Taxpayers Experiencing Economic Hardship
2 responses so far ↓
1 False Refund Schemes and Backwards IRS Return Processing Rules // Jan 13, 2010 at 10:13 am
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2 octaxgeek.com // Jan 17, 2010 at 1:18 am
Congress cannot simplify the tax code, they are going to continue to use tax law to try and influence the way people work, invest, spend and vote. People just don’t realize how much they are taxed, and will continue to vote for whoever promises to have government solve all of our problems.
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