IRS’ Stand on Simplification of Tax Code

Last updated on April 10, 2022

Taxpayers, along with the IRS and politicians, are calling for the tax code to be simplified. According to a study published by the Joint Committee on Taxation, the tax code had 1,395,000 words in the tax code in 2001. A tax research organization in 2005 found the number of words in the tax code to be 2.1 million, meaning that since 1975, the number of words within the tax code has more than tripled.

Such complexity has caused taxpayers to make unintentional mistakes when preparing their tax returns. Those who can afford to hire tax professionals rarely submit their taxes themselves. The tax code’s complexity also allows some taxpayers to reduce their tax liabilities legally and illegally.

According to the IRS, more than 80 percent of taxpayers pay transaction fees to file their taxes, 60 percent pay tax preparers to file their taxes, and 22 percent purchase tax software to help calculate their tax liability.

Republicans and the Democrats are now working to simplify the tax code by removing all codes that are deemed unnecessary. The IRS wants there to be more clarity within the tax code so taxpayers can better understand their rights and obligations.

According to the IRS, “Taxpayers deserve a tax system that enables them to compute their tax liabilities fairly and transparently – not one that effectively requires them to compute their tax liability under two sets of rules (the regular rules and the AMT rules) and often to pay more tax under the AMT regime simply because they engaged in the “tax-avoidance behavior” of having children or living in a high-tax state.”

The simplification of the tax code will be a huge relief to taxpayers who will finally be able to understand their tax choices and make informed decisions. Considering tax reforms are being discussed by both political parties, there is hope that the process will begin soon.