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Complex Laws Make Tax Filing Worse

April 18, 2006

• Tax Scams Proliferate In April • Mystery Shoppers Find Deceit, Incompetence Among Tax Preparers • Avoid Tax Rebate Direct Deposit Scam • Tax Rebate Goes Only to Those Who File • Instant Tax Refund Always Carries a Price • 'Instant Refund' Loans an Avoidable Expense • Tax Breaks for Family Caregivers • Court Shuts Down 'Warehouse Bank' • Don't Be Fooled By IRS Look-Alike Sites • IRS Warns of Common Income Tax Scams • Poor Americans Missing Billions in Earned-Income Tax Benefits • Complex Laws Make Tax Filing Worse • Paying Taxes With Your Credit Card Can Get Expensive • Senators Push for Electronic Tax Filing • IRS Warns of Tax Scams • Taxtime - Tips for Taxpayers • Don't Overlook Earned Income Tax Credit • Tax Refund Loans "Indefensible" • H&R Block Goofs on Its Own Taxes • Class Action Challenges H&R Block's Electronic Filing Fee • Don't Ignore Tax Payment Problems --- • More about tax preparation ...

By most measurements the burden of filing federal income taxes hasn't gotten any easier for Americans to bear, according to the non-partisan National Taxpayers Union's (NTU's) annual study of tax law complexity.

"Whether they choose to let pros prepare their taxes, or try the latest computer assistance, or go it alone with pen and calculator, Americans are paying a dear price in money and time because of our complex tax system," said NTU Senior Counselor and study author David Keating. "Recent tax relief laws have helped many taxpayers keep more of the money they've worked for all year, but the work of filing their federal returns at tax time has become a tiresome chore."

The NTU study is the eighth major examination of Tax Code complexity the group has conducted since 1999, thus providing a unique evaluation of tax-filing hurdles over time. Among the findings:

• The 1040 tax form with common Schedules A, D, and others will take the average taxpayer 37.8 hours to prepare this year -- with the assistance of a computer! Self-employed taxpayers filing the 1040 with small business schedules face an 80.2-hour completion task -- the equivalent of two weeks' paid vacation.

• For the second year in a row, roughly 9 out of 10 filers in 2006 appear to be using a paid preparer and/or a computer for assistance in filing their tax returns.

• Today, taxpayers must wade through 142 pages of instructions for the standard 1040 form and schedules, up from 128 pages last year, and more than double the number in 1985 -- the year before taxes were "simplified." These estimates are probably too low since they ignore the countless hours spent on tax minimization strategies.

• The total number of paperwork hours imposed by the Department of the Treasury exceeds 6.4 billion hours (most of which are IRS-related). Despite agency regulatory actions in fiscal year 2004 that reduced the paperwork mountain by 137 million hours, statutory changes by Congress piled 101 million hours back onto taxpayers.

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