Our Tax System Complexity

[Lee B]

"Scholars, policymakers, and taxpayers themselves often cite complexity as one of the worst problems plaguing the tax system. Complaints include, among other things, that the Internal Revenue Code (the “Code”) is too long, too difficult to read, very complicated, and, often, unclear.  Among the many costs of tax complexity are (1) billions of hours of paperwork and stress that taxpayers face each year, (2) monetary costs that taxpayers bear when they hire advisors and purchase software to report their tax liability and file their tax returns, (3) difficulty that taxpayers encounter when attempting to claim tax credits and other benefits, and (4) challenges the IRS confronts when attempting to deter tax avoidance and evasion opportunities that tax complexity often creates.

 

As we have discussed extensively, one way in which the IRS manages tax law complexity is through a phenomenon we have called “simplexity” – the presentation of complex law to the public as if it is simple, without actual simplification of the underlying tax law. The IRS relies on simplexity in many plain language explanations of the tax law, such as IRS Publications and automated legal guidance (in the form of the Interactive Tax Assistant). Simplexity enables the IRS to explain the tax law in ways the public is more likely to understand, thereby fulfilling the IRS’s duty to help taxpayers comply with the tax law. However, simplexity has its own problems, including oversimplifying the tax law, and, ultimately creating a two-tier system, whereby sophisticated parties enjoy benefits from the underlying, complex law, which benefits are not available to the general public."

 

This is a great explanation of our convoluted tax system.  It does give us "job security"  but even at our level of knowledge

we don't  have the depth of expertise to exploit the loopholes buried deep in the code.

[Catherine]

Sent the above to a local colleague, who replied, "

Simplexity or Complexity?

To be or not to be"

To which, in a fit of poetical contemplation and with deep apologies to old Will, I responded:

"To be, or not to be, that is the question;

Whether 'tis nobler in the mind to suffer

The slings and arrows of contradictory tax laws,

Or to take arms against a sea of IRS auditors

And by opposing, end them. To file - to comply,

No more; and by comply to say we end

The heartache and the thousand natural shocks 

That 1040 presentations are heir to: 'tis a consummation 

Devoutly to be wish'd. To file, to comply;

To comply, perchance to amend - ay, there's the rub:

For in that compliance of amending what penalties may come, 

When we have shuffled off this tax filing season

Must give us pause - there's the respect

That makes calamity of so long a career."

[Margaret CPA in OH]

This is fantastic, Catherine!  It means you either have too much time on your hands at the moment or the muse struck you and resistance was futile.  I hope you don't mind that I share this, with attribution, of course!

[Lee B]

Yes Catherine, you have a real talent, perhaps there is another career in your future.

[Lion EA]

Back when the K-2 and K-3 first came out and I was trying to explain to a client, a summer theater actress, but lapsed into a Dr. Seuss-like poem re K-2 and K-3... she emailed back:

That's the difference between us - you think Dr. Seuss and I immediately go into dirty limerick mode.

When deciding who next they should screw,

The IRS knew what to do.

They designed with some glee

New K-2 and K-3

Nailing client and accountant, too!

[Catherine]

3 hours ago, Margaret CPA in OH said:

This is fantastic, Catherine!  It means you either have too much time on your hands at the moment or the muse struck you and resistance was futile.  I hope you don't mind that I share this, with attribution, of course!

Go ahead and share it, and attribution is fine. 

Yes, on occasion, the muse strikes, and it all just flows without effort. It struck this morning and off I went!

[Catherine]

I'm glad you enjoyed my little offering.

[JJStephens]

Loved it! But it also brought a momentary horrific flashback to freshman English when I had recite the original soliloquy in front of the class. Even all these years later... I shuddered!

[Randall]

12 hours ago, JJStephens said:

Loved it! But it also brought a momentary horrific flashback to freshman English when I had recite the original soliloquy in front of the class. Even all these years later... I shuddered!

Ha, my sophomore HS English class, we had to recite Marc Anthony's speech.  Friends, Romans, Countrymen, Lend me your ears.

 

[RitaB]

On 3/30/2023 at 1:20 PM, Catherine said:

I'm glad you enjoyed my little offering.

I recall you saying one time we were in the "softly whimpering" stage of tax season.  LOL.  Thanks for a pithy one liner I have remembered every year since.  I am also frequently heard saying:  "This is too stupid to be real."

[Lee B]

Rita, you have done it again, now I have a big smile on my face

[Catherine]

3 hours ago, RitaB said:

"This is too stupid to be real."

Sometimes the situation is too stupid not to be real.