While tax season is one of the most stressful times of the year for many Americans, a new report shows that the complex and repetitive U.S. tax structure isn't making the process any easier for filers.
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National Taxpayer Advocate Nina Olson released a recent “roadmap” of the U.S. tax system – which illustrates everything from the processes whereby taxpayers obtain answers to questions, to how audits and appeals are handled.
“Anyone looking at this map will understand that we have an incredibly complex tax system that is almost impossible for the average taxpayer to navigate,” Olson wrote. “I personally have spent dozens of hours designing and preparing this map, as have many members of my staff.”
Olson added that the IRS would make an interactive map in order to help taxpayers over the coming months.
She has also advocated for the introduction of a “taxpayer anxiety index,” which would help identify the taxpayers who would benefit from a person-to-person conversation with an employee – rather than being pushed off to automated calls or the IRS website. The latter, she noted, can cause an already anxious taxpayer to feel dissatisfied and lose trust in a service provider.
The IRS watchdog also released a report on the Earned Income Tax Credit (EITC) last week. The EITC aims to subsidize working families with low-to-moderate incomes, who generally receive a credit equal to a percentage of their earnings – up to a certain maximum amount. A substantial portion of the support is awarded to workers with qualifying children, while support is given at varying levels. Married couples with more children tend to receive more money.
Olson noted that the way the IRS has been administering the EITC “often harms the very taxpayers it is intended to serve.” Her recommendations include putting a larger focus on benefits administration and having Congress reconsider the EITC design.
The tax credit became a focus on Capitol Hill earlier this year, following reports that the IRS made overpayments in 2018 of more than $18 billion – some of which were likely the result of fraud. People who claimed the EITC were also twice as likely to be audited by the IRS than those with incomes between $200,000 and $500,000.
IRS Commissioner Charles Rettig said that complications surrounding the EITC have arisen because it is a “very complex” part of the internal revenue code.
Olson is scheduled to retire from her post at the end of the month.