Americans Spend A Billion More Hours Preparing Tax Returns

by Mike Godfrey, Tax-News.com, Washington

16 April 2004

Whilst recent tax changes may have brought financial gains to many Americans, a new study has found that changes to the tax code have added one billion extra hours to the annual paperwork burden on US taxpayers, according to the National Taxpayers Union.

"Federal income tax rates have often risen and fallen, but the complexity of the tax system itself has almost always gone in one direction -- upwards," explained NTU Senior Counsellor and study author David Keating, adding that: "Even though paying taxes is still the biggest pain for Americans, the very process of filing taxes has become a major headache in itself."

According to the NTU, it now takes the average American 28 hours and 30 minutes to prepare the 1040 "long" form with the three common Schedules A, B, and D, an increase of 34% since 1995. The 1040A, or "short" form, along with the common Schedule 1, takes nearly as long to prepare (11 hours, 32 minutes) as the long form did just nine years ago.

The NTU also calculates that the increase in the tax law's complexity has added roughly 1 billion hours in annual paperwork burdens over the last 10 years, and estimates the overall paperwork burden at a massive 6.7 billion hours per year.

It also points out that the 131 pages of instructions for the standard 1040 form is roughly double the length that it was in 1985, and more than triple the length of the 1975 instructions.

This added complexity has seen the growth rate of returns prepared by tax professionals reach a record 62.1% (as of April 2 of the current 2003 tax year). Counting computer-prepared returns, that figure would rise to 88.4%, says the NTU.

With the Alternative Minimum Tax ensnaring ever more taxpayers into its net, Keating forecasts that the problem is likely to get much worse in years to come.

"In the coming years millions of Americans will face complex phase-outs from the 2001 and 2003 tax cuts, along with sharply higher Alternative Minimum Tax burdens. Congress and the President must work to reform the law and finally put a stop to this taxing trend." he concluded.

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