Internal Revenue Service Plans To Reduce Compliance Burden On Business

by Mike Godfrey, Tax-News.com, Washington

27 June 2001

The Internal Revenue Service (IRS) has undertaken a survey to measure the time and cost burden placed on business taxpayers when complying with federal income tax laws and regulations. Sponsored by the IRS's Large and Mid-Size Business Division (LMSB), the survey includes one version for business taxpayers and another for tax practitioners. Around 2,500 taxpayers and 2,000 practitioners have been randomly selcted from the IRS Business Master File.

In a statement released by the IRS, Larry Langdon, commissioner of the LMSB, said: 'We welcome this opportunity to hear directly from LMSB customers. Their survey feedback, should they choose to participate, will provide us with valuable information we can use to help meet their needs.'

LMSB has a customer base of approximately 225,000 business filers with assets in excess of $5 million. The aim of the survey is to collect information on businesses' costs relating to the external preparation of tax forms and documents. It will also help the IRS to analyse the time and cost that businesses spend on compliance activities within the company such as recordkeeping, purchase of tax software, internal preparation of tax forms and documents or any other income tax-related activity or product.

The survey also asks participants to identify provisions of the tax code that they have the most difficulty complying with as well as pinpointing areas of the compliance process where time and cost burdens could be reduced. 'We expect to use the survey results to identify areas where we can reduce the taxpayers' and practitioners' burden. I encourage anyone who is contacted to participate,' said Mr Langdon.

In order to ensure impartiality, the University of Michigan will independently conduct the survey. The university will quantify the burden by identifying the most and least burdensome aspects of the law, study the regulations and compliance process, and identify areas of potential burden reduction. Once the LMSB receives the report, the division will explore opportunities to reduce the burden on its customers.

According to the IRS, potential remedies such as streamlining the compliance process, simplifying forms and addressing recurring issues throughout the business community could be under consideration.

The survey is expected to be completed by September, 2001.

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