Tax Law Change Bumps Up Errors Made On US Tax Forms

by Leroy Baker, Tax-News.com, New York

28 September 2004

Changes in the tax law brought about by the 2003 round of tax cuts have caused errors to be made on almost 15% of dividend tax forms sent to taxpayers this year by Wall Street securities firms, a survey has found.

According to the Securities Industry Association, which polled firms representing 39 million clients, some 14.3% of the dividend tax forms showed errors, Dow Jones Newswires has reported.

The number of erroneous tax forms sent to taxpayers has grown since the SIA released findings of the partially completed survey in June, which showed a 9.5% error rate.

It is thought that this high error rate is being driven by firms having to reprogram systems to recalculate tax following legislative changes contained in the 2003 Jobs and Growth Tax Relief Reconciliation Act, which cut dividend tax from a maximum 38.6% to 15%.

The typical error rate on dividend tax forms is 5% to 8%.

Taxpayers are advised to amend any errors and refile their returns with the corrected information.

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