With the implementation of the Affordable Care Act and other recent changes to the tax code, filing an annual return appears more complicated than ever.
For years, the working assumption was that once you hit a certain income bracket, you could no longer manage your own taxes. With wealth came added expense.
But now even middle-class and low-income workers are facing the strain of a tax code burdened with seemingly endless deductions and costs.
“That’s true,” said Perry Barnett, a CPA and partner at the Rushton & Company firm in Gainesville. “Even for someone with what they might consider a basic tax return ... I would think it would be difficult to self-prepare.”
Tim Evans, vice president of economic development at the Greater Hall Chamber of Commerce, agreed that the complexity of the tax code has grown too great for many individuals to file returns via software assistance programs like TurboTax.
And the process is becoming more difficult to manage for many individuals as budget cuts take their toll on the Internal Revenue Service.
The IRS budget has been cut by more than $1.2 billion since 2010, straining customer service and increasing the likelihood of errors in tax returns, according to agency officials.
While the old quip that no one likes taxes may hold true, “You could foster a worse environment,” Barnett said.
Wait times at local IRS taxpayer assistance offices are growing, and the IRS reports that less than half of calls for assistance to the federal agency will get through this year.
“We’re seeing the same thing,” Barnett said. “Now, they’re so limited that they can only do certain things in the office. It’s beginning to delay the resolution of a lot of tax issues. Where it used to take three or four weeks, now it’s taking months and years.”
With growing complexity, increasing caseloads and fewer staff, the inability to collect tax revenue or perform necessary audits grows more likely.
The IRS has about 5,000 fewer tax agents than it did five years ago, and agency officials estimate $2 billion in revenue will not be collected this year as a result.
In February, IRS Commissioner John Koskinen issued a statement calling for a restoration of funding to “counter five years of declining budgets for the IRS, which have deeply eroded our ability to provide critical services to taxpayers, offer appropriate tax enforcement protections and plan for future improvements.”
While individual tax filers are dealing with these unique challenges, small businesses are faced with additional levels of regulations and requirements.
Evans said frequent changes in tax law are costly to businesses that have to repeatedly adjust their long-term planning.
Taxes are a critical element of any business plan, and instability in the tax code can contribute to job losses, shrinking revenues and lack of investment.
“Businesses are looking for consistency in the rules from one year to the next,” Evans said.