Experts offer advice for making tax time less complicated

On Balance with Leland Vittert

CHICAGO (NewsNation) — Taxes are due at midnight Monday. And while tax season has never been dubbed the most wonderful time of the year, it is more complicated now than ever before.

“The IRS right now is in a crisis that it’s never seen before,” said Ryan Ellis, a senior tax adviser at Family Business Coalition. “It’s never been this bad. I’ve been involved in the tax industry for over 20 years and people that are much older, more experienced than I am agree with me. It’s never ever been this bad that people can remember.”

Ellis joined “On Balance With Leland Vittert” ahead of Monday’s deadline to help make sense of why taxes have become such a headache.

Tax law

The U.S. tax code is longer than the Bible. The code is just over 1 million words; The King James Bible comes in at 788,000.

“The reason why tax season is such a headache for people is mostly because Congress has made the tax law so complex, and the IRS doesn’t help,” Ellis said.

And Congress is often adding new wrinkles. For example, at this time next year you’ll be filing 1099-K forms for selling things on Venmo or PayPal that previously may not have triggered a tax document at all.

“So every year something new and different comes up. That makes taxes a lot more complicated for people. Should it be easier? Yes,” Ellis said.

Customer Service Problems

One in five calls to the IRS gets answered. Already, refunds are going to take at minimum three weeks and could take three months depending on whether you file with paper or electronically.

Furthermore, the IRS is so short-staffed, there are entire websites devoted to tips on how to get a real person on the phone when you call.

Filing taxes also costs money. Though there is a free IRS tool for Americans earning less than $73,000 per year, Ellis said that leaves a lot of families out.

“If you’re a very simple taxpayer, if you’re somebody who just has a W2, job, a kid and a house — the usual stuff people have, you ought to be able to for free go onto the IRS website or to your state tax authority’s website and file your taxes online for free,” he said.

IRS is targeting low earners

New data released by Syracuse University shows the lowest-earning households — those making less than $25,000 a year — are five times more likely to get audited than wealthy people or any other income bracket.

The rate of poor people being audited nearly doubled in the past year, as taxpayers earning between $200,000-$1 million had only one-third the odds of being audited compared with those in the bottom income bracket.

The rise in audits for low-income earners comes even though overall rates for IRS audits are going down.

There are fewer households in that $25,000-or-less bracket than there are higher earners. The apparent imbalance in audits may circle back to the IRS being so under-resourced, as it is easier to go after the people who have less money because they’re using correspondence audits. Those are done by mail, and are simpler and cheaper than the face-to-face examinations needed for rich people who have complex investments and business dealings.

Last year, all but 100,000 of the more than 659,000 audits the IRS performed were done through the mail. Fifty-four percent of all those correspondence audits targeted people who made less than $25,000.

This comes even after President Biden pledged not to increase tax examinations for filers earning less than $400,000 and as he pushes to increase funding for the IRS by $80 billion over the next 10 years.

“Being audited is a really tough experience, especially if you don’t know what to,” said Shaquanna Brooks, founder and owner of Brooks Alliance, a diverse tax, financial services and accounting company, speaking on “Dan Abrams Live” Friday.

Brooks said taxpayers can even become nervous during these times.

“When taxpayers receive this correspondence audit, it’s most of the time computer jargon. Computer jargon is very technical and most taxpayers do not understand exactly what’s being asked of them,” she said.

Brooks said the IRS notice not only asks for obscure documents, but gives a general telephone number for taxpayers to call even though only 20% of these calls are being answered.

Making taxes better

Ellis shared some thoughts on how to improve the process going forward, suggesting a triage of sorts. Ellis suggested that the IRS for the next several years moves away from enforcement and audits and toward customer service and processing.

“One very tangible way you can make it better is take all the money that we give to the IRS for enforcement and audits right now, which they really frankly can’t handle, and move all that personnel and all those dollars over to people who can answer the phone and open the mail and process returns and get refunds out more quickly,” Ellis said.

“I think if you did that, and you had a surge that allowed the IRS to get back to its normal operating function, we would actually have what passes for normal at the Internal Revenue Service.”

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