Taxpayers Are Baffled, Activist’s Report Says

The U.S. tax code has become so complicated that millions of individuals can’t even figure out how to properly report their family status and dependents, the government’s taxpayer representative reported Thursday.

And that’s just one of many problems the nation’s 132 million taxpayers face today, largely as a result of unintended consequences of piling tax changes on top of one another over the years, Taxpayer Advocate Nina Olson said in a report delivered to Congress.

Among the problems:

* The many definitions relating to family status, including three separate definitions to claim a child for purposes of various tax credits and deductions.

* The alternative minimum tax, established to ensure that wealthy taxpayers paid at least some tax. Now taxpayers earning as little as $50,000 are affected.

* The sorry state of IRS toll-free telephone help. Taxpayer Advocate offices handle thousands of calls each month from individuals who couldn’t reach the IRS’ toll-free help or were uneasy with the accuracy of the advice they received.

Olson acknowledged that there appears to be little legislative support for tax simplification, but says it needs to be addressed.