Significant problems encountered by corporate taxpayers.

September 14, 1999

On September 14, 1999, Tax Executives Institute submitted the following comments to IRS National Taxpayer Advocate W. Val Oveson conveying significant problems encountered by corporate taxpayers in their dealings with the IRS. TEI's comments took the form of a letter from Institute President Charles W. Shewbridge, III, of BellSouth Corporation. The Institute's comments were prepared under the aegis of TEI's IRS Administrative Affairs Committee, whose chair is Robert J. McDonough, Jr., of Wang Global, Inc.

Section 101(a) of the Taxpayer Bill of Rights 2 mandates that the National Taxpayer Advocate report to Congress annually on the most serious problems encountered by taxpayers in dealing with the Internal Revenue Service. On behalf of Tax Executives Institute, I am pleased to respond to your request for comments on significant problems encountered by corporate taxpayers in their dealings with the IRS. You also asked us to respond to a draft report on the "top 20" problems identified in the recently completed filing season. We understand that these comments will be used in formulating your 1999 annual report.

As the preeminent association of corporate tax executives in North America, Tax Executives Institute represents a cross-section of the business community, and is dedicated to the development and effective implementation of sound tax policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. Our members are responsible for managing the tax affairs of their companies and must contend daily with the Internal Revenue Service and with the provisions of the tax law relating to the operation of business enterprises. Our comments focus on several areas where we believe improvements can be made to meet taxpayers' needs and expectations, and to minimize their administrative burdens.

The Perennial Favorite: Complexity of the Tax Law

Complexity of the tax law has been cited as the number one problem facing taxpayers since the Tax-payer Advocate's first annual report was issued three years ago. The draft filing season report also identifies complexity as the "most serious and burdensome problem facing America's taxpayers," explaining:

The yearly enactment of new laws as well as amendments to existing statutes creates confusion and misunderstanding. Even the use of computer programs does not eliminate the complex computations that a taxpayer often has to make to determine his or her tax liability. TEI agrees that complexity of the law -- including constant changes and amendments -- remains the primary impediment to the effective operation of the tax system and the efficient management of the IRS.

Some may fear that, like death and taxes, complexity will always be with us. At least in the case of large multinational corporations, that may well be true. But the complicated nature of today's economy should not be used as an excuse for not making the law simpler. Everyone -- Congress, the Department of Treasury, the IRS, tax professionals, and taxpayers -- bears responsibility for the current state of the law. We need to work together to find solutions.

Recent legislation requiring the IRS to provide an annual report to Congress on the sources of complexity in the administration of the Internal Revenue Code makes it more likely that the need for simplification will remain paramount in enacting legislation. Another step needed is consensus on ways to simplify current law. One area where consensus seems to be growing is the need to repeal the alternative minimum tax -- a system that requires taxpayers to compute their tax...