Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 9, 1992 TAG: 9202080175
SECTION: BUSINESS PAGE: 1 EDITION: METRO
SOURCE: JOHN LEVIN {LEAD} Last year, 46 percent of us laid out our financia
DATELINE: LENGTH: Medium
COMPLEX LAWS TAX OUR ABILITY TO DO OWN RETURN.
JOHN VIN ast year, 46 percent of us laid out our financial lives to a storefront tax preparer, accountant or tax lawyer and forked over $50 to more than $300 each to do the paperwork.Conceding there's no option about paying income taxes, why do we add insult to injury by paying someone to deliver the bad news?
Confusion. Fear. Impatience. Greed. And perhaps the government itself, which makes the job increasingly difficult and time consuming by fiddling with the tax code every year.
America has among the world's most complicated tax laws, said William E. Williams, former deputy commissioner of the Internal Revenue Service and now an assistant to the president of H&R Block Inc.
That Kansas City, Mo., company prepares returns for about 17 million people every year, claiming to be the country's largest tax preparer. Williams is on a public relations tour and Friday will visit Roanoke, where the company operates seven stores and employs about 160 people in peak tax season.
Unlike other countries that use their tax systems simply to generate revenues, Williams said the U.S. mixes political and social goals with the economic objectives of taxes. Child care is a good example of Congress addressing a social issue through the tax system, he said.
For the average family, the child-care credit saves a few dollars, but filing the special form to claim it adds an hour of work, based on IRS estimates.
"Things like that complicate our tax system," Williams said, "and I don't see our tax laws getting simpler."
Indeed, "this industry grew out of the fact that the law is so complex that people feel more comfortable getting somebody else do the work," he said.
"Tax laws are updated on a weekly basis," said Roanoke accountant W. Hope Player, counting regulations based on the law, technical corrections from the IRS and rulings by tax courts. "The impact is that nothing is static," she said. A typical Roanoke family, facing 15 hours and 49 minutes this year to keep records and prepare tax returns, likely to seek professional help.
Player said she is seeing many new clients; people who used to prepare their own returns are finding changes in their lives - marriage, divorce, refinanced mortgages - are complicating their taxes as well.
And owners of small businesses are too busy doing those jobs to stay on top of laws that affect a significant portion of their earnings, she said.
Long gone is the time when the average taxpayer could walk into an IRS office and expect clerks to fill out the forms. In the past 25 years, that service has been reduced to IRS workers volunteering after hours and on weekends to process forms for the elderly, handicapped and those who do not speak English. The rest of us are offered usually busy phone numbers and recorded messages.
It's no surprise, therefore, that a private industry has blossomed, producing tax software for personal computers and 900-telephone numbers that provide advice at $3 a minute.
The trend toward electronic filing also has led more people to tax services whose computers are linked to the government's. Last year, 7.5 million returns were filed electronically, up from 25,000 when that program began in 1986.
The IRS gets the chief benefits of electronic filing because the computer program catches mathematical errors, reducing the need for follow-up calls and letters to citizens.
But taxpayers have been sold on the concept of normally getting refunds faster if they pay a processor to file returns via computers.
And with the average American getting $925 back from the government, "we've got a refund psychology," Wiliams said. "We use withholding as an unofficial savings account."
The factor both the IRS and tax preparers tend to avoid is fear. But clearly, many Americans seek help with tax returns because they fear incurring the government's wrath.
"We don't want people to be fearful," said Jennifer Toth, spokeswoman in the IRS office in Richmond. "If they receive correspondence from us, the most important thing is to get back to us quickly," she said.
But "the IRS has a lot of power," Williams said, nothing that a surprising number of Americans overpay their taxes.
With computers now matching tax returns with withholding statements filed by employers and other sources of income, there's a 90 percent chance of the government spotting even a simple error.
Those are odds most Americans wouldn't want to be caught on the down side of.