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Sen. Ron Wyden says Americans spend more than 6 billion hours and $160 billion to comply with federal tax laws
Everyone tries to quantify pain, whatever its form or cause. Researchers at the National Institutes of Health use a scale of zero to 10, with zero meaning pain free and seven through 10 reflecting "severe" to "disabling" pain.
We’re not immune from it either here at PolitiFact, where we rate statements on a six-step scale from blissfully True to a full-out, Pants on Fire ridiculous lie.
So it’s not surprising that politicians try it as well, especially on complicated topics like tax reform. Putting things in an easy-to-understand - and stark - manner is often the difference between building support and quietly fading away.
Which is why Sen. Ron Wyden said this on Jan. 24, 2011: "Americans spend 6.1 billion hours a year complying with tax law. It costs us $163 billion to comply with our tax laws annually."
That’s a lot of time and money -- and pain. It’s also something people of all walks of life can relate to since just about everybody fills out a tax form and almost everybody dislikes it.
But is it true?
Wyden hopes so since it’s a key element in promoting his plan for simplifying the tax code. To push his plan Wyden is building a case that would appear easy to win - the tax code is too complicated, to bulky and dense, and hard for even smart people to negotiate by themselves.
There’s plenty of data to support the idea.
According to the Internal Revenue Service itself, the tax code today is 3.8 million words compared to 1.4 million in 2001.
You want pain? Here’s some more.
The code now comprises 25 volumes and takes up nine feet of shelf space, the IRS reports. It’s also a full-employment plan. Two companies publish newsletters daily that report on new developments in the field of taxation; the print editions often run 50 pages to 100 pages.
Had enough?
There’s plenty more, including proof of what Wyden says - it’s complicated. "Ninety-percent of taxpayers rely on preparers or tax software packages" to do their returns, the IRS says. The agency also suggests that those bold souls who venture out alone might want to reconsider: "The IRS (help line) received 110 million calls in each of the last two fiscal years. That is a staggering number, and not surprisingly, the IRS was unable to answer more than 25 percent of them."
So it’s complicated. But Wyden’s comment is a whole new order of hardship since 6.1 billion hours translates to 695,870 years. That’s a lot of time, averaging 44 hours for every completed tax return.
It’s huge but it’s also correct.
The 2010 report from the National Taxpayer Advocate, the official - and independent - ombudsman for the IRS crunched the numbers for the 2008 tax year, which is the most recent year for which data is available.
"U.S. taxpayers and businesses spend about 6.1 billion hours a year complying with the filing requirements of the Internal Revenue code and that figure does not include the millions of additional hours that taxpayers must spend when they are required to respond to IRS notices or audits," the NTA reported.
It also agreed with the cost. The Advocate’s office "estimates that the costs of complying with the individual and corporate income tax requirements for 2008 amounted to $163 billion – or a staggering 11 percent of aggregate income tax receipts."
That’s good enough for us. As Tax Day approaches, we rate this claim True.
Our Sources
Sen. Ron Wyden, statement and press release, Jan. 24, 2011
Tax Foundation, general background, Jan. 29, 2011
National Taxpayer Advocate, annual report, Jan. 30, 2011
Internal Revenue Service, Jan. 30, 2011
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Sen. Ron Wyden says Americans spend more than 6 billion hours and $160 billion to comply with federal tax laws
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