Talking Shop Blog

The IRS is required to provide a “Paperwork Reduction Act Notice” with the instructions to the 1040 tax booklet.

The PRA Notice also applies to business returns, including Form 1120s for S Corporations and Form 1065 for partnerships and LLCs.

The March 15 corporate deadline is coming up so we were wondering – just how long does it take the prepare the return? Of course that includes record keeping and learning the tax law.

Here’s what we found out:

There’s no column for total hours - it adds up to 155 hours and 23 minutes.

But that doesn’t include the required Schedule K-1. Add another 25 hours and 44 minutes.

And if you have to file Schedule M-3 – that’s another 72 hours and 19 minutes.

The IRS welcomes comments and questions on their forms.

You can email them at *taxforms@irs.gov. (The asterisk must be included in the address.)

Enter “Forms Comment” on the subject line. Or you can write them at:

Internal Revenue Service, Tax Products Coordinating Committee,  SE:W:CAR:MP:T:T:SP , 1111 Constitution Ave. NW, IR-6526,, Washington, DC 20224.

Let us know what you hear back!

“The hardest thing in the world to understand is the income tax.”

                         – Albert Einstein

Google “tax simplification” and you get “About 288,000 results (0.17 seconds). ”

We’re all for tax simplification. But we don’t see it happening anytime soon.

That’s because Congress uses the tax code to help achieve its policy goals.

On the one hand, the Administration and Congress both want “corporate tax reform.” Lower the rates – and broaden the base (eliminate deductions and credits).

On the other hand, proposals for new or expanded tax credits and deductions are introduced in Congress on a regular basis.

Yesterday the Administration expressed interest in a tax credit for “angel investors” as one way to encourage financing of small entrepreneurships and start-ups in the early stages of operation.

At a business forum in Cleveland, President Obama singled out the angel investor tax credit – since it is early access to capital that can make or break a business,

An angel tax credit might be a great idea. But any new credit or deduction runs counter to tax simplification.

The tax code gets more complicated every time a new tax incentive is enacted into law.

Whatever form tax simplification takes down the road, it likely won’t be all that simple. We’ll still have deductions, credits and exemptions.    

Because the government won’t give up the power it now has to use tax subsidies to achieve its policy goals.

The IRS recently released its proposed budget report for fiscal year 2012.

Included is a request for over 1,000 new IRS employees needed to implement some provisions of the new health care law.

The Report notes that the new health care law “represents the largest set of tax law changes in more than 20 years, with more than 40 provisions that amend the tax laws.”

The IRS wants to hire 81 new employees to handle the tax reporting of 25,000 tanning salons, at a cost of $11.5 million. Tanning salons face a new 10 percent excise tax on indoor tanning services.

We’re not sure how much of the $11.5 million is allotted for sunscreen protection.

You can find the budget report at http://www.treasury.gov/about/budget-performance/Documents/CJ_FY2012_IRS_508.pdf

The Administration’s Budget Proposals includes tax cuts, “Revenue Changes”, “Tax Incentives” and “Loophole Closers”.

Of course what’s viewed as a tax incentive to some may be viewed as a tax loophole to others.

The home mortgage interest deduction is a tax incentive to encourage home ownership. But renters might view it as a tax loophole.

The proposed budget includes $370 billion in tax cuts for some.

And there’s $335 billion in tax hikes for others – through “Revenue Changes” and “Loophole Closers”.

The Administration’s Budget Proposal also includes a repeal of the new 1099 reporting provision.

That’s good news.

But that repeal means $9 billion in lower tax revenues for the federal government.

And the government was counting on that $9 billion to fund some provisions of the new health care law. 

Uh-Oh.

Momentum is building to repeal the expansion of the Form 1099 reporting provision under last year’s health care bill.

The provision would require businesses to file a Form 1099 Information Return with the IRS for each vendor they pay $600 or more over the course of a year.

The law as enacted places a substantial administrative burden on companies, both small and large.

The IRS estimates the average time needed to complete a single Form 1099-MISC at 16 minutes, although they say the actual time “will vary depending on individual circumstances.”

And that’s just for one form. Imagine companies that would need to file hundreds and thousands of forms.

Then there are the other costs, including paper, postage, envelopes and filing software, to name a few.

Bills have now been introduced in both the House and Senate that would repeal this burdensome requirement.

Stay tuned.