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(Alexandria, VA) -- A decade of federal government tinkering with the Tax Code has added a billion extra hours to the annual paperwork burdens on American taxpayers, according to a comprehensive study of tax complexity conducted by the non-partisan National Taxpayers Union (NTU). Although the 2001 and 2003 tax cut laws put more money in millions of Americans' pockets, NTU found that the savings came with a price tag of their own -- a measurable rise in complex forms, instructions, and other compliance woes.

"Federal income tax rates have often risen and fallen, but the complexity of the tax system itself has almost always gone in one direction -- upwards," said NTU Senior Counselor and study author David Keating. "Even though paying taxes is still the biggest pain for Americans, the very process of filing taxes has become a major headache in itself."

The NTU study is the sixth major examination of Tax Code complexity the group has conducted since 1999, and thus provides a unique evaluation of how the income tax system has confronted citizens with new challenges year after year. Among the findings:

• It now takes the average American 28 hours and 30 minutes to prepare the 1040 "long" form with the three common Schedules A, B, and D, an increase of 34% since 1995. The 1040A, or "short" form, along with the common Schedule 1, takes nearly as long to prepare (11 hours, 32 minutes) as the long form did just nine years ago.
• Today's short form, at 48 lines, has double the number of lines on the 1945 version of the standard 1040 tax return.
• The increase in the tax law's complexity alone has added roughly 1 billion hours in annual paperwork burdens over the last 10 years -- part of the overall IRS-induced paperwork burden that is currently estimated at a staggering 6.7 billion hours per year.
• Today, taxpayers must wade through 131 pages of instructions for the standard 1040 form, which is more than triple the number in 1975 and over double the number in 1985, the year before taxes were "simplified." These estimates are probably too low since they ignore the countless hours spent on tax minimization strategies.
• The growth rate of returns prepared by tax professionals reached a record 62.1% (as of April 2 of the current 2003 tax year). Counting computer-prepared returns, that figure would rise to 88.4%.

Keating said that complexity is "likely to get worse before it gets better," because of the increased number of citizens who will be trapped by the "Alternative Minimum Tax" (AMT), a parallel tax system once aimed at ensuring the wealthy paid a substantial tax bill. By 2010, as many as 32 million taxpayers could be forced to complete a second tax return for (and pay) the AMT.

"In the coming years millions of Americans will face complex phase-outs from the 2001 and 2003 tax cuts, along with sharply higher Alternative Minimum Tax burdens," Keating concluded. "Congress and the President must work to reform the law and finally put a stop to this taxing trend."

NTU is a non-profit, non-partisan citizen organization founded in 1969 to work for lower taxes, less wasteful spending, and accountable government at all levels. Note: NTU Policy Paper 113, A Taxing Trend: The Rise in Complexity, Forms, and Paperwork Burdens, is available online at www.ntu.org.

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Related Links:

• Click Here for NTU Policy Paper 113

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