Bureaucracy At Its Best

This is too rich; I just can't let this pass without comment. The AZ Republic has an article today that talks about the IRS and its tables that estimate the time required to fulfill our tax obligations. The article starts this way:

Using a computer program to figure income taxes takes longer than doing it by hand, the IRS claims, infuriating the tax-preparation software industry.

The accounting profession also is protesting the agency's estimates of the costs of having a professional calculate various types of returns.

The outcries are in response to what the Internal Revenue Service introduced in its latest tax instruction booklets as a new, "more accurate" method of estimating the time and cost of filing.

The reporter is referring to page 79 of the 2005 instruction booklet for the form 1040 that comes in the mail. Blame must be placed on the proper shoulders for this ludicrous schedule; Congress, in the late 1990's, mandated that the IRS must give taxpayers some comparative guidelines about the time required to prepare a tax return. It's supposed to be an average, and The Mister always points out that averages are made up of highs and lows; but I have yet to meet anyone, CPA or self-preparer, who thinks any part of these tables are accurate.

For example, a nonbusiness filer - which is defined as someone without a schedule C, E, F or Form 2106, which would be someone like my kids - is estimated to require 13.7 hours and $13 in cost (for pencils and erasers? Stamps?) to do their own return without the help of software. According to the tables, it would take them 2 hours longer WITH a computer program, and double the cost. And if a paid professional prepared their return, it would take her less time - only 7.6 hours - but she would charge $121.

Even from a standing start, (and I know that my offspring are exceptionally brilliant, and ought not be used for comparative purposes) I'm pretty sure that my daughters would beat that time by hours, including the time it took them to go buy the software. And I can guarantee that the only person who would take more time, not less, to do a tax return by computer rather than by hand, is someone of The Greatest Generation who isn't proficient in using a computer.

If you need a chuckle, read the rest of the article. The software companies are up in arms about this slander on their product, and my professional brothers and sisters find the cost estimates for professional preparation wildly inaccurate (if it really took a CPA the estimated 7.6 hours to prepare the above referenced return, they most likely would not be charging $16 an hour to do it). Of course, the tables don't distinguish between a CPA's prep versus H&R Block versus my cousin Sally who does returns in her garage, so it's inherently useless at the very start.

I've been a CPA for many years, in public accounting and in industry accounting; and I confess to a sick pleasure in completing tax returns. It's much like cleaning a bathroom: you start with a big mess, and when you're finished, there is order and neatness and you can really see the results of your work. Over these many years, I've watched the IRS cycle its image from the man with the black-rimmed glasses backed up by the sheriff ready to haul you to jail for tax evasion, to the "kinder, gentler" system complete with taxpayer advocates and low audit probabilities, and now the pendulum is swinging back to the dark side - look out, all you rich people who earn more than $100,000 a year or you folks who run a business, because you are in their sights - and I suppose there are a couple more cycles left in my lifetime. But these timetables have always been a joke. And as long as they keep publishing them, they will continue to be a joke. It's a fine example of good intentions gone awry.