Although the prospects for enacting comprehensive tax reform have diminished significantly in recent weeks, the House and Senate tax-writing committees continue to work on parallel tracks on proposals to simplify the tax code in the hope that the political winds will shift in favor of action in 2014. In November, Senate Finance Committee staff unveiled three proposals to overhaul the nation’s tax code. Of significance to information professionals are the proposed reforms to the administration of the tax laws.
According to the committee, Americans spend more than 6 billion hours each year filing more than 150 million federal income tax returns. In addition, individuals and businesses each year file 1.4 billion information returns, such as Forms W-2 and 1099. Moreover, the committee notes, tax refund fraud through identity theft has because a significant problem, with nearly one-half million reported incidents in 2010 where a stolen identity was used to file a tax return and fraudulently claim a tax refund.
The proposed reforms to the administration of U.S. tax laws are intended to modernize tax administration, minimize compliance burdens, reduce tax-related identity theft, and shrink the tax gap. To accomplish those objectives, the proposals would simplify the tax-filing process and greater utilize technology, provide the IRS with new tools to combat tax-related identity theft and assist victims of this crime, and reduce the tax gap by increasing information reporting and providing the Internal Revenue Service with additional collection tools.
Feedback on the three discussion drafts is requested by Jan. 17, 2014. More information on the proposals can be found by clicking HERE.