According to the former IRS National Taxpayer Advocate, W. Val Oveson, the complexity of the tax law "continues to be the most serious and burdensome problem facing America's taxpayers." Over the years, the Internal Revenue Code has developed into a web of maddening complexity manifested by vague or highly technical requirements, exceptions, limitations, and special rules. In addition, many of these provisions must be applied in tandem with other complicated provisions that even the most sophisticated of tax advisers can find difficult, if not impossible, to decipher. As the complexity of the Code has increased, so has the complexity of the regulations that the IRS and Treasury have issued interpreting the Code. The sheer volume of tax law changes has made learning and understanding new provisions difficult for taxpayers, tax practitioners and Service personnel alike. Some of the rules are so complex that even the IRS has trouble administering them.

Since our current tax system is confusing and cumbersome, many taxpayers have difficulty preparing their tax returns. This heavy burden of complexity affects the entire spectrum of taxpayers, from low-income individuals to multi-billion dollar corporations. It also impedes the continuing efforts of the Internal Revenue Service to better administer and enforce the nation's tax laws. Implementation of simplification measures would significantly reduce complexity for large numbers of both individual and business taxpayers, and have the concomitant effect of making the tax laws easier to administer.

The ABA supports the simplification of the tax laws to promote equity, efficiency and the need for revenue, and in a way that promotes understanding by all taxpayers.

Following the release of the report of the U.S. President’s Advisory Panel on Federal Tax Reform November 1, 2005, various legislation has been introduced in the 109th Congress to simplify or streamline narrow provisions of the Internal Revenue Code and its administration, including the meaningful reform of the Alternative Minimum Tax. Despite widespread support for simplification efforts, these measures have not been acted upon. In the case of the AMT, the proposal was considered too expensive to implement, and a one-year stop gap measure was adopted instead. Similarly, the Presidential Panel had made its own recommendations, such as the Simplified Income Tax Plan that would streamline filing, promote filer understanding, reduce administrative burden and improve efficiency of enforcement efforts. But the sweeping scope of these changes and of other proposals, taken in light of other overarching Administration priorities, have not been acted upon. Despite the lack of movement, Tax Simplification remains a priority of the Congress and the White House.

One additional aspect of simplification efforts is addressing the consequences of certain measures. While awaiting the Advisory Panel's report, the ABA had sent a letter to the House of Representatives and to the Senate in September 2005 commenting on the Tax Technical Corrections Act of 2005. A primary focus of the letter was the need to contemplate a particular unintended consequence consolidating the number of definitions for "child" under the Internal Revenue Code from five to just one, as embodied in The Working Families Tax Relief Act of 2004, Pub. Law 108-311.

In April 2006, the ABA filed letters and provided oral testimony on separate occasions supporting full funding and adequate staffing the Internal Revenue Service, and repeal of the personal Alternative Minimum Tax. More than a dozen bills currently before Congress purport to simplify or streamline some aspect of corporate or individual taxes albeit in ways the ABA does not specifically support or oppose except with regard to how they may ease certain burdens on the Internal Revenue Service or the taxpayer.

As Congress prepares for its work for the remainder of September, it is not clear whether midterm elections will provide sufficient impetus in light of other priority issues to move additional simplification measures. Congress currently anticipates adjourning by September 29, and returning in November for a "lame duck" session.

• Tax simplification is a critical component of an effective federal tax system. It is a crucial issue that affects low-income taxpayers as well as large corporations.
• The Internal Revenue Code covers over 2300 pages and is steadily increasing. As the complexity of the Code has increased, so has the complexity of the regulations that the IRS and Treasury have issued interpreting the Code.
• The sheer volume of tax law changes has made learning and understanding new provisions difficult for taxpayers, tax practitioners and Service personnel alike. Compliance with the tax code is seriously undermined when taxpayers do not understand the tax law.
• According to a 1999 poll conducted by the Associated Press, 66% of respondents said that the federal tax system was too complicated and 56% of respondents said that they pay someone to complete their income tax returns.

The American Bar Association supports the simplification of the tax laws to the maximum extent consistent with basic equity, efficiency, and the need for revenue, so that such laws can be easily understood and complied with by the taxpayers and fairly and consistently administered and enforced by the Treasury Department.