Tax time is probably the least favorite time of the year for most people. I know it is for me as I just spent hours organizing my business taxes and will spend several more hours organizing my personal taxes. One of the most irritating forms is the 940 Employer’s Annual Federal Unemployment Tax Return. This return requires a payment of $42.00 if the employee was paid at least $7,000. Really. So for $42.00 per employee the employers have to fill out and send this form to the IRS. I have only one employee. So for a whopping $42 a government employee has to open the envelope, flatten out the form, probably scan it in, write for deposit only by the IRS on the back of the check, take the check to the bank, the bank then processes the check. Ok maybe they can skip a couple steps but it is still not worth $42.
Another cumbersome form is the 1096 transmittal form for the 1099. The transmittal form is required to be printed on an original red form only available from the IRS or authorized providers. The IRS says the reason is the IRS scans the forms and it has to be the original red form. Does someone have a lucrative contract to print the red forms and provide these archaic scanners? Yes you can now file electronically but not everyone has this set up.
So how much time and money do we spend on taxes? A 2017 study from conservative group American Action Forum AAF) says American taxpayers spend 17 hours on average completing their personal tax paperwork. “The individual income tax generates 2.6 billion hours of paperwork from roughly 150 million tax filers. This equates to 17 hours per response, or roughly two work-days dedicated to tax returns,” according to Sam Batkins, director of regulatory policy at AAF. The group also found that companies spend about 275 hours each preparing their taxes. The IRS says the cost of tax paperwork for businesses and individuals comes out to $86 billion, but AAF says their estimate puts it as high as $170 billion annually. Why do we have a tax code so complex even the people who work for the IRS don’t understand it and can’t explain it.
The bottom-line is working on taxes does not make individuals or companies a penny. It is a complete waste of valuable resources. There are many better ways to use this time and money.