Americans will spend 8.9 billion hours of their time at a cost to the U.S. economy of $409 billion to comply with IRS tax filing requirements in 2016 according to a new report from the Tax Foundation.
The report blames the staggering time and cost figures on the complexity of the U.S. tax code. It notes there are 7.7 million words of tax regulations and almost 60,000 pages of tax related case law combining to create a dizzying set of complexities that take up so much time and money to figure out.
The table below shows how the 8.9 billion hours of tax compliance breaks down among various entities. The bulk of the figure comes from business and individual compliance efforts.
| Table 1. Estimate Hourly and Compliance Costs of IRS Paperwork in 2016 | ||
|---|---|---|
| Form/Title | Total Annual Hours Burden | Total Annual Cost In Dollars |
| Top 50 Most-Costly Code Provisions | ||
| U.S. Business Income Tax Returns (1) | 2,832,500,000 | $147,431,625,000 |
| U.S. Individual Income Tax Returns | 2,647,000,000 | $98,680,160,000 |
| Income Tax Returns for an S Corporation (1) | 889,393,518 | $46,292,932,612 |
| Form 4562–Depreciation and Amortization (1) | 448,368,447 | $23,337,577,666 |
| Employer’s Quarterly Federal Tax Return (1 | 388,256,964 | $20,208,774,976 |
| Income Tax Returns for Estates and Trusts (1) | 375,796,476 | $19,560,206,576 |
| Form 940, FUTA Tax Return (1) | 105,295,370 | $5,480,624,009 |
| Form 4797–Sales of Business Property (1) | 100,633,248 | $5,237,960,558 |
| Schedule C: Profit and Loss from Business | 71,701,693 | $2,673,039,115 |
| Form 1099-INT, Interest Income | 63,059,438 | $2,350,855,849 |
| Proceeds from Broker and Barter Exchange Transactions (1) | 49,396,988 | $2,571,113,225 |
| IRA Contribution Information | 48,731,780 | $1,816,720,758 |
| Short Form Return of Exempt Organizations | 43,656,636 | $1,627,519,390 |
| TD 8864 Taxation of Fringe Benefits (1) | 37,922,688 | $1,973,875,910 |
| Distributions from Pensions, Annuities, IRAs | 37,519,860 | $1,398,740,381 |
| Form 8941 – Credit for Small Employer Health Insurance Premiums | 34,278,346 | $1,277,896,739 |
| Form 1099-DIV–Dividends and Distributions | 34,115,874 | $1,271,839,783 |
| 26 CFR 31.6001-1 Records in general; 26 CFR 31.6001-2 Additional Records under FICA | 30,273,950 | $1,128,612,856 |
| Heavy Highway Vehicle Use Tax Return | 27,120,040 | $1,011,035,091 |
| Foreign Tax Credit (Individual, Estate, or Trust) | 25,066,693 | $934,486,315 |
| W-8 BEN, W-8BEN-E, W-8EIC, W-8EXP, W-8IMY, W-8 MOU Program | 25,003,304 | $932,123,173 |
| Return of Organization Exempt From Income Tax Under Section 501(c), 527, or 4947(a)(1) | 24,951,529 | $930,193,001 |
| 1099-G Certain Government Payments | 24,709,380 | $921,165,686 |
| 1099-Miscellaneous Income | 24,639,062 | $918,544,231 |
| Form 8948, Preparer Explanation for Not Filing Electronically | 18,270,900 | $681,139,152 |
| Paid Preparer’s Earned Income Credit Checklist (Form 8867) | 17,824,793 | $664,508,283 |
| Reg-111583-07(TD 9405)(Final) — Employment Tax Adjustments; REG-130074-11 – Rules Relating to Additional Medicare Tax | 16,900,000 | $630,032,000 |
| Employer’s Annual Employment Tax Return | 15,702,300 | $585,381,744 |
| Split-Interest Trust Information Return | 15,152,550 | $564,887,064 |
| Form 2678 – Employer/Payer Appointment of Agent | 13,731,200 | $511,899,136 |
| REG-113572-99 (Final) Qualified Transportation Fringe Benefits | 12,968,728 | $483,474,180 |
| Form 990-PF | 11,054,637 | $412,116,867 |
| Employer’s Annual Tax Return for Agricultural Employees | 10,880,812 | $405,636,671 |
| Form 3800, General Business Credit | 8,345,000 | $311,101,600 |
| Mortgage Interest Statement | 8,038,699 | $299,682,699 |
| Profit or Loss From Farming | 7,845,596 | $292,483,819 |
| Form 8282, Donee Information Return; Form 8283, Noncash Charitable Contributions | 7,806,097 | $291,011,296 |
| Domestic Production Activities Deduction | 7,398,000 | $275,797,440 |
| Form 5300, Application for Determination for Employee Benefit Plan | 7,201,200 | $268,460,736 |
| Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan | 7,005,000 | $261,146,400 |
| Form 8825–Rental Real Estate Income and Expenses of a Partnership or an S Corporation | 6,288,600 | $234,439,008 |
| Publication 1345, Handbook for Authorized IRS e-file Providers | 6,023,762 | $224,565,847 |
| Exempt Organization Business Income Tax Return | 5,262,319 | $196,179,252 |
| Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans | 5,139,000 | $191,581,920 |
| Tuition Payments Statement | 4,848,090 | $180,736,795 |
| Quarterly Federal Excise Tax Return | 4,478,956 | $166,975,480 |
| Form 8957 – Foreign Account Tax Compliance Act (FATCA) | 4,446,476 | $165,764,625 |
| Form W-2G–Certain Gambling Winnings | 4,304,877 | $160,485,815 |
| Information Return of U.S. Persons With Respect To Certain Foreign Corporations | 4,280,244 | $159,567,496 |
| All remaining IRS regulations (1) | 285,801,030 | $10,654,662,398 |
| IRS Total | 8,906,390,150 | $409,241,340,626 |
| Source: Reginfo.gov and author calculations based on BLS December 2015 estimate of hourly compensation costs. (1) For large business forms and complex forms such as estates, Tax Foundation used an hourly compensation cost of $52.05 for professional and related workers. For all other forms, Tax Foundation used $37.28, the average compensation for all full-time private sector workers | ||
