Federal Tax Administration and the Small Taxpayer

The actual or supposed complexity of substantive federal tax law has generated two unresolved administrative by-products of peculiar importance in the case of small taxpayers. In each of these circumstances the Internal Revenue Service (and in one, the Congress) has tended to default on its programmatic responsibility to facilitate payment by small taxpayers of no less and no more than they owe under the tax law. For too long and to too large an extent, these taxpayers, although completely bewildered and devoid of self-confidence in the conduct of their tax affairs, have had to fend for themselves, both at return time, and later-at the point of an audit-in dealing with personnel of the Internal Revenue Service (IRS or Service). In the first instance, concerning a small taxpayer’s dilemma at return time, the principal adverse consequence is suffered by the tax system itself (or by all other taxpayers viewed in aggregate), and the cumulative prejudice has now reached alarming proportions. In the second instance, of the relatively few small taxpayers audited after having filed returns, only the individual small taxpayer actually undergoing audit is likely to suffer prejudice from his dilemma. Both circumstances warrant remedial action.