FEW THINGS are as terrifying as a letter from the IRS. The reason for this fear is justified — our tax code is so overly complex that it generally requires a professional to help average Americans in navigating the treacherous waters of the federal tax code. The reason that President Trump pushed the normal April 15th filing deadline back to July 15th is because of the COVID-19 crisis, many Americans simply could not meet with their accountants and tax preparers.
The tax code isn’t overly complex on accident — the entire point behind our tax code is to make it so complex that only the most rich and powerful are able to navigate it. Our tax code is a Byzantine maze of special interest loopholes. While the rich and the powerful are able to employ armies of accountants and lobbyists to twist the tax code to their advantage, average Americans, especially small business owners, are left wandering a regulatory minefield.
I know about the justified terror in receiving a letter from the IRS first-hand. I know how broken the system is, how stacked it is in favor of the rich and powerful, because I was once on the receiving end of an IRS action…and it’s not fun.
About a decade ago, I hired a supposedly well-respected accountant to handle my taxes. Unfortunately, despite his glowing recommendations, the income taxes that were filed on my behalf were grossly deficient. I was told, at the time, that every deduction was within the “legal and legitimate limits set forth by the IRS.” He was the professional, I was just out selling real estate so I signed the returns. Hindsight is always 20/20. Fast forward a few years and I received a letter from the IRS explaining that I was behind on my taxes and severe penalties and interest had accrued.
The review of my filings discovered that due to the wrongful actions of my accountant, I underpaid the IRS by about $70,000. With penalties and interest, and interest on the interest with more penalties added, the IRS stated I owed them over $300,000.
How did this happen? I did what I was supposed to. I hired a licensed professional. I paid the taxes he told me were owed and somehow, I am at fault? I get it, it’s my signature on the bottom of the filing. I’m the taxpayer, it is my responsibility at the end of the day. I’m the taxpayer who trusted a seasoned professional.
It took me years to finally settle the matter and make my repayments. It sounds strange saying it, but I was fortunate. Through the IRS Fresh Start Program, I was able to finally settle, and get my financial life back on track. I was able to pull myself out of that hole, many are not so lucky.
Like millions of other Americans, I quickly learned that the IRS doesn’t care if you hired an MIT mathematician or a Wall Street financial tycoon to do your accounting. If there is a mistake, they treat it like you simply decided not to pay. The system is simply too rigid and far too complex. No one deserves to go through that kind of stress and anxiety for no fault of their own.
It doesn’t have to be this way.
My solution: simplify the tax code. Let’s get rid of all of the unnecessary rules, loopholes and exceptions and have a fairer, simpler system where every American pays less and can file their taxes on something as simple as a postcard. I know that this idea will likely anger H&R Block, Turbotax and all of the Democrats that celebrate April 15th like it’s Christmas Day, but there is simply no reason that we need a 25-pound, 10,000-page tax code. Americans should not need to have an advanced tax degree to pay their taxes.
I am a strong believer in allowing taxpayers to keep more of their own money. The economy thrives when we are able to spend our money on the things that are important to us, not some bureaucrat in Washington. President Trump’s tax cuts were a great start. We should reauthorize and expand them. As part of that expansion I would propose going even further and work for a comprehensive overhaul of the entire tax codes.
New Hampshire has shown that you can cut taxes and reduce spending to balance the budget. It is time to send someone to Congress who shares those New Hampshire values. It is time to bring our hometown small-business principles down to the Swamp….and finally drain it.