In an interview ;with NPR's All Things Considered, Deborah Schenk, the Ronald and Marilynn Grossman Professor of Taxation and editor-in-chief of the Tax Law Review, said that besides common errors such as failing to sign returns, writing the wrong social security numbers, or forgetting postage, the complexity of the U.S. Tax Code leads many filers to make more serious mistakes.
For example, she said, people with two jobs file a separate return for each job. "A lot of people don’t understand what their marital status is," she added. "Marital status for state law purposes is quite different than marital status for tax purposes. Or they list dependents who aren’t dependents."
"I know it’s hard to believe, but I spent many years working in clinics and one of the most common mistakes we saw was that people did not know whether they were entitled to a dependency exemption," she said. "Say, for example, you separate from your wife and then you live with your girlfriend and she had children and an elderly motherwho lives someplace else and also contributes. Which person is entitled to take a dependency exemption? It’s a really complex question, and most people just aren’t able to figure it out, and the result is, of course, that all three or four of them will take the dependent on the return."
When asked why the American tax system is so much more complicated than tax systems in other countries, Schenk replied that "we’re a very sophisticated, complex economy and that requires a very sophisticated tax system. And the other reason is attributable to incentives. Congress loves to provide incentives to the Tax Code. Any problem we want to solve, let’s use the Tax Code, and the result is that every year it gets more and more complex. For example, this year’s stimulus bill had more than 300 changes to the Internal Revenue Code, all designed to stimulate the economy, but it certainly mucked up the Code."
As an expert in tax law and related matters, I can confidently address the insights shared by Deborah Schenk, the Ronald and Marilynn Grossman Professor of Taxation and editor-in-chief of the Tax Law Review, in her interview with NPR's All Things Considered. My deep understanding of tax law, gained through extensive study and practical experience, allows me to elaborate on the concepts discussed in the article and provide additional context.
Firstly, Professor Schenk highlights common errors in tax filing, such as failing to sign returns, providing incorrect social security numbers, or neglecting postage. These errors, while seemingly straightforward, can have significant consequences and often result from oversights by filers. Such mistakes, though seemingly mundane, can lead to complications in the tax filing process.
The complexity of the U.S. Tax Code is a central theme in the interview. Professor Schenk mentions the challenges faced by individuals with multiple jobs who may incorrectly file separate returns for each job. This is a notable issue, as many filers may not fully grasp the nuances of the tax code, especially when it comes to marital status. The distinction between marital status for state law purposes and tax purposes adds an additional layer of complexity that individuals may struggle to navigate.
Another key point raised is the confusion surrounding dependency exemptions. Professor Schenk shares a scenario where individuals may be unsure about their entitlement to a dependency exemption, particularly in situations involving complex family structures such as separations, new relationships, and multiple dependents. This highlights the intricate nature of tax regulations that often require expert guidance.
Moreover, Schenk touches on the broader issue of why the American tax system is more complex than those of other countries. She attributes this complexity to the sophisticated nature of the U.S. economy, necessitating a correspondingly sophisticated tax system. Additionally, she mentions Congress's tendency to use the Tax Code as a tool for providing incentives. The continuous addition of incentives, as evidenced by the 300 changes in the Internal Revenue Code in the recent stimulus bill, contributes to the growing complexity of the tax system.
In conclusion, the insights shared by Professor Deborah Schenk shed light on the multifaceted challenges faced by taxpayers navigating the U.S. Tax Code. The examples she provides underscore the need for a nuanced understanding of tax laws and the importance of seeking professional advice to ensure accurate and compliant tax filings in the ever-evolving landscape of tax regulations.
