Confessions of an Amateur Tax-preparer

Tax (Photo credit: 401K)

Not long after I retired from my civilian job I was looking for a pastime activity that would keep my brain active and I decided to try being a volunteer tax preparer with the organization, VITA. It has always seemed to me that it would be some kind of cop-out not to be able to follow written instructions. I volunteered for tax season three years    running and it was interesting. I was a little disappointed to find that the “course” for volunteers was not really so much a course as it was a one-week blitzkrieg refresher for people who already knew the ropes, but I took it on as a challenge and I figure I did all right. Virtually all the other people in the class were old hands, having retired from the trade and in it simply for the psychic income. Nice people all. Fortunately, I have always done my own taxes, including the taxes on my sister’s disability trust, so I had that experience to fall back on.

Tax preparation is a large industry in this country. According to a U.S. News & World Report article last fall, there are about 800,000 people doing that, some 200,000 of whom are CPA’s. H&R Block alone hires about 100,000 seasonal workers every year. Reading this caused me to marvel at the implications of switching to a flat tax, as recommended by Herman Cain (9-9-9), Rick Perry (20% across the board), and mildly-praised by Mitt Romney. Yes, a flat tax would relieve a lot of frustration at tax time, but there would also be a million new unemployed, not to mention 435 frustrated Congress creatures left without a major means of tinkering!

Another thing I found in researching this subject is that while the think-tank Tax Institute issued a damning and widely-quoted report in 2005 that claimed that it costs 22 cents for every dollar the system collects, it simply isn’t true. Computer software has actually cut the time involved, something well-researched by former tax specialist Larry Walker, Jr. He points out that the trend to electronic returns has accelerated and is meeting success. He says that using software, a Form 1040 with Schedule A, plus a state return, takes about an hour to prepare and the fee “averages $150.” Now, to me and my depression-era instincts, $150 is still a lot of money, considering I can get my own software and follow the instructions, but isn’t it interesting that most people don’t consider the price unreasonable?  I thought it interesting to read some years ago that the Tax Commissioner himself did not do his own return, but hired it done. There might be a sandwich parallel to the concept: just consider the Subway hoagie: You pay about double the cost of ingredients for the privilege of standing there and telling someone else just what munchies to put on as they build your sandwich for you. That says a lot, doesn’t it?

No, it’s not the difficulty of the system itself that concerns me, but its opacity. The sheer complexity of the tax code defies logic and as soon as it starts to makes sense, I find it fools me. That’s because it isn’t designed to be intuitive, but rather is a massive patchwork of political manipulation that is permanently under construction. I found evidence during my work in the field that the body politic has accepted this reality. People would present their W-2’s, their 1099’s, their Social Security statements, and sometimes an incredible shoe box of miscellaneous paper, and then compliantly and patiently wait until I had entered the data. I don’t recall anyone ever wanting to vet their forms or question a single figure on the printed return – they only cared about the bottom line. The machine never lies. And, as far as I know, it never did – but where might this lead? We are venturing beyond control, it seems to me. Remember the scene from the movie of H. G. Wells’ novel, The Time Machine? Remember how the people of the future responded when the giant gong began beating? Yep, same look.  That’s why I felt even better for getting their thanks and that psychic income.  If not for me, some Moorlock might have done a worse job and charged them $150 in the bargain!