<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Caroline Baum</p> <p>(Corrects description of IRS funding in fourth paragraph.)</p> <p>I bet you didn't know you had a taxpayer advocate at the Internal Revenue Service. Her name is Nina Olson, and she submits an annual report to Congress.</p> <p>The <a href="http://www.taxpayeradvocate.irs.gov/userfiles/file/2012-Annual-Report-to-Congress-Executive-Summary.pdf">2012 report</a> features some of the standard statistics popularized by tax-policy think tanks every April 15:</p> <p style="padding-left: 30px">-- U.S. taxpayers spend more than 6.1 billion hours a year complying with the 4-billion-word <a href="http://www.cch.com/TaxLawPileUp.pdf">tax code</a>.</p> <p style="padding-left: 30px">-- About 60 percent of taxpayers pay a professional to do the honors; another 30 percent rely on commercial software.</p> <p>Then there are some tidbits only the IRS could provide:</p> <p style="padding-left: 30px">-- Last year, the IRS had a backlog of more than 1 million pieces of correspondence.</p> <p style="padding-left: 30px">-- Only two of three callers looking for a real person actually connected with one.</p> <p>Nina (if she's my advocate, can I call her by her first name?) says tax complexity is the No. 1 problem facing U.S. taxpayers. No. 2 is the Alternative Minimum Tax. And guess what No. 3 is? "The significant and persistent underfunding of the IRS," which is the chief cause of taxpayer problems.</p> <p>The call for more funding would have been no surprise to the Nobel Memorial Prize winner James Buchanan, who died last week at the age of 93. The father of <a href="http://www.bloomberg.com/news/2013-01-09/james-m-buchanan-nobel-prize-winning-economist-dies-at-93.html">public-choice theory</a>, Buchanan understood that government officials act in their own self-interest, just like agents in the private sector. He certainly would have agreed with Nina that <a href="http://www.bloomberg.com/news/2013-01-11/to-simplify-taxes-start-by-standardizing-them.html">tax complexity and grotesque loopholes</a> are big problems for the U.S. As a supporter of a <a href="http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=3682">flat tax</a>, though, he most certainly would not have recommended a bigger IRS budget as the solution.</p> <p>Sorry, Nina. You let me down. I'll have to find someone who really advocates for me.</p> <p>(Caroline Baum is a Bloomberg View columnist. Follow her on <a href="https://twitter.com/cabaum1">Twitter</a>.)</p> <p>Read more breaking commentary from Bloomberg View at <a href="http://www.bloomberg.com/view/the-ticker/">the Ticker</a>.</p> </body> </html>