Lawmakers Press IRS to Simplify Procedures, Help Entrepreneurs Utilize Tax Breaks

Washington (PRESS RELEASE – April 19, 2010) — As millions of Americans file their taxes, lawmakers pressed the nation’s top tax man about what the Internal Revenue Service (IRS) is doing to simplify compliance for small firms struggling with economic recovery. In testimony before the House Committee on Small Business, IRS Commissioner Douglas Shulman detailed outreach and education efforts designed to assist small business taxpayers. Members of the Committee said the agency should take additional steps to help small enterprises take advantage of recently enacted tax benefits.

“Helping entrepreneurs grow and create jobs has been a top priority for this Congress,” said Rep. Nydia M. Velazquez (D-NY), the Chairwoman of the House Committee on Small Business. “The IRS has an important role to play in ensuring entrepreneurs can tap into the Recovery Act and HIRE Act’s tax breaks, while also reducing the costs of complying with the tax code.”

During the hearing, lawmakers noted that, due to the Recovery Act, the IRS has sent out a record $175 billion in refunds with more expected to follow. The HIRE Act, which the President signed into law last month, provides additional relief with a job creation tax credit and Social Security payroll tax holiday for new hires. While these gains are important, lawmakers said the agency should be doing more to help entrepreneurs file accurate returns.

“Small businesses have to spend a disproportionate amount of time, money and manpower just to follow the law,” Velazquez said. “The IRS needs to start taking steps that simplify the process, so these resources can go toward expanding businesses and hiring workers, rather than navigating the tax code.”

Many small firms have complained that filing taxes requires filling out numerous, time-consuming forms. According to one study, small firms with less than $10 billion in revenues spent more than 1.7 billion hours on tax compliance, incurring out-of-pocket expenses of between $15 billion and $16 billion. Members of the Committee noted that making tax filing less complex would encourage compliance, while reducing costs for taxpayers.

“Making it easier to file taxes is a win-win,” Velazquez said. “It encourages compliance, resulting in more revenue while also making it less costly for businesses to follow the law.”

At the conclusion of the hearing, Velazquez said the Committee will continue to examine ways to improve the tax code and reduce its complexity for small businesses.

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