The IRS’s delay of the tax return filing season to July 15 has had no discernible effect on the costs of filing paperwork, despite a reduction in the number of forms used, according to a new study.
“Despite the first drop in the total number of IRS forms in five years, taxpayers are still projected to spend close to $200 billion per year complying,” said the July 13 study from the American Action Forum.
The study, conducted by the forum′s Dan Bosch and Gordon Gray, found that the total projected taxpayer cost associated with IRS paperwork compliance in 2020 is $196.7 billion, a 0.3 percent decrease from 2019. Meanwhile, the number of IRS forms has been reduced by 9 percent, from 1,337 in 2019 to 1,217, after two years of growth.
Between 2015 and 2019, the number of IRS forms increased by 55 percent and reached a high in 2019 but dropped in 2020. Despite the large one-year decline — which the study called the “most noteworthy″ change compared with 2019 — 2020 saw the second highest number of forms used since the American Action Forum began its annual study in 2014.
The estimated aggregate time burden required to complete IRS forms was about 7.98 billion hours in 2020, down slightly compared with last year, the study said, citing data from the Office of Management and Budget. That′s 52 hours per taxpayer, it said.
Roughly half of the decrease in forms stems from information collection reviews that were discontinued at the IRS’s request, according to the study. The remaining reduction comes from revisions in active forms over the past 15 months — including a 34-form drop for the U.S. business income tax return.
In terms of compliance costs, U.S. business income tax returns cost $61.6 billion, and U.S. individual income tax returns cost $33.3 billion in 2020, the study found.
Every year, 12 million filers spend an average of 279 hours to complete the U.S. business income tax return, while 173 million filers spend 10 hours completing the U.S. individual tax return, the study said.
New research from Investment Property Exchange Services states that in 2020, 22.3 million taxpayers filed after April 15 — compared with 7.3 million last year — and 42 percent of taxpayers said they didn’t know that the new tax day is July 15.