(CNSNews.com)– According to the Tax Foundation, it will take Americans 8.9 billion hours to comply with IRS tax-filing rules in 2016, which equals a compliance cost of about $409 billion.
In addition, the Tax Foundation reported that the U.S. tax code has grown from 409,000 words in 1955 to 2.4 million in 2015 – an increase of 486%.
The 8.9 billion hours of tax-filing, added the Tax Foundation, “is equal to nearly 4.3 million full-time workers doing nothing but tax return paperwork.”
Also, the $409 billion loss to the U.S. economy in IRS compliance is greater than the gross product of 36 states.
The Tax Foundation further reported that estate and gift taxes generate $20 billion annually for the U.S. government, but the opportunity cost of compliance is $19.6 billion, which reduces the net value of those taxes to only $4 million.
Providing examples of how costly it is to complete the IRS tax-filings, the Tax Foundation reported that it costs 2.8 billion hours, or $147 billion to file U.S. Business Income Tax Returns. The second most costly is for U.S. Individual Income Tax Returns, weighing in at 2.6 billion hours and $98 billion.
Many corporations choose to identify as S corporations (S Corp) to avoid the additional layer of tax imposed on traditional C corporations (which are taxed separately from their owners). However, the income tax returns filed by S corporations still cost $46 billion nationwide each year, and consume 889 billion hours of labor, said the Tax Foundation.
IRS paperwork under the Profit and Loss from Business category costs 71.7 million hours of labor and $2.7 billion dollars annually.
Income tax returns for Proceeds from Broker and Barter Exchange Transactions, distinct from the Profit and Loss in Business category, cost 49.4 million hours in lost productivity and $2.6 billion.
Complying with Form 8948, Preparer Explanation for Not Filing Electronically, requires 18 million hours of work and $681 million dollars.
Distributions from Pensions, Annuities, and IRAs cost 37.5 billion worker hours and $1.4 billion.
The Tax Foundation stated that “the latest official estimates of the eye-popping amount of time and money that Americans lose each year in complying with IRS paperwork– 8.9 billion hours and $409 billion in lost productivity– indicate that the most important benefit of tax simplification may be the gift of time.”