The IRS is not only the most feared of government agencies, it also is one of the biggest and most expensive. The agency has more employees than the Central Intelligence Agency, Federal Bureau of Investigation, and Drug Enforcement Agency combined, and its budget makes it a bigger consumer of tax dollars than the Departments of Commerce, State, or the Interior.

12,000 = The number of additional IRS employees needed to answer phone inquiries from confused taxpayers during tax filing season. Because taxpayers will have nothing to file under a national retail sales tax, additional personnel will not be needed.

$1,000 = The hourly collection quota placed on IRS agents auditing individual taxpayers in the San Francisco office. Although collection quotas violate the law, the current system is so complex that the IRS assumes mistakes will be found on every return. There will be no errors with a national retail sales tax because there will be no returns to examine.

62,000,000 = The number of lines of computer code required by the IRS to manage the current tax code. A national retail sales tax will ease the IRS's ongoing computer problems dramatically.

1,420 = The number of appraisals of works of art that an IRS panel performed in order to tax the assets of dead people. Because double taxation under a national retail sales tax does not exist, the absurdity of having the IRS value art would disappear with the death (estate) tax.

3,200 = The number of threats and assaults IRS agents experienced over a five-year period. A fair and simple tax system will reduce taxpayers' frustrations dramatically.

136,000 = The number of employees at the IRS and elsewhere in the government who are responsible for administering the tax laws. Because the number needed is dictated by the complexity of the tax code, fewer personnel will be needed under a national retail sales tax, and the elimination of the IRS will save taxpayers a significant amount of money.

$13,700,000,000 = The amount of tax money spent by the IRS and other government agencies to enforce and oversee the tax code. Both taxpayers and the economy will benefit from the spending reductions made possible by a national retail sales tax.

17,000 = The number of pages of IRS laws and regulations, not including tax court decisions and IRS letter rulings. This page count would be reduced significantly by a national retail sales tax.

5,557,000 = The number of words in the income tax laws and regulations. With a national retail sales tax, there will be no need for a tax code that is nearly seven times longer than the Bible.

820 = The number of pages added to the tax code by the 1997 budget act. A national retail sales tax will slash it to a fraction of its current size.

250 = The number of pages needed to explain just one paragraph in the Internal Revenue Code. A simple national retail sales tax will eliminate IRS regulation.

271 = The number of new regulations issued by the IRS in 1997. By putting an end to constant social engineering, a national retail sales tax will halt the IRS's constant rewriting of the tax rules.

261 = The number of pages of regulations needed to clarify the tax code's "arms-length standard" for international intercompany transactions.

569 = The number of tax forms available on the IRS Web site. No forms will be necessary under a national retail sales tax.

31 = The number of pages of fine print in the instructions for filling out the "easy" 1996 1040EZ individual tax form. By contrast, individuals will have nothing to fill out under a national retail sales tax.

8,000,000,000 = The number of pages in the forms and instructions the IRS sends out every year. Under a national retail sales tax, there are no forms and no instructions.

36 = The number of times the paperwork the IRS receives would circle the earth each year. Complexity and paperwork will vanish under a simple national retail sales tax that treats all citizens equally.

293,760 = The number of trees it takes each year to supply the 8 billion pages of paper used to file income taxes in the United States. A national retail sales tax will be much more friendly to the environment.

1,000,000,000 = The number of 1099 forms sent out each year to help the IRS track taxpayers' interest and dividend income. Under a national retail sales tax, this requirement will be eliminated.

33,984,689 = The number of civil penalties assessed by the IRS in 1996. Because a national retail sales tax will be so fair and simple and the IRS as we know it will not exist, taxpayers will no longer have to fear the long arm of the Internal Revenue Service.

10,000 = The number of properties seized by the IRS in 1996. Part of this problem is caused by the government's trying to take too much money from people, and part is caused by complexity. A national retail sales tax will reduce the government's take and eliminate complexity.

750,000 = The number of liens issued by the IRS against taxpayers in 1996. A simple, low national retail sales tax will result in no more fights between the government and taxpayers.

2,100,000 = The number of IRS audits conducted in 1996. Under a national retail sales tax, there will be no more audits.

85 = The percentage of taxpayers selected by the IRS for random audits who had incomes less than $25,000. A complicated tax code benefits the wealthy, who can fight back. A national retail sales tax will be good news for those with more modest incomes.

47 = The percentage of taxpayers living in just 11 southern states subject to random audits. Because audits will be eliminated under a national retail sales tax, so will discriminatory audit patterns like this one.

10,000,000 = The number of corrections notices the IRS sends out each year. With a simple and fair tax system like a national retail sales tax, mistakes will be eliminated.

190,000 = The number of disputes between the IRS and taxpayers in 1990 that required legal action. In a national retail sales tax environment, there will be no opportunities for disagreement, and legal action will not be necessary.

3,253,000 = The number of times the IRS seized bank accounts or paychecks in 1992. Under a national retail sales tax there will be no need for these tactics.

33,000,000 = The number of penalty notices the IRS sent out in 1994. Because a national retail sales tax will eliminate the current tax code, this problem will be eliminated.

15 = The number of years the IRS believes it will need to modernize its computer system. A simple, national retail sales tax will not require complex computer systems.

1,000,000 = The number of Americans who received tax forms with erroneous mailing labels in 1998.

20 = The percentage error rate at the IRS for processing paper returns. Under a national retail sales tax, there would be no opportunity for errors because there would be no returns to process.

6,400 = The number of computer tapes and cartridges lost by the IRS. Once a national retail sales tax is implemented, these tapes and cartridges could remain lost.

22 = The percentage of times reporters for Money magazine received inaccurate or incomplete information in 1997 when calling the IRS's toll-free hot line. Under a national retail sales tax, Americans will not need to call the IRS because they will not be there.

40 = The percentage of times Money magazine reporters received wrong answers in 1997 in face-to-face visits at IRS customer service offices.

$800,000,000 = The estimated cost to update the IRS's computers for the year 2000. Scrapping the tax code for a national retail sales tax will allow the government to institute a simpler computer system.

500,000 = The number of address changes made to correct the master file by IRS employees each year.

78 = The percentage of IRS audit assessments on corporations that eventually are disqualified. A national retail sales tax will eliminate the onerous corporate tax.

8,500,000 = The number of times the IRS gave the wrong answer to taxpayers seeking help to comply with the tax code in 1993 (taxpayers still are held responsible for errors that result from bad advice from the IRS). A national retail sales tax will be so simple and convenient that taxpayers will not need any help.

47 = The percentage of calls to the IRS that resulted in inaccurate information, according to a 1987 General Accounting Office study.

5,000,000 = The number of correction notices the IRS sends out each year that turn out to be wrong. An error rate of 50 percent will be impossible under a national retail sales tax.

40 = The percentage of revenue that is returned when taxpayers challenge penalties. Under a national retail sales tax, there will be no penalties.

$5,000,000,000 = The amount of money that taxpayers were overcharged for penalties in 1993. After a national retail sales tax goes into effect, such injustice will disappear.

3,000,000 = The number of women improperly fined each year because they have divorced or remarried. Under a national retail sales tax, such travesties will be eliminated.

10,000,000 = The number of taxpayers who will receive lower Social Security benefits because the IRS failed to inform the Social Security Administration about tax payments.

$200,000,000,000 = The amount of misstated taxpayer payments and refunds on the books of the IRS. The IRS is no more able to administer tax laws that defy logic than is the average taxpayer. A national retail sales tax will rectify this problem.

64 = The percentage of its own budget for which the IRS could not account in 1993, according to an audit by the U.S. General Accounting Office.

$8,000,000,000 = The amount the IRS spent to upgrade its computer system unsuccessfully.

$23,000,000,000 = The total proposed price for the IRS's computerization and modernization plans by 2008.

6,400,000 = The number of taxpayers who visited IRS customer service centers seeking answers to their tax questions in 1996. With a national retail sales tax, no taxpayers will need help.

99,000,000 = The number of taxpayers trying to comprehend the tax system who called IRS hotlines in 1996. Under a national retail sales tax, the taxpayer will have nothing to worry about.

30 years = The number of years a dispute can last between the IRS and a corporation. Under a national retail sales tax, no IRS, no disputes.

8,000,000 = The increase in the number of taxpayers who will be subject to the alternative minimum tax by 2007. This absurd provision forces taxpayers to calculate their income two ways and then pay the government the higher of the two amounts. It will disappear under a national retail sales tax.

$134,347,500,000 = The Clinton Administration's estimate of private-sector compliance costs. If the defenders of the status quo admit compliance costs are this high, the actual costs may well be even higher.

653 = The number of minutes (nearly 11 hours) the IRS estimates it takes to fill out a 1040 form.

72 = The number of inches of height of the stack of tax forms in the Chrysler Corporation's tax return.

6,000,000 = The number of unanswered phone calls made to the IRS in January and February 1998. Considering that answered calls frequently result in mistakes, taxpayers who fail to get through probably should feel lucky.

2,400,000 = The number of phone calls to the IRS that resulted in busy signals in January and February 1998. A busy signal is better than a wrong answer because the IRS holds taxpayers liable for mistakes even if they are following IRS advice.

56 = The percentage of calls to the IRS in 1997 that went unanswered. Again, no answer is better than a wrong answer.

$157,000,000,000 = The amount spent by the private sector to comply with income tax laws.

$7,240 = The average compliance cost incurred by all but the biggest 10 percent of corporations for every $1,000 of taxes paid in 1992. The radical simplification brought about by a national retail sales tax will be a boon for small businesses that cannot maintain legal and accounting staffs to comply with the tax code.

50 = The percentage of taxpayers who feel compelled to obtain assistance in filling out their taxes each year.

5,400,000,000 = The number of hours it takes Americans to comply with federal tax forms. Under a national retail sales tax, compliance will require no time at all.

2,943,000 = The number of full-time equivalent jobs spent on compliance.

$3,055,680,000 = The market value of the tax preparation firm H&R Block, Inc., which opposes a national retail sales tax. The company's opposition is understandable because a national retail sales tax will eliminate their business.

$24,000,000,000 = The difference between what corporations said they owed and what the IRS said they owed in 1992 -- a gap the government admits is due to ambiguity and complexity in the code. A national retail sales tax will eliminate the confusion embedded in the current system – it eliminates the current system.

46 = The number of wrong answers Money magazine received in 1998 when it asked 46 different tax experts to estimate a hypothetical family's 1997 tax liability. Professional assistance will not be necessary with a simple, national retail sales tax.

$34,672 = The difference in liability between the highest and lowest incorrect answers among the 46 professionals who failed to calculate the tax liability of Money magazine's hypothetical family.

$610 = The amount the hypothetical family would have overpaid on its 1997 taxes if it had used the answer that came closest to the actual tax liability (assuming, of course, that Money magazine's expert had filled out the tax return correctly).

45 = The number of professional tax preparers who came up with different answers when asked by Money magazine in 1997 to fill out a hypothetical family's 1996 tax return.

45 = The number of professional tax preparers who came up with wrong answers when asked by Money magazine in 1997 to fill out a hypothetical family's 1996 tax return.

76 = The percentage of professional tax preparers who missed the right answer by more than $1,000.

$58,116 = The difference between the lowest estimate of the family's tax bill and the highest estimate in Money's survey of tax professionals. Because the complexities in the tax code will disappear under a national retail sales tax, mistakes will, too.

$81 = The average hourly fee charged by the professional preparers who came up with the 45 wrong answers. Taxpayers will pay nothing under a national retail sales tax.

50 = The number of different answers that 50 tax experts gave Money magazine in 1988 when asked to estimate a hypothetical family's tax liability. Under a national retail sales tax, taxpayers will not need to consult tax preparers, much less run the risk of paying penalties for wrong answers.

50 = The number of different answers Money magazine received in 1989 when it asked 50 different tax experts to estimate a hypothetical family's tax liability.

48 = The number of wrong answers Money magazine received in 1990 when it asked 50 different tax experts to estimate a hypothetical family's tax liability.

49 = The number of different answers Money magazine received in 1991 when it asked 50 different tax experts to estimate a hypothetical family's tax liability.

50 = The number of wrong answers Money magazine received in 1992 when it asked 50 different tax experts to estimate a hypothetical family's tax liability.

41 = The number of wrong answers Money magazine received in 1993 when it asked 50 different tax experts to estimate a hypothetical family's tax liability (9 of the original volunteers did not bother even to respond).

824 = The number of changes in the tax code accompanying the 1997 tax cut. A national retail sales tax will put an end to constant social engineering.

285 = The number of new sections in the tax code created by the 1997 budget act. A national retail sales tax will eliminate the current tax code.

3,132 = The number of pages needed by the Research Institute of America to explain the changes in the tax law in 1997.

11,410 = The number of tax code subsection changes between 1981 and 1997. A national retail sales tax will eliminate those subsections.

160 = The percentage increase in the stock value of tax preparation firms in the three-month period during and after enactment of the 1997 budget.

54 = The number of lines on the new capital gains form, up from 23 before the 1997 budget deal. Under a national retail sales tax, the capital gains tax is eliminated.

878 = The number of times major sections of the tax code were amended between 1955 and 1994. A national retail sales tax will eliminate today's confusingly complex tax code and replace it with a simple system that does away with constant tinkering and social engineering.

100 = The increase in the number of forms between 1984 and 1994. A national retail sales tax will eliminate all 100 forms.

9,455 = The number of tax code subsections changed between 1981 and 1994. Under a national retail sales tax, politicians will not be able to use the tax code to micromanage economic or social behavior.

578 = The percentage increase in the number of tax code sections between 1954 and 1994 that deal with major segments of tax law. Endless changes in tax law will grind to a halt under a national retail sales tax.

5,400 = The cumulative number of changes in tax law since the 1986 Tax Reform Act. Most, if not all, of these changes add compliance costs to the economy--costs that a national retail sales tax will eliminate.

$20,500,000,000 = The amount of lost income the economy suffered in 1993 as a result of the economic uncertainty in the business community caused by the constant manipulation of the tax code. To help prevent politicians from undermining business planning by constantly changing the tax laws, a national retail sales tax law should include a supermajority provision blocking such tax rate increases.

$400,000,000 = The amount of the special tax break for one corporation inserted in the tax code in 1986 at the urging of Dan Rostenkowski (D-IL), then chairman of the House Ways and Means Committee. A national retail sales tax will wipe out provisions for special-interest groups.

$413,072 = The average amount of political action committee contributions received by members of the House of Representatives tax-writing committee during the 1994 election cycle. A national retail sales tax will reduce special-interest corruption and eliminate the ability of politicians to use the tax code to reward friends and punish enemies.

12,609 = The number of special-interest organizations officially represented by congressional lobbyists. A national retail sales tax will wipe out all special preferences, loopholes, deductions, credits, and tax shelters.

$3,200,000,000 = The total amount earned by Washington, D.C., lobbyists in 1993. By taking away the playing field for special-interest tinkering, a national retail sales tax will clean up political pollution.

2 = The number of IRS offices in Washington, D.C., made available to Members of Congress and their staffs. With someone else doing their taxes – free – it is little wonder that Members of Congress do not understand the public support for a national retail sales tax.

$127,000,000,000 = The amount of taxes not paid as a result of tax evasion. A fair, simple, national retail sales tax will reduce tax evasion.

10,000,000 = The number of people who unlawfully do not file tax returns. By reducing both the tax burden and compliance costs, a national retail sales tax will bring people out of the underground economy.

3,500,000 = The number of people who do not file who would be eligible for refunds. Perhaps more than any other number, the millions of people who fail to file in order to claim their tax refunds reveals just how intimidating the tax code has become.

4 = The number of times a single dollar of income can be taxed under the current system, counting the capital gains tax, corporate income tax, personal income tax, and death (estate) tax. These taxes are eliminated under a national retail sales tax.

100,000 = The number of Internet sites found by one search engine when queried for the phrase "tax shelter." Because a national retail sales tax will eliminate all discrimination in the tax code and allow people to keep a greater share of their income, tax shelters will vanish after reform.

$3,500 = The amount one woman was forced to pay twice, even though the IRS eventually admitted the debt had been owed – and paid – by her former husband.

$210,260 = The amount the IRS tried to garnish from the wages of a woman for the back taxes her husband had owed before their marriage.

$26 = The amount the IRS seized from a 6-year-old's bank account because her parents owed money.

$70,000 = The amount demanded by an IRS agent who was threatening to send a couple to jail in a case that the tax court subsequently dismissed because the IRS's claim "was not reasonable in fact or in law."

$500,000 = The amount the IRS was forced to pay a taxpayer after engaging in a vendetta against him, including putting the innocent man in jail for four months.

$6,484,339 = The amount demanded by the IRS from the family of a victim of Pan Am flight 103, based on the assumption of a future settlement.

$900,000 = The amount a small businessman was fined after being entrapped by his accountant, a paid informer for the IRS.

$5,300,000 = The amount the IRS paid its informants in 1993.

25 = The percentage of households with incomes over $50,000 that would pay an inaccurate assessment from the IRS rather than fight.

$46,806 = The amount of tax penalty imposed on one taxpayer in 1993 for an alleged underpayment of 10 cents.

1,300 = The number of IRS employees investigated and/or disciplined for improperly viewing the tax returns of friends, neighbors, and others.

$155 = The amount of penalty imposed on a taxpayer in 1995 for an alleged underpayment of 1 cent.

50 = The percentage of top IRS managers who admitted they would use their position to intimidate personal enemies.

$14,000 = The amount allegedly owed by a daycare center that was raided by armed agents, who then refused to release the children until parents pledged to give the government money.

80 = The number of IRS agents referred for criminal investigation on charges of taking kickbacks for fraudulent refund checks.

$3,000,000,000 = The dollar assets of Princeton/Newport, an investment company that was forced into liquidation after 40 armed federal agents raided the company on suspicion of tax evasion--only to have the IRS later conclude that Princeton/Newport actually had overpaid its taxes.

$10,000 = The fine imposed on one taxpayer for using a 12-pitch typewriter to fill out his tax forms instead of a 10-pitch typewriter.

109 = The number of envelopes containing unprocessed information found in the trash at the IRS's Philadelphia Service Center.

GRAND TOTAL: More than 737 billion incredible-but-true reasons to simplify the tax code with a national retail sales tax.

0 = The number of taxpayers under a national retail sales tax who will have to calculate depreciation schedules.

0 = The number of taxpayers under a national retail sales tax who will have to keep track of itemized deductions.

0 = The number of taxpayers under a national retail sales tax who will need to reveal their assets to the government.

0 = The number of taxpayers under a national retail sales tax who will lose their farms or businesses because of the death (estate) tax.

0 = The number of taxpayers under a national retail sales tax who will have to pay a double tax on their capital gains.

0 = The number of taxpayers under a national retail sales tax who will have to compute a phase-out of their personal exemption because their incomes are too high.

0 = The number of taxpayers under a national retail sales tax who will be subject to the alternative minimum tax--those forced to calculate their tax bill two different ways and then to pay the government the greater of the two amounts.

0 = The number of taxpayers under a national retail sales tax who will have to pay taxes on overseas income that already was taxed by the government of the country in which the income was earned.

0 = The number of taxpayers under a national retail sales tax who will have to pay taxes on dividend income that already was taxed at the business level.

0 = The number of taxpayers under a national retail sales tax who will be taxed on interest income that already was taxed at the financial institution level.

Source: The Heritage Foundation, Backgrounder # 1170
http://www.heritage.org/library/backgrounder/bg1170.html

Edited by Dave Emmith
Note: This document has been adapted to make a case for the national retail sales tax. Its original intent was to make a case for the flat tax. The facts remain the facts in either case. We believe the national retail sales tax remains the best alternative.

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