The Earned Income Tax Credit is identified as causing major problems for taxpayers in several of the other sections of this report. This issue appears on the list of the 20 most serious problems affecting taxpayers and on the most litigated issues list. The Earned Income Tax Credit is one of the primary causes of Taxpayer Advocate casework. Additionally, revenue protection cases are primarily Earned Income Tax Credit related issues. A great deal of work needs to be done to simplify the Earned Income Tax Credit.
Business expenses present a complex problem.
Because of the built-in complexity in this area, tax law simplification is the answer. Several legislative proposals are made in this report. Interest IRS is often a secondary issue with a large number of cases, including Taxpayer Advocate casework. However, since interest is charged on virtually every balance due case, we have found that the interest charge itself is a significant problem for a large number of taxpayers. Many of the hardship situations that taxpayers face result from the large amount of interest that has accrued.