Vague Federal Tax Code Can Be Considered Unconstitutional

David Vance

David Vance

Millions of Americans are getting ready to file their taxes before the April 15 deadline, but how many of them actually understand the federal tax code? A Rutgers University–Camden professor says it’s too complicated to comprehend and therefore unconstitutionally vague.

“How can the average citizen even understand the tax code?” asks David Vance, a clinical assistant professor of accounting at the Rutgers School of Business–Camden. “There’s layer on layer on layer of complication and that makes it hard for anyone to make sense of it.”

In his article “Is the Federal Income Tax Code Unconstitutionally Vague?” published in October 2013 in the Mustang Journal of Law and Legal Studies, Vance suggests that the tax code is so complex, burdensome, and ambiguous that it is unconstitutional.

The Rutgers–Camden scholar, who is a former corporate controller, chief financial officer, and trial attorney, notes that in the past, the Supreme Court ruled statutes unconstitutional if they are so vague that people of ordinary intelligence don’t know what’s required or prohibited.

“Courts will only rule laws unconstitutional under extraordinary circumstances.  The complexity of the tax code might constitute such a circumstance,” Vance says.

In his paper, Vance writes that every year it takes taxpayers six billion hours to complete tax forms while spending hundreds of billions of dollars in accounting costs related to filing taxes.  The tax code makes compliance difficult and leaves many unaware of how their taxes are computed.

Unsurprisingly, this leads to many errors on tax returns.

“Taxpayers who prepare their own returns have a high error rate, but so do the experts,” Vance says. “We pay a lot of money for computer software and for professionals to do our taxes, yet they make mistakes, too.”

Vance says the Internal Revenue Service sends more than 100 million notices to taxpayers informing them of errors or potential errors in their returns “which means more than 70 percent had errors.”

He also cites a recent report that some 918,600 taxpayers were owed $760 million by the IRS for the 2010 tax year alone because taxpayers failed to properly claim it.

Furthermore, surveys that Vance studied indicate a high rate of errors in returns completed by professional tax preparers and IRS taxpayer assistance centers.

“What if doctors or architects had a high error rate?” Vance asks. “It would be unacceptable.”

To solve the problem, Vance suggests that the Supreme Court appoint a special master to review and reform the tax code so that it is easier to understand.

“The government must raise revenue through taxes, and we have to pay them. The only issue is how complicated taxes can be,” Vance says. “When the courts are faced with a complicated problem, they have the right to appoint a special master to sort out the details and simplify things.”

Vance’s suggestions include eliminating alternative calculations, supplemental forms, and worksheets, and setting a strict limit on the length of the tax code.

“My only hope is for the courts to deem the tax code too complicated. It’s a possibility, but I won’t throw away any of my tax books,” he says.

Vance teaches courses in accounting, finance, corporate restructuring, and global business economics at the Rutgers School of Business–Camden.  A Voorhees resident, he is the author of four books, including Raising Capital (Springer, 2005).

Vance earned his bachelor’s degree from Rutgers University–Camden, his master’s degree from Drexel University, and his Juris Doctor from the Rutgers School of Law–Camden.

 

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