Business owners list the IRS forms they hate the most
By Sue Kovach • Bankrate.com

When it comes to IRS forms, small business owners hate the same ones the rest of us do -- and then some.

That's the finding so far of the high-tech Paperwork Unpopularity Poll that the U.S. Senate's Committee on Small Business has been conducting for the past six months through its Web site. The online poll is encouraging small business owners to pick which IRS form they hate the most -- and to tell why.

"A startling universe of forms and schedules await Americans attempting to comply with the law and make a living by running their own business," says Sen. Christopher S. "Kit" Bond, the committee chairman. "The frustration you hear when you listen to small business people -- it's really powerful. They want to spend their time running small business, not dealing with complex and indecipherable tax requirements."

So far, the poll has found that familiarity breeds contempt: The five most-complained-about forms are among the most common business and individual tax forms. They are, from fifth-worst to worst:

• Form 6251, Alternative Minimum Tax
• Form 4562, Depreciation and Amortization
• Form 1041, Schedule D, Capital Gains and Losses
• Form 1040, the US Individual Income Tax Return
• Form 941, the Employer's Quarterly Federal Tax Return. The single-most-reviled IRS form confronts business owners every three months.

Scathing comments
Here are some of the comments that dissatisfied users posted anonymously about Form 941:

"Way too confusing for anyone without a degree or a CPA."

"My monthly liability and my quarterly liability is always just a few cents different. It's a lot of useless paperwork to find I've overpaid by 12 cents!"

"Instructions are unclear, confusing, and the Social Security and Medicare calculations never equal the deduction amount listed in Publication 15."

The electronic polling booth has been open for the past six months, since shortly after the committee held a hearing on the burden that tax filing and tax reporting impose on small business owners.

A big burden on small business
The hearing uncovered some startling facts about the IRS paper blizzard business owners face.

There are up to 200 tax forms and schedules that can apply to small business owners, containing more than 8,000 lines, boxes and data requirements. The 200 forms require 700 pages of instructions, written in the IRS's familiar, nearly incomprehensible style.

According to testimony, 76 percent of small business owners hire a tax professional to help them navigate this tangle of tax laws and forms.

Bond asked IRS Commissioner Charles O. Rosotti to begin reviewing the forms and the poll was set up to identify the worst offenders.

"Small business and the self-employed pay about $600 billion in taxes, roughly 40 percent of all taxes collected," he states. "Clearly, we must take steps now to simplify IRS paperwork for small-business taxpayers."

Bond is confident that he and IRS Commissioner Rosotti are on the same wavelength.

"He agreed with us that if we would work with him and identify the major problems with forms businesses confront, he would put high priority on reviewing the most complex and indecipherable requirements that effect the small business owner," says Bond.

Paying the price
Small business owners hope so.

People who take part in the poll are promised anonymity, but one who volunteered to speak out is insurance consultant Jim Davis of Little Rock, Ark.

He says he spent so much time on tax paperwork he couldn't properly run his business. The form he hates the most?

"The checks I write to my tax lawyers and CPAs," he says. "I solved my problems. I decided to pay the price and hire the proper technical help, and for the past several years that's how I've operated. It's expensive, but it's been worthwhile."

The IRS code is terrible for small business, says Davis. His mission is to work for change through the National Federation of Independent Business, America's largest small business membership organization. Davis is a member of its leadership council in Arkansas.

"I'm not an anti-tax person," Davis emphasizes. "I'm anti-paperwork. There must be a better way in this new millennium for us to pay our fair share of taxes."

Bond says the committee will give feedback to the IRS soon, then watch one tax year cycle of forms to see if there are any changes made.

"We'll work on it for the cycle, and keep on it until the complaints stop coming in," he says.

Sue Kovach is a freelance writer based in Florida

--Posted Nov. 15, 1999