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Taxes burden small biz
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August 18, 2000: 3:15 p.m. ET
Entrepreneurs have more tax problems, get little IRS assistance, GAO finds
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NEW YORK (CNNfn) - Small-business owners are more likely than other taxpayers to have tax compliance problems, but the IRS is not offering much assistance, says a new report by the U.S. General Accounting Office.
And while the Internal Revenue Service has set up a new unit that is designed to serve smaller enterprises, "implementing the new ... operating division will not be easy," according to the report by the investigative arm of Congress.
 "This report has confirmed what small-business owners have been telling us for years -- the tax code is just too difficult for most people to understand and the IRS has not operated in a way to serve small businesses effectively," said Sen. Kit Bond, R-Mo., chairman of the Senate Small Business Committee, which released the report.
Small business -- a diverse group of 40 million taxpayers that includes family farmers and the self employed -- pay nearly half the taxes in the United States, the GAO said. But while these entrepreneurs are likely to face tax situations that are as complex as those facing larger corporations, they are much less likely to have the resources to deal effectively with those issues.
New division to serve small business
The IRS has announced plans to restructure itself, establishing a new division to deal exclusively with issues confronting small business and the self employed. That unit is scheduled to begin service in October.
The agency said its reorganization should improve service to small-business customers. It also cited plans to improve its paperwork and telephone services to make them more useful.
The GAO, however, questioned whether the new division would be able to deal effectively with the widely diverse taxpayers who make up the small-business community. And it urged the tax service to adopt management systems that would lead to changes in the behavior of its employees, to make them more responsive to taxpayer needs.
Other problems cited in the study, which was based on interviews with 1,000 small-business owners, include:
· Many respondents were unaware of the IRS services that were available to them, and many more, while knowing that the services existed, did not use them. Small businesses are often reluctant to go to the IRS for help.
· When they did use IRS products and services, such as publications and toll-free phone numbers, small businesses were not happy with the experience. While the publications were readily available, they were not easy to understand, and phone assistance was often difficult to access.
· Some 36 percent of taxpayers hire professional help to prepare their taxes because the laws and requirements are too complex. Another 56 percent said they hire tax pros to assure compliance.
· The self employed face more complicated issues and file twice as many forms and schedules as other individuals, even though they are also individual filers and are similar to others whose income is solely from wages and investments. 
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