Is Corporate Tax Law Too Complicated?

On the surface corporate tax law may not appear to be too complicated. The short version of the law is very simple - US corporations are required to pay 35% of their profits in the form of United States federal income tax. However, just below the surface of the tax law is where the confusion begins. There are literally thousands upon thousands of volumes of information regarding the United States corporate tax code and the policies, rules and regulations and laws that govern it.

Furthermore, there are so many exceptions, exclusions, inclusions and loopholes in the corporate tax code that it is often very confusing for even the very best qualified tax accountants and tax lawyers to understand.

Why US Corporate Tax Law Is So Complicated

Because Congress and the IRS are constantly making revisions to the corporate tax code law in the United States, it is difficult for anyone to adequately keep track of all the constant changes. Congress often authorizes different types of tax credits, tax deductions as well as tax increases that may or may not be permanent and may only be available or required by law for a short time.

Therefore, what is considered a valid or legal credit or deduction this year, may not be able to be applied for corporate tax return turns the next year. Furthermore, the sheer number of forms, addendum and worksheets offered by the IRS for corporate tax returns boggles the mind. In fact, there are so many different types of forms available for use with corporate tax returns that it is extremely difficult for one person to actually know what all of them are used for.

Making Sense of the Corporate Code

In order to stay abreast of the ever-changing tax code and the way it affects corporate income taxes, many certified public accountants are required to constantly educate themselves on a continuous basis. Even with continuous studying and training, many certified public accountants and certified tax lawyers complain that changes in the tax code happen so fast that it is often difficult to keep pace.

Corporate Tax Code Simplification

These days, many small business owners, certified public accountants, tax lawyers and legislators are pushing for simplification and reform of the United States income tax code for both individuals and corporations. Many complain that because of the complexity of the United States corporate income tax code, many small corporations are taxed too heavily and may be penalized for simple yet honest mistakes - while some multi-jurisdictional corporations may avoid paying many types of income tax at all.

Advocates for income tax code reform speculate that by simplifying the tax code small businesses will be able to compete better with larger businesses that are able to employee hundreds if not thousands of accountants and lawyers to help them with their income taxes. Furthermore, advocates state that by simplifying the tax code, it will help many small business owners reduce their income tax liability and be able to set keep more of the money that they earn.