Simple Tax for Seniors Act of 2004

Mr. Speaker, I move to suspend the rules and pass the bill

(H.R. 4109) to allow seniors with Social Security and pension income to file their income tax returns on a new Form 1040SR without regard to the amount of interest or taxable income of the senior, as amended.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, let me first open up with the discussion on H.R. 4109 and the importance of this bill that is on the floor today, the Simple Tax For Seniors Act of 2004.

Mr. Speaker, in America, it is customary to recognize the long life and achievements of older citizens by offering a discount on rides, theater tickets, and other fees. While there are certainly many businesses that choose not to offer discounts, Federal law requires that all individuals be treated equally in public accommodations. Yet, there is an exception.

Instead of offering a discount, the IRS makes filing a tax return more difficult for seniors. Taxpayers aged 65 or older are not allowed to use the one-page form 1040EZ, even if they have a simple return and choose not to itemize deductions. Instead, seniors are required to file using the far more complicated form 1040 and its numerous schedules.

There are over 35 million seniors over the age of 65, and the IRS receives over 10 million standard tax returns from seniors each year. Due to the retirement of the baby boom generation, this number is expected to rise to 12.5 million by 2010. The IRS has taken note of this trend and, thankfully, the agency is working on a new simplified tax form for seniors. But even though the test form has been popular among a focus group of seniors, the IRS has not yet fully or finally decided to implement the new form and make it available.

The IRS estimates that the new form, assuming it is made available, will simplify tax filing for millions of seniors and their tax preparers.

This legislation will assure the IRS devises a simple form for seniors to use in filing their 2005 tax returns.

Senior taxpayers earning Social Security, retirement benefits, interest and capital gains will be able to meet their obligations on a simple tax form tailored to the specific needs of senior filers.

Because it will make tax filing easier for seniors, the bill has the strong support of the AARP, the American Association of Retired Persons, and the 60-Plus Association.

Mr. Speaker, during the past several weeks, we have addressed the marriage penalty and other problems with the tax system. Now is the time to address the senior penalty. There is little justification for denying seniors access to a means of filing that is so popular and efficient.

I would like to thank the gentleman from Georgia (Mr. Burns) and the gentleman from California (Mr. Cox) for championing this piece of legislation. I urge my colleagues to support the legislation.

I also know it will be difficult for those to see, but it is a 1040EZ form. It is very, very simple; it is easy to read. It is not complicated, and it provides all the details necessary for the IRS to properly calculate either liabilities or refunds. The beauty of a form like this is that it is simple. Many know that even those who have the help of accountants find it an enormous task in completing the IRS required forms. But for the seniors to be further penalized by not being able to participate in this easy document is simply shameful. So we are very excited about the chance to bring this bill to the floor.

I have as well, and I will provide and place into the Record, the floor statement of the gentleman from California (Mr. Cox) relative to this; but I want to take a moment also to single out one of his constituents, a member of the Silver Haired Congress, Mr. Roland Boucher of California, Orange County, California. This idea germinated basically in a discussion of the Silver Haired Congress.

Many people I know say nothing ever gets through Congress. You cannot reach the people. It is hard for them to understand the difficulties people face. They are just not hearing me. Well, Mr. Boucher, your idea has merit. It has been brought to the attention of the policy committee. The gentleman from California (Mr. Cox) is the chairman of the policy committee and, of course, he is a member of the Congress, but also the hard working efforts of the gentleman from Georgia (Mr. Burns), who decided to team up together to make certain that this idea not only was vetted properly in the policy committee but was ultimately brought forward by the Committee on Ways and Means which has jurisdiction for Social Security.

So to Mr. Boucher and the Silver Haired Congress, I salute you for taking the time to bring the idea and the notion to Congress of the inequity of the current situation where seniors were not allowed to file on the simple form. It is another example of where Congress hears from constituents and legislation is enacted on this floor, the people's House, bringing these ideas forward for seniors everywhere to enjoy the simplified form.

So I place Mr. Cox's statement into the Record, who had to go to the White House for some briefings on homeland security, a very, very important topic. And I know he wants this placed in the Record.

Mr. Speaker, at this point I will also enter into the Record the 1040S form so it can be part of the testimony.

[GRAPHIC] [TIFF OMITTED] TH02JN04.001

[GRAPHIC] [TIFF OMITTED] TH02JN04.002

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

I would like to commend the majority. When we took control of Congress in 1994, we were very specific in sending a message to the IRS through hearings we held here in the Capitol that we wanted more simplified forms. So I do not agree to the notion that somehow we are trying to get ahead of the curve here or catch up with the IRS. It is after our pleadings with them to make the IRS more user friendly do we find ourselves now viewing the forms that they are testing. In fact, they have been tested in two locations, in Tampa and in Minneapolis, so we know that the tests are receiving very popular and positive acclamation.

Our idea is that we now further define it so that the IRS, in fact, will make this available for all seniors who choose to use them.

Mr. Speaker, I yield 5 minutes to the gentleman from Georgia (Mr. Burns), the author of this legislation.

Mr. Speaker, I yield myself such time as I may consume.

First, let me suggest to our colleagues there are several vehicles that would help simplify the IRS completely. The gentleman from Georgia (Mr. Linder) has a sales tax proposal that is very thoughtful and worth studying, and I urge some Members on both sides of the aisle if they would like to actually simplify the operation of the IRS, they look at that piece of legislation. There are other proposals such as the flat tax proposal that again bears some discovery and conversation.

So as we continue to try and make the IRS as user friendly as we possibly can, I just commend my colleagues to look at that situation.

Mr. Speaker, I yield 2 minutes to the gentleman from Michigan (Mr. Smith), the Chair of the Subcommittee on Research. He is also a member of the Committee on International Relations and a sponsor of flat tax.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, today we have an opportunity to make life easier for millions of American seniors who file a tax return. In view of the large number of seniors and the relatives who file on their own and the growing number of seniors, the IRS has long recognized the need to simplify tax filing for seniors.

In support of this goal, the IRS has conducted focus group meetings in Tampa, Florida and Minneapolis, Minnesota in which group members praised a test form 1040S developed by the IRS. If Congress does not act, however, there is no guarantee that the IRS will make this simple filing option available. Moreover, seniors will continue to be barred from using form 1040EZ because of their age.

The American Association For Retired Persons supports this legislation. So does 60-Plus. And the Joint Committee on Taxation has concluded that it will not cost anything in terms of revenue.

Mr. Speaker, I want to thank the gentleman from California (Mr. Thomas), the chairman of the Committee on Ways and Means, for bringing this measure to the floor; the gentleman from California (Mr. Cox), chairman of the policy committee; the gentleman from Georgia (Mr. Burns), the sponsor of this legislation; my colleague, the gentleman from North Dakota (Mr. Pomeroy), on the Democratic side; and again a special recognition of Mr. Boucher of the Silver Haired Congress from Orange County, California, for illuminating the problem and bringing this idea to the United States House of Representatives.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I am very worried that somebody might hurt themselves patting themselves on the back on this one so let me put this in perspective. What we are about to legislate is a congressional directive to the Treasury Department, to the agency overseeing the IRS, to do what the IRS is doing.

We are all for simplified tax forms for seniors, and I will be happy to support this legislation. I will go into the detail of it in a minute. I have got before me and I will offer as an exhibit in the Record a sample form released by the Treasury Department yesterday which is precisely the subject of the legislation before us.

In other words, in this instance, Congress appears to be scrambling to try and get in front of the parade that is already well under way. We have prospects, I believe, of bringing this online with or without this legislation. But because everyone is for tax simplification for seniors, I urge my colleagues to vote for it.

To correct any misunderstandings, seniors are not presently precluded from using the 1040EZ form. On the other hand, it does not capture a senior citizen deduction relevant to their needs. That is why seniors using simplified forms tend to use the form 1040A. It is a simplified form, 20 million Americans use it, a number of them seniors; but it includes items not relevant to seniors' taxable situations. Items like educator expenses, student loan interest, tuition and fees deductions, these are extra lines on here. They are very clear what they purport to mean, but they are irrelevant to a senior's considerations.

So the IRS, under the leadership of Commissioner Mark Everson, has developed a form that is simple, two pages, captures the sources of income commonly reported by seniors, including investment income, pension, interest, dividend income, capital gains and losses. It includes all of that, but still in a simplified form with a larger font to make it a little more readable for seniors.

I commend the commissioner for his leadership of the IRS. I believe that he has taken steps to improve its service to taxpayers while improving compliance with the Tax Code by the taxpayers. I am very heartened about the stepped-up targeted audit activities geared toward large corporate concerns that have been routinely cheating on the Tax Code. I also commend him for this particular initiative simplifying the Tax Code for seniors. I guess we in Congress thought it was such a good idea we are scrambling to get a little bit of the credit ourselves.

So I would urge my colleagues on both sides of the aisle to support this legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, back in North Dakota people chuckle about the story of the chicken who was absolutely convinced that dawn arrived as a consequence of his crowing. Well, we have heard some crowing today. And the reality is we are going to have a simplified tax form for seniors. In fact, the Treasury Department has published it, shown us what it is going to look like. All this without a congressional bill. But what the heck. It is a good idea so let us join the party and quickly pass this bill.

I would like to straighten out a couple of things. It is not, as my friend and colleague on the Committee on Ways and Means said, that over the last 10 years of Republican majority in this House they have marched steadfastly towards the goal of tax simplification. Well, we all know the reality is a bit different. Hundreds of pages have been added to the Tax Code. It is more complex than ever. Things phase in; things phase out. It is a nightmare. And so I am really delighted to hear both sides of the aisle talking about tax simplification.

I believe this is precisely something we need to do. Now, while the 1040EZ was crafted essentially to capture those that are just basically reporting their W-2 statements, single people or married, wage earners without children, it has done a good job of that. Obviously, senior citizens fall into a different bracket. They have been using the 1040A, which is another simplified form; but we can improve on the 1040A.

I am very pleased that the commissioner of the IRS has demonstrated leadership once again with this 1040S, which I think will be a much better form. To help illustrate the order of events here, this bill before us, H.R. 4109, was introduced, but in the end was not consistent with the work under way at Treasury and IRS to develop a new IRS form. So H.R. 4109 was amended to reflect precisely the work being already done at Treasury. Well, let us salute them for a job well done. I guess we could clap them on the back with a resolution of congratulations. Instead, we will demonstrate our fervor by passing this legislative directive under the suspension bill.

All of that really does not matter. What matters is that we get a simpler form that is going to help seniors, make it easier than ever for seniors filing their taxes. That is what this resolution does. That is why I am going to vote for it.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, we should pass this bill. It is a good bill. We should simplify the Tax Code for seniors. That effort has been well under way. I am very pleased the IRS has had the work focus group tested so they have been able to draw direct feedback from senior constituents representative of those who will now be using the new form. I am pleased to vote for this bill.

I, just again, to put it all in perspective, let us not be claiming too much credit here. This effort was well under way, but it is a good thing to do. Let us do it.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I thank the gentleman from California (Mr. Cox) and the policy committee in working with me on this legislation, the gentleman from California (Mr. Thomas), the chairman of the Committee on Ways and Means, and the gentleman from Florida (Mr. Foley) for managing the debate and supporting this legislation today.

This is a Simple Tax For Seniors Act. Simple. Simple tax for seniors. 1982, 24 years ago, the IRS developed the 1040EZ which works for everyone in America except seniors. 24 years. The IRS had an opportunity to correct an oversight, really a blatant example of age discrimination, and yet they have chosen not to act. We are in a position today to correct that problem.

It is incredible, absolutely incredible that the current tax law provides simplified tax forms for all Americans except those over 65. This is nothing other than age discrimination on the part of the Federal agency, the IRS. We are told that this injustice stems from an earlier era where all Americans retired at 65 and the 1040EZ had no place to report retirement income. That is no excuse. It is no excuse for not providing a short form for our seniors. If a 1040EZ does not do the job, then we ought to have a separate form that does. Again, that is what this bill does today.

This legislation creates the 1040S for seniors that is a simplified tax form. It will provide our seniors with a short form similar to the EZ that all the country can use; and amazingly enough, it results in tax savings. Tax savings and Federal dollar savings for the IRS.

There are an estimated 11 million Americans over the age of 65 who currently file the standard 1040 form without taking one itemized deduction. They would be delighted to be able to use a new short form if one were available. We know that the current EZ form costs the IRS about half as much to process as the standard 1040. So we can reasonably expect that we will save 50 percent of the cost of processing associated with the 1040S.

Are there any objections to the bill? Apparently not. I am delighted to have the support from both parties, from both sides of the aisle; but we are not willing to admit the fact that this is something that we have to get done today. Some believe that this form will make it easier for seniors to file their taxes, but it might be at the expense of making it harder for the IRS to audit their returns through an automated system. I do not think that is the case; but if it is the case, then I am going to side with the senior taxpayer over the Federal tax collectors each day and every day.

Some believe that we ought to do nothing. Just wait, just wait for the IRS to make the changes themselves, that given time, given time, they will do what is right. They will do what they ought to do. They will create a form. We have been waiting 24 years.

Why is this bill necessary? We have had a 1040EZ for 2 decades without having a single, simple tax form for seniors. Really a violation of the Civil Rights Act. The Treasury says they are still studying the matter.

We have crafted this bill with the help of the Committee on Ways and Means, working with Treasury, to ensure that the bill guarantees a truly effective short form by 2005, a date certain, 2005. We have done so without leaving any loophole.

Do not allow the IRS to avoid moving forward to produce anything less than a simple form for seniors equal to the simple form employed by all other taxpayers. We have amended the bill to remove all excuses for creating a true short form and provide the force of law against an action spanning years, and indeed decades, by bureaucrats. It does not take the IRS 2 years to audit seniors. It does not take them 2 years to place liens on their homes. It should not take 2 years to draw up a simple form to make it a little easier for seniors to figure out their tax obligation; 2 years can be an eternity for someone in their sunset years.

So if the IRS is truly planning on finally coming out with this short form for seniors, fine. This bill will not hurt a thing. But if they are planning on more stalling, they just got a kick start from the Congress. We are resolved that before this session is over, we will have a law in place that guarantees our seniors will no longer be subject to the blatant age discrimination that they have suffered for years through not having access to a short filing form like the rest of their fellow Americans.

My colleagues, it is pretty simple. It is time that we pass the Simple Tax Act For Seniors, H.R. 4109. I urge my colleagues to support this legislation.

Mr. Speaker, thanks to the gentleman from Georgia, Mr. Burns, for sponsoring this outstanding and much-needed reform of our tax system. This bill will direct the IRS to create a simpler, shorter, less time-consuming tax return for America's senior citizens. As you might expect, Mr. Burns' success with this bill means that seniors will save

time and money during tax season, but the good news for all of us is that in fact, all taxpayers will benefit, because simple forms cost the IRS less money to process. So we are cutting government spending with the passage of this act. According to the IRS, the government spends 50 percent more processing the standard 1040 than it does processing the short 1040EZ form.

I appreciate Mr. Burns' leadership on this issue. I also want to thank a constituent of mine, Roland Boucher, for helping to put this issue on the map and for sharing with me a number of ideas which I shared with Congressman Burns, who led this lightning-strike campaign to craft a bill, bring it to the House floor, and provide relief for seniors in time for the 2005 tax year. Roland Boucher, who is my delegate to the National Silver Haired Congress and Chairman of United Californians for Tax Reform, has been a tireless advocate for this legislation and similar tax reforms in State and local government. And he has sent a message from Orange County, California. Says Roland, ``Please tell Congressman Burns that he is about to make a lot of seniors very happy. We are tired of being denied a simple option for filing our taxes simply because of age. We're tired of being treated as second-class taxpayers just because we've attained a level of wisdom and experience to which others can only aspire.''

Representative Burns' bill is a valuable reform for America's more than 35 million seniors, all of whom are denied the use of the existing 1040EZ form by IRS regulation. Simplicity and a less time-consuming process at tax time could yield enormous benefits, precisely because the IRS has made the current system so difficult. The Tax Foundation estimates that taxpayers spend almost 6 billion hours per year complying with our Federal income tax system at an annual cost of $194 billion. This difficulty in meeting the demands that the law and the IRS have placed upon Americans is on the rise. The Tax Foundation estimates that by 2007 the cost could soar as high as $350 billion.

You might think that almost all of this time and money is spent by huge corporations with their complicated capital structures and multitudinous business operations. Wrong. 45 percent of the costs are borne by individuals. Does this burden fall most heavily on the rich, with their various assets and more complicated financial lives? No. The Tax Foundation discovered that compliance costs are highly regressive. Taxpayers with adjusted gross income of less than $20,000 pay a staggering 4.5 percent of income merely in compliance costs. This is an outrageous and unacceptable bureaucratic tax on all Americans, but today we focus only on the unfair treatment of seniors. For a moment let us all imagine what it must be like to be a retired low-income senior, working hard to make ends meet on a fixed income, and then to have to devote almost 5 percent of that limited income just to figure out how much money you owe the IRS. Talk about adding insult to injury. It's time to cut the hassle tax, the anxiety tax, the confusion tax of having to complete an endless, complicated tax return.

Mr. Burns and I want simplicity and an end to the enormous compliance tax for all Americans. Today, I am proud to stand with the gentleman from Georgia as he leads the first phase of the campaign--relief for America's millions of senior taxpayers. This reform is long overdue. I thank the gentleman from Georgia for making it happen.

Mr. Speaker, over the last few years, we have been able to cut taxes; but we have not been able to simplify those taxes. Maybe this is a step in the right direction. And I am the prime sponsor of the flat tax because there is so much favoritism that is now incorporated by special interests, lobbyists and groups putting into our Tax Code, that every favor becomes a disservice to everybody else that has to make up those taxes.

Today the Federal Tax Code has 400 percent more words than the Bible and accompanying the law are a staggering 2.5 million pages of regulations. As a result, it now takes a person filing a 1040 form a full 13 hours and 27 minutes to do their taxes.

H.R. 4109 helps seniors reduce this burden by requiring the IRS, and not leaving it to their discretion, where some administrations might say, let us go ahead and have a 1040S and some administrations say, well, we do not need the 1040S. But this would require the IRS to have a more simplified version of the tax form for seniors.

Under present IRS rules, more than 35 million individuals age 65 or older are not permitted to use the 1040EZ; and the ratio of seniors to all individual income tax filers is growing. According to an IRS study, the return filing population aged 65 and over will grow from 10.7 million in 2000 to 12.5 million in 2010. In light of this trend, the IRS has been considering, like the gentleman from North Dakota (Mr. Pomeroy) suggests, a simplified tax form for seniors. This legislation will assure IRS follows through on its promise to make such a form available. In particular, the bill requires the IRS to offer to individuals age 65 and over a form 1040S that is as similar as practicable to the 1040EZ.

The IRS is instructed to make the form available notwithstanding the receipt of Social Security benefits, distributions from a qualified retirement plan, annuities or other deferred payment arrangements, interests or dividend or capital gains or losses.

Finally, the IRS is instructed not to establish an income threshold for use of the form so that seniors with incomes in excess of the $50,000, the current threshold for form 1040EZ, will be permitted to use the simplified form.

The IRS estimates that as many as 11 million seniors will use the new form in the first year it is made available.

As one of the few members of Congress who does his own taxes, I am well aware of the mind-numbing complexity of figuring out the income tax. As the old saying goes, there's nothing certain but death and taxes. We can't do anything about death, but we can and should make taxes as fair and easy as possible.''