By Dan Horn
The Cincinnati Enquirer

IRS Commissioner Mark Everson

More people than ever are using tax professionals or computer software programs to help prepare their tax returns.

Convenience is one reason for the trend, but Internal Revenue Service officials say the increasing complexity of the federal tax code is what's driving most to seek help.

"If the law gets too complicated," said IRS Commissioner Mark Everson, "people just throw up their hands."

He said about 60 percent of all tax returns are now prepared by professionals, and many of the rest are prepared by taxpayers who use software programs to help them file over the Internet.

So far this year, 45.8 million tax returns have been filed electronically, a 12 percent increase over the same period last year.

Everson said tax returns have become so complicated that many people feel they have no choice but to turn to a professional or to a computer program to interpret the rules and do the calculations.

He said the complexity of the system, as well as a drop in IRS audits and enforcement activity since the mid-1990s, has hurt collection efforts and emboldened tax cheats.

"If people can't understand their responsibility, they're less likely to comply," Everson said.

The annual tax gap - the difference between taxes owed and taxes paid - has grown in recent years from about $250 billion to $300 billion. And at the same time, the public's respect for the system has declined.

An IRS poll found that the number of Americans who said it was all right to cheat on their taxes grew from 11 percent in 1999 to 17 percent in 2003.

Everson said the solution is boosting enforcement and simplifying the tax code, two things the IRS can't do without help from Congress, whose members make the rules and set the agency's budget.

In the past few years, Congress has cut the IRS budget, added new rules to the tax code and ordered the agency to shift resources from enforcement to customer service.

"That's what created this problem. It created a kinder, gentler IRS," said Ross Brown, a special agent and spokesman for the IRS in Cincinnati. "It's hard to be kinder and gentler in criminal enforcement."

Brown said criminal enforcement in the Cincinnati area has remained steady despite a decline nationally, which included a drop in property seizures from 10,700 in 1995 to just 400 in 2003.

Everson said help for enforcement is on the way. The number of individual audits already is on the rise - the odds of a person being audited now are about one in 150 - and the expected hiring of 5,000 new agents should boost those numbers further.

"Our feeling is that when we invest a dollar (in enforcement), we get five or 10 times that in return," Everson said.

The complexity of the tax code may be a tougher problem to solve. New rules keep making tax returns more complicated, and efforts to simplify have gone nowhere.

IRS officials say the next best thing to improving the system is doing what they can to help people navigate it.

Their efforts include a free-filing online program at www.irs.gov and encouraging taxpayers to take advantage of software programs.

Everson said the software has been a great help because it is more user-friendly than paper returns and because the computer does all the calculations.

If the information going in is correct, math errors are eliminated.

The error rate for electronic filing is 1 percent, compared with about 20 percent with paper filings.

"People are using this software because many are unable to do it themselves," Everson said. "The days of people feeling comfortable doing their taxes themselves ... are receding."

Email dhorn@enquirer.com