Estimating the Compliance Cost of the U.S. Individual Income Tax

Abstract

This paper focuses on the design, development, and use of the Individual Taxpayer Burden Model (ITBM)— a microsimulation model developed jointly by IBM and the 1RS to estimate the amount of time and money that individuals spend on federal tax compliance. First, the authors summarize the methodology that was used to define, measure, and model tax compliance burden. Next, they present estimates of overall compliance burden, and results from a simulation of economic and policy changes that took place between Tax Year 2000 and Tax Year 2001. Finally, they discuss applications of the burden model and review future development plans.