The income tax compliance cost of big business

A survey of 1,329 of the largest corporations in the United States reveals that the average annual cost of compliance with federal and subfederal corporation income tares is approximately $1.565 million, implying an aggregate annual compliance cost of over $2 billion. As a fraction of revenue raised, these compliance costs are lower than estimates that have been made for the individual income tar. The cost-to-revenue ratio is higher for state corporate tar systems than it is for the federal tar system, presumably reflecting the nonuniformity of state tar systems. There is near unanimity among senior corporate tar officers that the Tar Reform Act of 1986 added complexity to the tar system resulting in a combination of higher compliance costs and less accurate information transmission. They point to. in particular the alternative minimum tar, inventory capitalization rules, and the taxation of foreign-source income as growing sources of complexity.