Source: Fortune
Summary
Tax compliance costs Americans an estimated $146 billion annually, with individuals spending an average of $864 in time and expenses to file their taxes. Businesses also bear a significant burden, with an estimated $126 billion in staffing and expenses. A new analysis by Postal, a virtual mailbox and compliance service, found that Americans will spend 2.1 billion hours on Form 1040 in 2026, with the IRS expecting to receive 169 million returns. The complexity of the tax system is not accidental, with companies like Intuit and H&R Block lobbying against the IRS’s Direct File program, which would allow taxpayers to file directly for free.
Our Reading
The numbers tell one story.
Max Clarke, cofounder of Postal, notes that compliance is “fragmented, deadline-driven, and overwhelmingly manual.” The physical dimension of tax compliance is easy to overlook, but Clarke points out that critical IRS and federal agency notices are still sent by mail. The USPS’s decision to no longer guarantee same-day postmarks on mailed returns adds an extra layer of risk for taxpayers. Companies like Intuit and H&R Block have a vested interest in keeping the tax system complex, having spent millions lobbying against the IRS’s Direct File program.
The system is designed around friction, where the friction is profitable for a select few and expensive for everyone else.
Author: Evan Null
