The IOWA Farm Bureau Federation is a general farm organization with a membership exceeding 149,000 families. Farm Bureau is a voluntary organization which is united for the purpose of analyzing common problems and formulating action to achieve economic opportunity and social advancement. The Iowa Farm Bureau offers a number of services to its members in order to achieve these goals. In response to the members' growing need for accurate recordkeeping, Farm Bureau created a farm records division in 1966 to help members prepare and maintain needed documents.

Farming combines traditionally separate industrial functions. The farmer both labor and management. Crucial to his or her managerial role is the ability to keep detailed, accurate records. At its inception in 1966, Iowa Farm Bureau's farm records division assisted 504 farmers/taxpayers. In 1982, this number has grown to 3,264. In large part, this increase is due to the increasingly complex tax statutes, regulations and forms. In order to minimize tax liability, farmers as well as all individuals, must maintain a plethora of records.

Non-self-employed taxpayers with little dividend or interest income have few forms or schedules to submit when completing the form 1040. However, a simple farm transaction, for example - the sale of a cow purchased for breeding purposes and held more than two years - may involve as many as seven separate steps with reporting requirements for each.

Step 1: The sale must be reported on form 4797 (sale of items used in business).

Step 2: The calculations on form 4797 must then be transferred to schedule D (capital gains and losses).

Step 3: The figures then must be transferred to form 1040.

Step 4: Since the cow was a purchased cow, the farmer must complete form 4255 (investment credit recapture). Then this figure would be transferred to the 1040.

Step 5: The amount of depreciation on the cow must be indicated on form 4562.

Step 6: This depreciation figure then goes to schedule F (farm income and expenses) and then the schedule F figure is transferred again to form 1040.

Step 7: If the farmer sells several cows in a year and has substantial capital gains, the farmer may have to complete form 6251 (alternative minimum tax) with the results of these calculations then transferred to schedule 1040.

As you can see from this example, farmers still are overly burdened by the income tax reporting system. Our farm records division reports that their paper work has not been reduced; and in fact, the major result of the Paper Works Reduction Act is that the forms are now accompanied by a paragraph stating that the information is necessary to carry out the Internal Revenue laws of the United States.

It is difficult at best to separate form from substance when the subject is taxes. The IRS is in an unenviable position of gleaning legislative intent from acts of Congress, and proposing workable and understandable forms to implement the law. As tax laws become more complex, thereby requiring the IRS to administratively develop forms and schedules, the ability of taxpayers to comprehend the regulations diminishes arithmetically, more likely geometrically. Given our voluntary tax reporting system, this is a most troubling trend. The incentives to abuse the system may be linked to complex statutory changes, which the IRS has little choice but to implement. Perhaps it is time to not only examine IRS forms, but also the laws that spawned the forms.