Complex tax form confuses citizens

WASHINGTON - As the final crush of Americans rushed yesterday to stuff mailboxes with their 1997 tax returns, few forms were drawing more anger and exasperation than Schedule D, the capital gains form, whose labyrinthine steps would challenge Theseus, the maze-conquering hero of Greek myth.

Taxpayers can thank the 1997 tax law for creating the new Schedule D by establishing four - count 'em, four - tax rates for capital gains, which are the profits from sale of stock, real estate and other assets.

The capital gains form, which has metastasized from a one-page, 19-line form to a two-page, 54-step Rube Goldberg machine of higher mathematics, is so complex that even the people who wrote the law are tossing up their hands. House Ways and Means Committee Chairman Bill Archer (R-Texas), who always brags that he does his own taxes, for the first time resorted to a computer program to prepare them this year, his spokesperson said.

And unfortunately, a lot of people who should have filed Schedule D didn't realize it. The Internal Revenue Service is sending back more than 1 million returns because they failed to include Schedule D. That's an unusually hefty chunk of the 20 million or so people who were expected to report capital gains this year.

Republicans around the country honored the federal tax filing deadline yesterday with news conferences and events to call for abolishing the tax code and replacing it with a simpler, fairer system. But GOP fingerprints are all over the 1997 tax law, which is responsible for not only Schedule D but also a host of other new complications in the tax code.

04-16-98