> Intuit spent at least $25.6 million since 2006 on lobbying, H&R Block about $9.6 million and the conservative Americans for Tax Reform roughly $3 million.
> In contrast, the NAACP has spent $140,000 lobbying on “free-file” since 2006 and Public Citizen has spent $110,000 in the same time frame.
With two orders of magnitude of lobbying dollars difference on either side, I'm surprised this is going anywhere.
> “An IRS direct-to-e-file system is redundant and will not be free – not free to build, not free to operate, and not free for taxpayers,” Plummer (a spokesman for Intuit) said, adding that it “will unnecessarily cost taxpayers billions of dollars.”
Oh, like the system your company built and lobbies for? How do you say stuff like this out loud without your pants bursting into flames on the spot?
I can definitely foresee a future, based on governmental record in publicly-facing IT systems, where every single word of that statement is technically 100% true.
First part is all but tautological - Of course it won't s not free to build or operate; and thus it wouldn't be "free for taxpayers" in the most technical sense (this doesn't mean it wouldn't be excellent value or save money overall or even cost more money but save it where it counts).
It's the last sentence (unnecessarily cost taxpayers billions) that could go either way. This could in principle end up an efficient and effective, easy to use and helpful well performing system that's a brilliant investment of public money.
I hate to say it though, but it's also extremely possible it would cost a lot of money with nobody using it because it sucks.
Besides, it feels like in the USA, IT systems are only a part of issue with tax system. Actual tax code and submission options are the bigger part.
It could completely suck and still be incredibly useful if they would just tell me what 1099's (or other) they have on me. They're going to eventually if I don't file it appropriately.
For instance, I just received some mail that I owe tax based on my Uber and Lyft earnings. One problem, I never worked for either. So now I'm expected a big slog through paperwork to remedy this problem that happened a couple years ago. Oh, and it may continue on to the next two years. I have no way of knowing what they think they know about me.
I thought you could get your tax transcripts from the IRS any time off the website, unless you make over a certain amount of money (to be fair, I think most HackerNews readers do exceed that limit..)
That's really interesting. I've never been able to see anything like this on their site before.
Also interesting is my account balance is currently $0, and I know that's not true even if they 100% believe the last mailing denying my 1099's from Uber and Doordash (not Lyft as I said above).
Incidentally, Neither Uber, nor Lyft can help through customer service. I was thinking of taking them to small claims court since I'm not bound by any forced arbitration.
It was 17 pages of mail with SSN, all my tax info, accounts, etc... Even if it were sent to someone scamming me (and I know it was sent to the IRS), I would have been sending back less info than they sent me.
The mail I was sent does match the the 1099's in irs.gov. So maybe the mail I sent back was believed and they just zeroed out everything as the only dispute left would have been around $13.
I'm sure it will play out over time. I've had a couple interactions with the IRS over the years and it's always been a fair experience. I'm sure Uber and Doordash will have a hard time providing any valid identification to the IRS.
USGov hasn't nationalized a company like that since WW1 when they seized Merck, and even then they just sold it back after the war. We'll nationalize utilities, transportation and transport-adjacent industries like airport security. Also finance companies will drift into and out of state control, as finance companies do.
But USGov would far sooner regulate the tax prep industry more heavily than simply take it over. We ain't no China.
A few more news stories suggesting Intuit is going to see a huge drop in revenues from this free IRS offering should bring that number down significantly.
Honestly I don't see how it would impact them significantly. Intuit already offers free file for the cases that would likely be covered by this tool from the IRS.
> I hate to say it though, but it's also extremely possible it would cost a lot of money with nobody using it because it sucks.
IMO The government should directly be hiring the best and the brightest with the pay to match. I would be more than happy to pay more taxes at my pay grade (or would support higher capital taxes) for free e-filing that's easy, fast, and multiplatform. However my taxes are raised would surely be cheaper than what I pay my accountant annually to file for me.
It's ridiculous to me that government contracting is always expected to cheapen out for "efficiency". Governments should have excellent software and product minds on staff at all times to manage communication and data internally and externally, imo.
Yet most US constituents, of all parties and socioeconomic status, seethe at the thought of a government worker of any level making “too much” money.
It doesn’t matter that someone working for the government has the potential to have a much higher impact on a nationwide level than some rank and file worker who works at some blue chip auto insurance company, the moment increased pay for government workers is even brought up, that person imagines it as coming directly out of their paycheck.
See teachers, urban planners, sanitary workers, NASA scientists, etc…
It’s a shame, because I have the unpopular opinion that _more_ government, filled with talented people who actually want to _fix_ the issues they’re passionate about, is the answer to almost all of the USs domestic problems. Right now the highest paid government workers are those on the brink of retirement in administrative positions so far removed from any real work. A bureaucracy of gerontocracy, if you will. I really wish the government (not the political world, but the civil staff) was seen as as a place for passionate young people to aspire to, with the pay to match.
This is pretty simple to explain: Governments respond to a completely different incentive structure than private companies. It shouldn’t be surprising that their outcomes differ, even (especially?) when the government spends more.
Here's the thing, though. Tax filing should not be a thing nearly anyone actually does. The IRS already knows what you made. I should be able to log into a website and verify that it's correct, or receive a letter, or both, and sign off on it. If my tax situation is complicated then I should be able to log into that same platform and tell them that I will be filing proper documentation.
I agree with the rest of your statement but while Conservatives exist with their two Santa Claus nonsense then it won't matter.
Think about all the information (marital status, dependents, residence, childcare spending, healthcare spending, education spending, charitable contributions, …) you need to correctly calculate your taxes owed. Now imagine that the IRS is tasked with maintaining all of this information in a single database so they can send you your “statement”.
Folks argue that most of this information is available to some level of government already, but that’s a far cry from centralizing all of it in what by definition must be an easily accessible form.
Dramatically simplify the tax code and this approach becomes feasible without being a security and privacy nightmare.
> Think about all the information (marital status, dependents, residence, childcare spending, healthcare spending, education spending, charitable contributions, …) you need to correctly calculate your taxes owed. Now imagine that the IRS is tasked with maintaining all of this information in a single database so they can send you your “statement”.
There's nothing hard about updating a few values with these then you're done in five minutes. State governments already do simple walkthrough forms and federal is really no different. If you have a complex tax situation then that's your problem to deal with. Don't burden 99.9% of the population with something that should be free, should be simple, and should be fast.
It’s actually not. I lived in a country that filled out the forms.
I actually had to dig up pay statements, etc to confirm the information. I’m glad I did because my employer made a mistake on a retirement contribution.
So what did it save me? Maybe typing in some numbers, which is probably 5% of the total effort.
The issue is the complexity of the tax code. It would be great if the IRS pre-filled forms, but the forms aren’t going away.
Many people won’t review the dozen or so pages of forms to make sure they’re correct. No doubt that will favor the IRS, not the tax payer.
This is a bad take in my opinion. First of all, we already have W-4 forms today, where you report your intentions to the government, vis-à-vis married, single, etc — they just need to be updated so that you send it in to the government (a joint one for couples) when you make a change (birth, marriage, divorce, deaths). Most people are not eligible for child care deductions, nor healthcare deductions, other than the ones that come through an employer program which can already be reported to the government without your interaction. Education tax credits are based on 1098(?) forms the government should already have their copy of. Also most people don’t give enough charity to bother with those either.
You could log into a website occasionally and upload charity receipts or click through a wizard to apply for a deduction for one of those deductions most people don’t use, but the flow for basically 80% of taxpayers, and essentially 100% of the bottom 70% of earners, should be a quick form update when life changes happen, and a yearly EITC-funded refund check that just shows up.
This is a lot like the argument that Microsoft’s Office products could be so much simpler: 80% of users use only 20% of the features.
But of course everyone in that 80% uses a different 20%. When you consolidate the overlapping deductions, credits, exceptions, exemptions, … you end up with a staggering amount of data required to accurately “pre-compute” income tax bills for even 80% of taxpayers.
“Quick form update when life changes happen” is, I think, an overly sanguine way to express a requirement that grieving parents file paperwork with the revenue service when a child has passed. That’s a bit melodramatic, but my point is that centralizing the execution of a complex tax code inside a state bureaucracy creates a perverse relationship with the folks who are supposedly in charge.
Once all the calculations are taking place in an opaque, voracious IRS database, what constraint is there on even more complex taxes and exemptions? Your doctor knows you’re a smoker. Should you pay a Medicare surcharge? ACA plan purchasers already do, in contrast with most private employer plan members.
No, no they don’t. Because we already have determined what most people use and made a special form for them called 1040EZ. It only offers simple things but is enough for most people. Then there’s the 1040A which goes a few steps further but is still simple. Millions and millions of returns are submitted on these short forms every year. These filers are proving that they don’t need complicated deductions and stuff because they already don’t use them.
> grieving parents file paperwork with the revenue service when a child has passed.
What are you talking about, in our current system you’d be filing next April and omitting the deceased person from the list of dependents. Your grieving strawmen would be able to take many months to go update the info before the cutoff when they print your check/bill (likely it would be minimum 4 months after year end like it is today).
> Once all the calculations are taking place in an opaque, voracious IRS database, what constraint is there on even more complex taxes and exemptions?
I don’t really want to talk politics on here, but I think this is a separate battle to fight. The tax system is already ridiculously complex because it’s trying to use the tax system to incentivize/punish behavior and at least two parties/factions have engineered it, so it’s quite confused. All politicians will continue to use this to scam the people who they like less, for the benefit of whoever they like more (campaign contributors) and they obviously don’t mind complexity even when it’s on taxpayers to compute. All things equal I’d rather force a computer to compute it and know that I can’t be audited for not understanding tax code.
Because increasing the friction around paying taxes makes people angrier about having to pay taxes and plays into larger political narratives around whether the government is effective or not.
It’s a huge, political dark pattern designed to keep people angry at the government to lower public sentiment towards the government.
I don’t think being sent a statement of account is what causes other nations’ countries to not get riled up culturally about tax. To the extent that a nation’s populace doesn’t get riled up about the taxes they pay, I think it is from a feeling of (a) representation and (b) the tax dollars being spent effectively.
In the US there is a feeling of lacking representation on both sides, which I suspect is due to corporate lobbying and the culture wars, and I think a feeling of ineffective spending, again I think due to lobbying, and also pork barrel projects.
I think the answer is to remove corporate lobbying and limit campaign spending.
Agree, as an American now living/working overseas, it is mind blowing how easy it has been to deal with taxes in my foreign country - I don't have to do anything. Taxes are withheld out of my paycheck, and this foreign government sends me a letter at the end of the year telling me how much I paid. I don't have to submit anything. So much easier.
Except I have to still have to spend $ to Turbotax efile an American IRS return to tell the IRS I owe no taxes. How dumb is that.
Our tax system covers a lot more types of 'income' than most other countries. The USA taxes you on all earning worldwide, but they don't see anything out side of the US. Now since 1993 you are supposed to declare any foreign bank accounts too. And there are many still cash based businesses that they can't easily estimate your earnings for. It is crappy, and it is also part of lobbying to keep in complex. Both accountants, lawyers and for the lower classes the tax preparation companies all want complexity.
That kinda doesn't matter. Those things account for a single-digit (at most) percent of all taxpayers. People with complicated tax situations will have to do more work to pay taxes. But well over 50% of US taxpayers could make use of a simpler, IRS-provided system wherein they just get sent a bill and can choose to pay or contest.
This doesn't impact most people in the USA. A simple system offered for free by the IRS is good enough for 99% of folks. If you have a complex situation then that's your problem to pay for. Not mine.
I think GP is suggesting that some interests want the process of filing your taxes to be annoying/frustrating/degrading/disruptive to increase anti-tax sentiment.
(I.e., most people have already been deprived of the funds for some fraction of the year; what interest is served by making them waste time finding records and jumping through hoops and potentially paying a third party to help them provide the IRS with information that it mostly already has?)
I think there's another group of people who want to more closely tie the notion that "government is funded by taxes" to "government spending programs are largely choices in the short-term and entirely choices in the long-term".
To that end, I would like taxes to be due about 4 Tuesdays before the Election Day Tuesday. If you want to vote for politicians who are campaigning on spending a lot of taxpayer money for good programs, so be it, but do it with recent memory of having paid your taxes (assuming you are in the slight majority* who pay federal taxes on net). If you want to campaign on spending a given amount of taxpayer money, whether more, the same, or less than today, your campaign should be interpreted close to taxpaying time.
I don't want it to be more onerous or annoying to pay taxes. I do want people to recognize that taxes and spending are linked (and frankly, ought to be more closely linked than they are today, IMO).
* - which until very recently was a slight minority of households who paid federal taxes on net.
>I would like taxes to be due about 4 Tuesdays before the Election Day Tuesday.
Most people pay taxes in small increments every 2 weeks then get a refund around tax day, so your plan may not do what you think.
>I do want people to recognize that taxes and spending are linked
To your own point, they really aren't. [0]
>But do it with recent memory of having paid your taxes (assuming you are in the slight majority* who pay federal taxes on net)
To add some color on this [1]:
But, for the most part, people don’t pay income tax because they have little income. About 60 percent of non-payers make less than $30,000 and another 28 percent make between $30,000 and about $60,000.
Of the 72 million households that will pay no federal income tax this year, about 24 million, or roughly one-third, are age 65 or older.
Oh, right. I did skip stating an important step in the plan [so, upvoted]. I would do away with the withholding scheme (perhaps creating a parallel savings mechanism) and force income earners to write a check/do an ACH for their taxes.
Under that system, I'm totally fine if people get a $1K refund after writing a check for $15K in taxes withheld. That would still demonstrate the linkage sufficiently to inform their voting choices.
Sure, but again to your own point, the share of voting Americans who don't earn income (and therefore pay no taxes) because they are over 65 is already 1/3 and only going to increase.[0]
There will always be zero tax payers with the right to vote.
That's OK, especially since most of those who are now over 65 and retired worked and voted on reps/platforms/policies from 18-65 and earned income/paid taxes for probably ~40 of those years.
Is the status quo not fairly neutral in terms of which aspect of government spending is more fresh in peoples’ minds—the benefits vs the cost? Otherwise this just seems like it’s about biasing people in a particular direction.
I think what you really want is a receipt of how your tax money was spent for say, anything above $1.
The problem is that would only apply to federal taxes. Not state or local income taxes, nor real estate taxes, or retail tax, or tax on gas or other things you might buy or use.
I'm not sure if you're describing something else, but tax withholding is voluntary. You can opt out and choose to pay your estimated taxes as a lump sum, but that also requires a level of budgeting that I'd argue most people don't have the financial literacy/self-control to do effectively.
I did this as a 1099-contractor, since that’s about the only way to do it as a contractor.
Paying estimated quarterly taxes four times a year wasn’t bad. I calculated my withholdings, remitted my tax payment through EFTPS, and was never surprised at tax time. I don’t think I ever got a refund or owed when I was doing it myself.
I learned that many people who have never contracted before are shocked they have to do this, lost on how it works, and had (then) no good place to go for actionable advice. I found that surprising and kind of sad in a way. We could be doing so much better with financial literacy.
This brings something up which I don't understand about US tax code. Why can't I be taxed on income which I've already earned instead of having to estimate to within ~5% (IIRC) what I should earn? I'm sure there are reasons for this, but this seems broken.
I think this is largely do to having a progressive and conplicated tax system. If work one job, earn salary, don't receive a variable bonus, and work the whole year at the same rate, it's easy enough to calculate.
But, get a raise, take a pay cut, find a new job, start or stop a second job, or a third, or fourth, get paid hourly, get sick, take time off to care for a sick family member, have a kid, go back to school, graduate, get married, get divorced, get a mortgage, pay down your mortgage, ... There are all sorts of scenarios that could change your tax situation on both the federal and state level, making it difficult to calculate how much you would owe up front.
What it really boils down to is our tax codes suck, and too many rich folk are keen on keeping it that way.
Please explain in detail the legal process that allows you to opt out of paying your payroll taxes as you go and instead pay after the tax year has completed.
An individual can't ever opt out of payroll taxes, that's an employer's responsibility. Income tax withholding, however, can be adjusted with a W-4. As others have mentioned, though, anyone making a reasonable income is going to have to pay estimated quarterly installments or get angry letters.
Setting aside the 90% thing, to your original point, paying taxes is not a voluntary thing. There is, however, at least some flexibility in how you pay them.
The flip side of this is: who cares, withholding is actually fine. For a vast majority of people, estimated withholdings is pretty close, and the few percentage points one might earn on a $1k refund in the meantime just isn't worth it.
In my opinion, the best easy tax situation would be that at the end of the year we can skip (most of) the filing step and I either get a check or a bill.
Edit/delete window is past, so mea culpa for anyone else in this thread: sibling comment from bandyaboot is right on the limited path to exemption. I was mistaken on how much withholding flexibility there was for employees (aside from increasing it), and how much W-4 allowances could realistically (or, rather, legally) have an impact. https://www.irs.gov/publications/p505
To dispense with the unnecessary snark, you can claim exemption from withholding, but only if you had no tax liability in the previous tax year and you expect the same to be true of the current tax year.
We've had the last few years of one party demonizing the IRS, insisting they're "coming after" the little guy. I suspect trust in something like this is already starting on shaky ground before it's even rolled out, which may contribute to "it's such a waste - no one uses it!". Even if a substantial of people that need this the most (people least able to afford any filing fees), this will continue to be fought. :/
I’m immediately reminded of the healthcare.gov project, starting out with a budget of ~$90 million (which is already suspiciously high) and subsequently costing ~$2 billion, before launching with so many issues that it was initially unusable.
Yes, and what came out of that? Some of the people who rescued that project with modern software development practices went on to found Nava, a public benefit corporation, to help the government do better work:
I also have a friend who left Google to join numerous other high performers at 18F and know for a fact that they have done good work benefiting taxpayers:
I believe the U.S. Digital Service is better than it once was, and while it's not all rainbows and unicorns and super efficient everywhere (no doubt there are tons of huge problems with money being wasted), I do think there is improvement, and hopefully some people reading this will go help out.
I'd much rather ATTEMPT to have an efficient free-file system than not try at all.
Running over budget? Sure. But I’ve worked on much more complicated outsourced corporate projects for companies whose total revenue is only a fraction of $2 billion. Public sector inefficiency is in a league of its own.
To be clear I’m not saying it’s a bad idea either, or not worth the money. But I would be surprised if it didn’t cost billions to implement.
It didn't cost billions and it was a key incident that led to a huge revolution in how federal websites and projects get built, e.g. 18f and the US Digital Service.
That was a much more technically difficult project than an IRS tax filing site will be.
It involved systems from multiple agencies and jurisdictions that had been developed separately and not been designed to exchange data with systems outside their own agency.
The IRS systems already talk to everything they need to talk to.
> cost a lot of money with nobody using it because it sucks.
For sure it could. Haven’t dug into the details yet but the #1 cause I’d expect if that does happen is if the government contracts the actual implementation out to…surprise, one of those same shitty firms, Intuit and H&RBlock. And they would build it to suck basically on purpose. I hope existing players in the paid tax return space will be excluded from being part of building whatever this is, as it would be a huge conflict of interest.
Just because it's true doesn't fireproof their pants. They already operate a service that is not free to build operate, and we know beyond a shadow of a doubt costs taxpayers needless additional billions of dollars.
So then why would the taxpayers not want to invest an alternative that could spend "needless billions" to save additional needless billions?
>With two orders of magnitude of lobbying dollars difference on either side, I'm surprised this is going anywhere.
I think everyone should use this to update their priors on the impact of lobbying. Government action is not contingent on a dollar vs dollar comparison. Citizens United did not result in a raft of unpopular legislation being passed. (Not saying it was the right decision, just that its impact was overstated.)
We should all feel heartened that our government is responding to good arguments over lobbying dollars.
Another one we should keep fighting on is Right to Repair. John Deere and the like can put as much money into the fight as they want - as long as we have people like Rossman being gadflies, sanity will win. Eventually.
Frankly, by far the biggest impact of lobbying happens when one side has anything at all, and the other side doesn't. Most lobbying isn't bribery, as much as it is spending money to get create a situation where the politician will listen to you explain your case. When the politician has heard both sides in such a manner, they'll basically vote with their conscience. When only one side has explained their argument, it's a lot easier for the politician to vote with that one.
It's not a crazy statement. I expect the IRS's system to be worse and more costly than TurboTax on the technical side, at least initially. But it's a step in the eventual right direction; I shouldn't need a third party to pay taxes.
If I were Intuit, I would be spending that on making sure the IRS selected us as the sole provider of their free tax software. Then make sure it's slightly more annoying than using TurboTax so I could get paid twice for the same job.
It would be an epic failure if the government issued a tax collection software contract out and didn’t put in some sort of clause preventing intuit from providing a competing service. I have a hard time seeing them do something like that.
The product is fine. It doesn't really need radical improvements. That money should have been returned to shareholders.
What it needs is to not exist. The product does a fine job of doing an unnecessary thing. For the vast majority of users it should be a tax bill or refund check that arrives with no user intervention at all.
The remaining use cases should be handled differently -- perhaps by a professional. That professional may themselves want such software, but it's likely a different interaction than software also aimed at users with much simpler use cases.
But lobbying has such better ROI!! .. We also need lawys from the federal level that all these "known" things must be pushed to the IRS and the state and local use that as their source of information .. Then this software just needs to deal with federal deductions that aren't digital or optional like charity .. We have such a dumb system
I'm not arguing one way or another but one point the tax software companies do have is who pays the cost. In the commercial product arena, the products are bought by people who make over median wage. The lower income folks have simpler taxes usually. The free products cover them generally. I may be wrong but that's how I see it. I didn't feel the need to pay for any software until I was making a lot of money (relative to median) and managing a lot of assets.
That might be true in theory, but in practice companies like Intuit and HR Block use dark patterns to trick users into paying when they should qualify for free filing.
And you pointed out exactly what the problem with the current system is.
The rich can pay someone to do the work for them. This saves them time, stress, energy, etc. The poor cannot. They have to do all this themselves and then they’re open to the risk of actually getting something wrong. And the impact of getting something wrong is highly imbalanced. If they get something wrong and end up paying more tax than they need to there will never be a second thought given to it. But if they mess up and pay less taxes than they should they will be hit with a penalty, interest, and even maybe an audit.
And the idea that everyone should be reasonably competent in taxes seems a little ridiculous to be honest especially when no one is taught how to do taxes in any point in their lives.
An alternative might be to teach how to do taxes in school, but at that point the cost of teaching taxation would far exceed the cost of developing this software, never mind the human hours that are wasted.
> If they get something wrong and end up paying more tax than they need to there will never be a second thought given to it.
Anecdotally, I messed up copying tax owed from the table a couple years back, and the IRS sent me a letter telling me I made a mistake and overpaid, along with a check for the difference.
In any case, a lot of the complication in the tax code comes down to the government incentivizing certain behaviors, so it makes sense that we should put more focus on teaching people to read the rules and find out what those incentives are. Of course a free calculation tool to run simulations could help people to understand those rules, and we ought to make the actual filing more convenient for everyone.
True, the IRS is generally really good about fixing and refunding basic math errors. Had you missed taking a tax credit you were eligible for, there’s approximately zero chance you would have received a similar letter.
Another alternate is to eliminate the federal personal income tax. W-2 employees would get immediate increase to their take home pay and employers would get out of tax withholding chores. Feds can just increase the already large deficit spending to cover the tax reduction or reduce spending.
Deficit spending is already the highest it can be without jeopardizing the Dollar. Sometimes I think about them reducing spending instead, but then my alarm clock wakes me up.
If you are self-employed, you have to pay for TurboTax regardless of your income level. We had to pay for TurboTax when I was a student and my wife was making $20k a year teaching music lessons.
You don't have to, you could try to do the paperwork yourself and severely screw it up like I did as a contractor right after college. Or really roll the dice with a pirated TurboTax.
Many of the lower income folks I know are too nervous/not comfortable with their own ability to file their own taxes and use tax preparer services. Some also do this in the hopes of getting their return quicker, so they not only pay to file but then get hit with the equivalent of a payday loan on their return.
But do 40% of households not file tax returns, because that is what we are talking about here, and I'm pretty sure a large portion of that 40% do file because they get refunds/rebates, and I'm pretty sure a large portion of that portion use a service because they can get their refund/rebate quicker (though as a loan at payday loan advance rates).
I'm not disputing that many of them file a return. I'm saying that they wouldn't possibly be paying for this system, which is paid for by federal taxes.
> The lower income folks have simpler taxes usually. The free products cover them generally. I may be wrong but that's how I see it.
Sure, but that's also how taxes generally work as well. People making less money will be paying less for the IRS service just as much as they would be paying less for the TurboTax system, as it currently is.
> The lower income folks have simpler taxes usually
Not sure about that. They qualify for a lot of complex rebates and stuff. When you make a certain level that they consider middle-class, suddenly your taxes become a lot easier (in a bad way).
About a year ago, I got audited by the IRS. It was 100% my fault; I had sold a good chunk of stock in 2020 and but forgot to report the capital gains on my tax form (a tax form that was, evidently, automatically approved by the fed in about ten minutes!).
So last year I got a bill in the mail for $8,000; $7,000 for the actual taxes I owed, and a $1,000 fine. I was able to call and get the fine lowered (thanks to advice I received in HN actually!) and I wasn't "angry" with anyone but myself. I did owe the money, I didn't blame the IRS for wanting it.
But it did kind of make me wonder something: if the government was able to find out that I screwed up on my taxes, then why am I doing anything? Clearly they have all the data and information necessary to determine how much I actually owed, and clearly they were able to spot my mistake, so why make me pay $60 for TurboTax at all? Why not just send me a bill or refund every year?
Because you could have gotten married, been blinded, and started a business grossing $900k but only netting $100k a year and they would know none of that outside of a couple of 1099s.
What they did for you though is look at your return, and saw you didn't declare investment income that they knew about from a 1099.
But your point is wrong. In 87% of the cases, the IRS does have all the information. Even if you have donations or other deductions it doesn't matter, because 87% of people take the standard deduction since it's more than their itemized deductions.
And marriage and death records are public, as are probate. So they would have all of that too.
That's not what they said at all. Most people are not changing marital status or starting businesses every year.
The IRS could send a tax bill for what they do know, with an option to agree that is all you owe and pay, or an option that you will need to file the taxes yourself because they are missing information.
For the vast majority of Americans, option 1 will cover them.
I think it’s likely the IRS uses some kind of database of US vital statistics (including marriages) as part of efforts to detect tax fraud. Other federal agencies do, eg the State Department’s passport office uses a proprietary database called EVVE of birth and death data. [0]
Sure, but couldn't that be done on a case-by-case basis, and the fed just sends you a refund/bill at the end of the year that you're responsible for amending?
I'm not saying a company like Intuit adds zero utility, I'm just saying that I think a lot of taxes are simple enough to where it would be relatively easy to just give people a default thing. If the IRS gets something wrong, or is missing some info, then I think a software like TurboTax makes a lot of sense, but isn't that much more of an edge case? Fundamentally, the complexity of my taxes didn't really change in the last five years.
When the 1040EZ was a thing, only 16% of filers used it. Those would be the candidates who could safely have the IRS do their return. With anyone else, there's all kinds of information the IRS has no clue about.
Most people don't use the EZ because even the most common deductions (that the IRS knows about, like your mortgage and state taxes and your stock investments through a firm, etc.) couldn't be put on there.
But the IRS still knows about them.
Also they could put a website where you could spend five minutes entering the most common information they don't already know, and then spit out your bill.
It's not that hard. Most filers situations aren't that complicated.
>Also they could put a website where you could spend five minutes entering the most common information they don't already know, and then spit out your bill.
Same happened with me, though technically not an audit, and in my case the IRS didn't actually know the cost basis for the stock sale. I had to tell them, otherwise they assumed 0 and were going to bill me a lot more. So that's why they needed me.
Which goes to another stupid thing, for some reason the RSU brokerage doesn't report the cost basis. I guess to make it more annoying to sell company stock.
Most people (87%) take the standard deduction anyway because it's better than their itemized deductions. All those people could just take the bill from the IRS (that would include the standard deduction).
The could also put up a website where you spend five minutes inputing the most common deductions they don't know about. It's not that hard, most filers situations aren't that complex.
One of the most valuable things I got from doing my taxes through CPA's for decades boils down to a single word: Education.
Tax laws are complex and they are not going to change any time soon. As I said in another comment, we can't even build a damn high speed train --which is simple when compared to changing tax laws. So, let's not pretend the idea of simplifying tax laws is anything other than a fantasy.
The education I received through the years guided me towards understanding what one can do to use the legal tools available to all of us to reduce our tax obligations.
I emphasize "legal" because people somehow have equated paying less taxes to some nefarious thing. If the law says you can take deduction A by doing B. Well, do B and get deduction A. If you don't, you are leaving your money on the table out of pure ignorance.
The probability of and IRS easy file system providing this level of service to taxpayers is less than zero. I have never regretted paying a CPA to advise me and prepare my taxes. It's worth every penny.
I did actually get a human to do my taxes for me this year. It wasn't even that much more expensive, though I think I don't generally do anything too crazy deduction-wise.
Agreed. Yet, tax law is complex. And we are not going to simplify it any time soon. We can't even build a damn high speed train, let's not pretend this country can get anything of note done these days.
Intuit is a bunch of vampires stealing money from Americans. Every developed country in the world has a relatively easy tax system for citizens, but only the US operates in this insane way where they willingly tax citizens by not providing them with an easy way to do taxes, and instead sends them to the wolves of Intuit and others.
Because elected reps believe that they need to support constituent businesses in addition to constituent people. And those constituent businesses spend more money to ensure they are heard.
I have often wondered if we could split the house in two: one for people and one for industries. This would force transparency and bring the primary issue of double speak and lobbying to the forefront. It would turn them into official cogs in our body politik instead of forcing reps to work and speak in a duality.
Do you expect voters to switch sides of the aisle over this issue? If not, then politicians have no reason not to take industry money. After all, if you have access to all the campaign and other funds without losing voters, then it would be idiotic not to follow the money.
As someone from a country with ludicrously (needlessly) complicated tax law: Unless you have a really complicated situation, you just get a pre-calculated form on a government site you basically just have to look at and approve. That covers about 90%+ of everyone.
>Republicans on the House Appropriations Committee in June proposed a budget rider that would prohibit funds to be used for the IRS to create a government-run tax preparation software, unless approved by a group of House and Senate committees.
>The move “safeguards the IRS from an obvious conflict of interest where the tax collector becomes the tax preparer,” the bill’s summary states.
That doesn’t contradict what I said. Did you uncharitably assume “parties” meant political parties?
Also, per the site guidelines, please don’t make unnecessary accusations that someone has not read the article. Pointing out what the article says is enough—the self-righteousness doesn’t add anything.
Even developing countries! In my shitty country this year I got an email, and 2 days later my tax return money showed up in my bank account. I need to fill out some extra forms to claim my work from home tax benefit, but it's a minimal amount of effort, and it's optional.
> Republicans on the House Appropriations Committee in June proposed a budget rider that would prohibit funds to be used for the IRS to create a government-run tax preparation software, unless approved by a group of House and Senate committees.
The move “safeguards the IRS from an obvious conflict of interest where the tax collector becomes the tax preparer,” the bill’s summary states.
The one that affects most people is that the IRS system is "eventually consistent", but they do not currently have the information needed to file your return on the date your return is due.
If you don't believe me, request your transcript-of-records* on your account filing date. Then request it again in early fall. The latter will, IME, be complete while the former will not.
The one that affects only a subset of people is that many deductible items that go into tax returns are never shared with the IRS at all and only the taxpayer knows about them (today).
You're technically correct, but in most cases the date the original form was filed with the IRS was around the deadline. It just takes them a while to upload them all.
But we could also just make the filing deadline October for individuals. Most of those late arriving forms are K1s for partnerships that only file in April.
Technically, the use of the software isn't compulsory. You can still fill out the physical tax forms and mail them in.
That said, I am solidly on board with the IRS just computing the taxes for taxpayers and sending them a bill. Taxpayers who dispute the bill can then just file their own taxes as normal.
All your financial transactions are already reported by the other parties (including most foreign ones: I have an offshore account that reports to FATCA).
Your personal data (age, dependents, marriage) is also in databases recording births and status changes.
There would be a conflict of interest if the IRS was incentived to maximize tax revenues. Are they? Does anyone at the IRS get paid more if tax revenues are up in a particular year?
I would think that they're only incentivized to accurately apply the existing tax laws, and those laws are written by a separate entity.
US taxes arent complicated because of tax software lobbiests. In fact they are already very simple if you actually value simplicity. But people dont - they value paying the least in taxes as possible (as they should).
You can dumbly supply a small amount of information and be in complete compliance with the law. Virtually all complexity comes from proving ways in which you don't owe taxes and calculating how much. Thus, reducing complexity necessarily increases taxes for most cases. That means reducing complexity will always have lots of normal people rationally opposing it.
Tax complexity reductions need to be accompanied by tax cuts across the board.
Unfortunately your take is wrong, rather than controversial.
I do my taxes every year, sometimes long-form, sometimes with software like TurboTax. The complexity of my taxes is entirely the fault of the way in which I am required to provide information to the IRS, most of which they already know, even though I take the standard deduction and don't do any "tricks". A simply example is if you have any sort of stocks/bonds or other tradeable asset holdings. Reporting this is a massive pain in the ass, because despite the fact that Schwab/Etrade/et-al already report this to the IRS, they make you list the cost basis, date of purchase, and sale price of every transaction that occurred within the tax year as part of calculating whether or not you're eligible for long-term capital gains or are taxed at your marginal income tax rate (short term capital gains). Very closely related is transactions dealing with RSUs, which every tech worker (most of HN) has to deal with. This is despite the fact I work a relatively normal white collar job on a W-2 and don't even file a base 1099 on a yearly basis.
Taxes are complicated in the US because our tax code is bonkers and we're forced to precisely input a whole lot of spreadsheet bullshit that the IRS already knows so they can auto-check our work against their database rather than just telling me I owe them an extra $2k because despite having maximum withholding, the government wants to fuck me a little deeper in the ass. Exactly none of this is optional, I am /obligated/ to report all of this complexity, whether I paid enough or not, or I am legally penalized.
Taxes /could/ be simple, but they are not, for anyone who makes more than about $60k/yr, which is nearly half the country.
> You can dumbly supply a small amount of information and be in complete compliance with the law.
This is not only factually untrue, anyone who follows this advice is putting themselves in significant legal jeopardy.
> Unfortunately your take is wrong, rather than controversial.
Right/wrong and controversial/uncontroversial are not mutually exclusive. Look at the amount of people in favor of the notion that tax lobbiests are to blame for tax complexity. It's always the dominant narrative
> A simply example is if you have any sort of stocks/bonds or other tradeable asset holdings. Reporting this is a massive pain in the ass
Actually you just proved me correct. You could simply declare this income as regular income and forego the tax-advantage of the capital gains rate. But you dont want to pay extra in taxes. There is no penalty. The government might actually send you a higher return than your tax return indicates. And besides all that, that aspect is more tedious than complicated. You just write down whats in the box.
>> You can dumbly supply a small amount of information and be in complete compliance with the law.
> This is not only factually untrue, anyone who follows this advice is putting themselves in significant legal jeopardy.
What is factually untrue about that? I feel like I actually wasn't specific enough to be falsifiable (what exactly does "small" constitute?) so calling it factual untrue is funny.
> You could simply declare this income as regular income and forego the tax-advantage of the capital gains rate.
No, you can't do that. It's reported by the investment broker as investment income, and you must declare it as investment income and provide the specific details /whether or not there is any tax advantage/.
> There is no penalty.
Prove it. Show me where the IRS says that you can submit investment income as regular income when it was already submitted on the backend by a broker as investment income and how that will not result in a penalty for misfiling.
> more tedious than complicated
This tells me you've never done it. Depending on your broker (and sometimes you don't get to choose, for instance as part of an ESPP or for RSUs) they may not provide it to you in a nice clean way and it's rather annoying to determine, for instance, the correct cost basis. At some point "tedious" and "complicated" are the same thing.
> complete compliance with the law.
Actual tax attorneys barely know what qualifies as "complete compliance from the law". You should probably simply refrain from giving legal advice about taxes if you are not in fact a tax attorney and the reader is not in fact your client.
When I was living in Sweden, it was like that. I got a paper form with everything already filled, including income, loans, assets and so on. If everything was correct and you didn't have to change or amend things, then you could send a single text message (SMS) to confirm that everything was OK. Since estimated taxes are already deducted from your salary by your employer, you only have to pay the difference with that estimation. A few of the years they overestimated that a little bit, and I got the money back on my bank account within a month. This is how it can be.
It's not bad. The form actually says you don't have to calculate your tax and you can leave the remaining fields blank. The IRS will crunch the numbers and send a bill/refund. If your income is simple, that's a good way to file. If you made a mistake crunching that part yourself, they will correct it. If you get a refund or don't owe much, then it's not a big deal.
If you have choices (e.g. joint vs separate, itemized vs std deductible), then you want to crunch the numbers yourself so that you can make the best choice. You also need to be careful if you have reporting requirements that don't affect the tax total that year like IRA backdoors and AMT books.
They probably did at an extremely high level, I already paid and threw it away (which was silly... don't do tax stuff when mentally exhausted) but it certainly had no specific details or context on how they arrived at that conclusion, what exactly was wrong, etc. It did have some very serious statements about failure to pay, increased penalties for late fees, etc. and having tried to call the IRS in the past, I know that it's worse than pulling teeth to get real answers so I decided this fight wasn't worth it. That said, I have also had them come back before with a mistake on their end and a check I wasn't expecting so my current mental model for the IRS is that they are honest brokers in general, just really really slow.
They will say what for and give you the opportunity to dispute it. You can even call and talk with someone. They aren't faceless, heartless, or infallible. If it's their mistake, or an honest mistake on your part, they're pretty easy to work with.
By keeping their hand secret, the citizen has to error on ovrreporting so as to avoid unreporting penalties. So it makes sense for the gov not to show their hand. The gov is akin to blackjack dealer.
However, it's not clear to me how self reporting/filling is not a 5A violation of self incrimination.
> “An IRS direct-to-e-file system is redundant and will not be free – not free to build, not free to operate, and not free for taxpayers,” Plummer said, adding that it “will unnecessarily cost taxpayers billions of dollars.”
There's no reason why this has to be true. It might be true, but only due to inefficiencies.
The IRS already has code to calculate and validate everything. That's how they know if you make an error on your taxes or failed to report something. All they need to do is refactor it and turn it into an application. That's not a trivial effort, but all the functional code has already been written by the IRS.
My impression is that most of the cost of development for Intuit and H&R is keeping up to date with changes in the tax code (and possibly updating data import methods, since those are controlled by 3rd parties and may change). The IRS already has to do the same data checking and cross-checking and import. Therefore, keeping tax prep privatized is a massive duplication of effort.
> All they need to do is refactor it and turn it into an application. That's not a trivial effort, but all the functional code has already been written by the IRS.
That "not trivial effort" sure sounds like "will not be free – not free to build, not free to operate, and not free for taxpayers" to me.
Don't get me wrong; I'm entirely in favor of this action, but I have no illusion that it will be free to build, nor free to operate, nor free for taxpayers.
The point is that the bulk of the cost is already duplicated. When was the last time Turbotax's UI had a major revamp? The conservative narrative is, "Intuit and H&R do this so IRS doesn't have to. Isn't it nice that you don't have to pay more for your tax prep software because the private sector is so efficient?"
No, we pay Intuit (or H&R or an actual accountant), and the federal government also spends money so the IRS can develop essentially the same functional code to check tax returns that the third party is preparing according to the same rules.
In 2006 during the primaries, one of Obama's operatives floated $2 Bn as the cost of tax prep. Not all of that would be avoided by an IRS "free" e-filing app, but even if e-filing apps only represent 25%, it wouldn't take that long at $500 million per year to pay for the development of an app and refactoring IRS's existing code to be used in the app, even if it turns into a horribly inefficient project. How many billions can IRS spend on a turbotax killer without producing a turbotax killer?
> The IRS already has code to calculate and validate everything.
They don't have everything, it's not all automatically reported to the IRS. Having you report it, instead of the IRS reporting it to you, means you can't be completely certain what they do and don't know, and have to report everything to be on the safe side. On the other hand if they just billed you and left something out, you could just keep it a secret and not correct them.
IRS e-file software would not have to pre-fill every source of data they have, making them vulnerable to fraud if a taxpayer notices some income wasn't reported and realizes they can get away with "forgetting" to report it.
All they need to do is offer free e-file software and fill in W-2, 1099, and any other standard information that everyone knows is going to be reported anyway because it comes from employers or financial institutions. IRS could still leave it up to individuals to self-report any other sources of income, even income the IRS knows about through other data sources. They don't have to show all their cards.
Other countries already have systems like this. How do they handle it? Do they tell taxpayers what their tax bill is based on all data sources, or just the standard ones (incorporated employers, financial institutions) and expect taxpayers to fill in the rest even if the government already knows about them?
I think it's more a theoretical problem than an actual problem. Getting away with not reporting income at the time of filing because the government doesn't know about it sounds fun, until the government discovers that income later through updated or alternate sources, and then you have to pay that plus penalties. Betting that the government won't know about it ever because they don't know about it now seems like a bad strategy. Any income the government very likely doesn't know about, like cash transactions, is already reported on the honor system, and only because of personal ethics or fear of audits or employees whistle-blowing on their employers' tax fraud. None of that would change.
I've been using Free File Fillable Forms (https://www.freefilefillableforms.com) for several years now and look forward to whatever the IRS comes up with.
Same here – if you like doing your taxes on paper, AND you post on this site, you'll love it & it'll save you some cash over Turbotax/friends.
I will say it isn't the most user friendly application, as evidenced by the error I received this year by email:
Issue : Business Rule X0000-005 - The XML data has failed schema validation. cvc-complex-type.2.4.a. Invalid content was found starting with element `QualifiedCareExpensesPaidAmt`. One of `{"http://www.irs.gov/efile":IdentityProtectionPIN, "http://www.irs.gov/efile":QualifyingPersonSSN, "http://www.irs.gov/efile":DiedLiteralCd}` is expected.
The following information may help you determine the form at issue:
Field/Xpath: /efile:Return[1]/efile:ReturnData[1]/efile:IRS2441[1]/efile:QualifyingPersonGrp[2]/efile:QualifiedCareExpensesPaidAmt[1]
It did help me find the form & line at issue instantly, but I'm not sure a non-programmer would have as much luck.
Federal Reserve operates at the direction of Congress, who also directed them to build FedNow. FedNow is operated as a utility with a cost recovery (vs profit) model. Ergo, public good.
That's not the same thing. For the process referenced by your link, the taxpayer would still need to fill in most lines, only leaving a few calculation lines blank for the IRS to finish.
> If you want the IRS to figure your tax. Read Form 1040 or 1040-SR, lines 1 through 15, and Schedule 1 (Form 1040), if applicable. Fill in the lines that apply to you and attach Schedule 1 (Form 1040), if applicable. Don’t complete Form 1040 or 1040-SR, line 16 or 17.
> If you are filing a joint return, use the space on the dotted line next to the words “Adjusted Gross Income” on the first page of your return to separately show your taxable income and your spouse's taxable income.
> Read Form 1040 or 1040-SR, lines 19 through 33, and Schedules 2 and 3 (Form 1040), if applicable. Fill in the lines that apply to you and attach Schedules 2 and 3 (Form 1040), if applicable. Don’t fill in Form 1040 or 1040-SR, lines 22, 24, 33, or 34 through 38. Don’t fill in Schedule 2 (Form 1040), line 1 or 3. Also, don’t complete Schedule 3 (Form 1040), line 6d, if you are completing Schedule R (Form 1040), or Form 1040 or 1040-SR, line 27, if you want the IRS to figure the credits shown on those lines.
As much as I love not having to use paid filing software, I don't expect the federal government to create something that isn't incredibly frustrating to use that costs way too much to build
As a founder, some of the federal and state software for registering in various states, workers comp, etc and the estimated tax process as an individual is surprisingly decent. It's not great, but the state and federal level stuff is generally ok.
A couple years ago, the IRS didn't pay my income tax refund for six months, and during that time they couldn't tell me why they weren't paying, when or if they were going to pay it, what the status was, whether there was anything wrong, or when they would have any information on what the status was, and this was after waiting for many, many, many hours to get in contact with the person that wasn't going to tell me anything at all.
And this is the IRS that wanted me to provide them with a selfie in order to make estimated income tax payments online.
That is pretty far from OK. I will be paying for tax preparation software one way or the other, I would much rather pay the private sector so that I have a choice if I don't like a particular application.
The financial sector is the clear winner in who makes worse user-facing software though. I've interacted with a whole variety of US government services from federal to city and they're on average better than the garbage I have to use for back end management related to bills and various investments. Consumer tax software is downright user-hostile.
Nowadays I outsource my tax prep to a professional, but I’d still be happy if this system can serve the folks with the easiest-to-file taxes. I don’t even care about the economic ROI, it just seems like a nice thing to have in a relatively wealthy country, like parks or libraries.
I'll see your 'reduce complexity' and raise you "laws that compute things and have hyperlinks to other parts of the law should be written in a programming language" or even a con-lang designed for specificity. Hell, it's even called "the U.S. Code". I believe there's some precedent from the French but I believe it's a proof of concept: https://arxiv.org/pdf/2103.03198.pdfhttps://hn.algolia.com/?q=catala
The asterisk to such a thing is that my understanding is that "ignorance of the law is no excuse" so changing from the official language of the country over to ... something else ... runs the risk of bringing back a "the clergy reads the laws and tells you what it says" style setup, but TBH even right now with the IRS tax code written in English I still cannot reasonably read it and conceptually author my own copy of Turbo Tax so I'll take my chances with the unintended consequences hazard
"Free" should mean free of complexity. The big cost of doing taxes is not in submitting the taxes, but rather is the enormous byzantine complexity of calculating how much you owe.
If Intuit can build a system and charge for it, it should be entirely possible to build it as open source, software, and it's the kind of think that some non-profits would probably go for.
THe IRS will have a slightly easier time building a system like this, as they can pre-fill some of the data that they already have, but it should still be possible to at least match Intuit here.
It feels like this is an area where competition would be a good thing. The IRS's system might be good or it might be bad. If the job was done by NGOs, you could have multiple systems, all learning from each other's successes and failures, and users would choose the one that is the most intuitive. Maybe a better idea would be to give taxpayer data to non-profits (after user authentication and consent, of course.)
I hope this will work for expats. America doesn't allow changing residency, and annulling citizenship costs upward of $1,000. Yet we have to pay taxes, and to avoid being double taxed in everything (but still double taxes in some) you have to use expensive tax software to file your taxes.
Don't tax authorities have an incentive to minimize tax returns and maximize taxes paid? Just like in for-profit companies, there's a temptation to employ dark patterns here.
These systems have been developed in other countries and I don't think this problem exists, even though it intuitively should.
I'm interested, but cautious. I'd probably let some other folks find the bugs in the system. Yes, it costs me a little money. I'm just really avoidant of something like an audit and would rather do the tried-and-true until the new thing is up to snuff.
Second, you'd have to give up substantial amounts of privacy (both related and unrelated to the banning of cash).
As an example, to make taxes automatic, you would have to annotate each electronic transaction with its taxable treatment.
If I buy a ticket on Delta to go on vacation, that has one tax treatment (no effect). If I buy that same ticket on Delta to go on a business trip, that has a different tax treatment. (Further, I would wager that telling airlines which scenario it is would not be helpful in terms of ticket pricing/terms.)
If I buy a sandwich on vacation vs that same sandwich on a business trip, different tax treatments...(and the business trip airline ticket even has a different tax treatment than the business trip sandwich).
From a non-US perspective, hearing/reading about how tax returns work there is some kind of crazy Byzantine nightmare.
In Aus, I file it through a free, online government portal.
Most of my stuff is pre-filled: personal income, social support payments, bank interest, dividends/managed fund distributions, etc. Previous years' deductions are rolled over with relevant data pre-filled, which then prompts me to fill in the blanks through a series of steps. There's relevant depreciation calculators for various work-related purchases (laptops, cars, etc.) that all align with the tax office's advice around depreciation durations and rates.
All of this is known because most (i.e. bigger) companies are required to hold your tax file number and report on salaries paid, pension contributions and withheld tax. If you don't give them your TFN, they tax you at the highest rate and then you will get the difference back upon filing a return. If it's not pre-filled, you get your data on a payment summary at the end of financial year and just put it in manually - again, it guides you through this. For a standard white collar worker, because my employer knows how much they're paying me, they can accurately estimate the total income I'll get over a year and thus accurately withhold tax. This means my tax return is generally pretty much a wash until deductions or extra income starts moving it, but that's only a couple of percent usually.
For stuff like bank interest, you can choose to give them your TFN, or you can just enter it manually and the return process will calculate it out in the process.
You can of course delete and re-enter any of the pre-filled information if it's somehow wrong. You're not under any obligation to use the pre-filled data.
The upshot of this is that for the overwhelming majority of people who don't have complicated tax arrangements, it's entirely possible to do it all by yourself, for free. You are of course always able to have an accountant do it for you (the system has processes for them to file a return on your behalf). The underlying principle is that everyone can in theory do their own tax return no matter how complex, though of course that means reading up on a lot of the tax code (the tax office tries to provide relevant examples of how the various rules work). But if you're a standard white collar employee working a 9-5 with some basic investments (e.g. your pension and a small stock portfolio, maybe an investment property if you want to throw in some non-prefilled complexity, and you've got some basic deductions such as through donations and work expenses) it's going to be pretty easy to do with a few hours' research, max.
Hell, I think I could still even use the paper forms for this all, but why?
I suspect that US readers will, on average, baulk at this level of government oversight and the idea that big brother sees all of your income, etc. but the reality is it's still possible to do cash-in-hand jobs and lie on your return so if you're in for a penny re: committing tax fraud, you may as well be in for a pound. Besides, the main way of doing the dodgy on your tax return in Australia is via declaring deductions that you're not fully entitled to (e.g. 100% deduction of your mixed work/personal phone, rather than just the pro-rata amount of use for work) and hoping that you don't stand out too much on a statistical analysis to be audited.
> I suspect that US readers will, on average, baulk at this level of government oversight and the idea that big brother sees all of your income
No. Most US readers are aware that the US government already collects this level of detail, and are frustrated that we can't get access to the information the government already has and instead have to painfully collect and provide the information the government already knows.
Lets see, the US has a big election next year, early fund raising ? Since the Citizens United Ruling, political bribes are now legal in the US.
I believe this system will only support the easiest of tax forms, the type any idiot can fill out.
Have one of these: 401k, pretax medical/college accounts, stock dividends, non-US interest, income other then wages from commercial for-profit companies, you will be SOL.
And I am sure many people can add to the list of these items. These are the items that make Tax Accountants the real money.
Brokerages and banks already send the IRS your info about 401k plans, HSA/529/etc. accounts, and stock dividends/sales. Most (not all, but most) 1099 employers send the IRS your 1099 as well. Filling these out yourself is a pointless formality and duplicated work in exactly the same way that filling out your own W-2 is.
Government-prepared returns won't cover everybody, but they will cover a much larger share of the population than you're assuming. At an offhand guess, I'd say maybe 90% of people will be just fine.
Nearly everything you mentioned automatically files paperwork with the IRS anyway. I'm not sure why you think that they could not be part of a pre-filled return.
I feel like this is a point that gets overlooked in the discussion. The IRS ALREADY has software that does your taxes. It's just that currently it's used to validate you did it correctly and they aren't going to tell you the results unless you did it wrong. Sure building this system isn't going to be as easy as "give our existing software a public URL", but there should be a lot of code reuse happening.
It's pretty clear why they think this, due to lobbying. I think everyone agrees none of those items should be grounds for not using this theoretical system.
I share some skepticism, but I suspect some basic stuff may be supported (out of the gate or soon) - IRA/401k info may not be too difficult, at least with data from major players (vanguard/fidelity/etc).
I bought and sold two houses, moved between states, and our family had two businesses as well as W2 income - all this over an 18 month period. I went to an HR Block ('big name, offices in multiple states, etc') and they made a lot of mistakes, took about 2 years to unwind the mess.
No, they're not. Citizens was problematic. But it says nothing about bribes, whether that be handing a politician cash or promising them a job. Mischaracterizing it sucks the oxygen out of the room for the cause of reform.
>Citizens was problematic. But it says nothing about bribes
Kind of disagree.
In 2016 Sheldon Adelson (a now deceased wealthy casino mogul) donated $25 million to the Super Pac "Future 45". The Pac's main objective was to run advertising against Hillary Clinton. To say that Sheldon didn't have influence on Trump akin to bribery is naive. Fun fact, Sheldon's contributions is one of the main reasons the US Embassy in Israel is now in Jerusalem and not Tel Aviv. (Just a minor example)
Unlimited corporate donations (as a result of the CU decision) and superpacs have been the most significant influence on American politics of this generation.
> To say that Sheldon didn't have influence on Trump akin to bribery is naive
Influence can definitely be bought. But trading influence isn’t bribery. What Adelson did is closer to a manufacturer opening plants in a swing state—despite higher costs—to curry favour with its senators than sticking wads of bills in their pockets. It’s definitely not the same. That’s the problem. But it’s a far cry from wiring Trump money in exchange for an executive order.
Blurring the line between bribery, lobbying and campaign financing not only sucks the sail out of campaign finance and lobbying reform. It also destigmatises actual bribery.
> In contrast, the NAACP has spent $140,000 lobbying on “free-file” since 2006 and Public Citizen has spent $110,000 in the same time frame.
With two orders of magnitude of lobbying dollars difference on either side, I'm surprised this is going anywhere.
> “An IRS direct-to-e-file system is redundant and will not be free – not free to build, not free to operate, and not free for taxpayers,” Plummer (a spokesman for Intuit) said, adding that it “will unnecessarily cost taxpayers billions of dollars.”
Oh, like the system your company built and lobbies for? How do you say stuff like this out loud without your pants bursting into flames on the spot?