Why the IRS Should Automatically Fill In Returns With What It Knows 613
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Soulskill
from the because-addition-is-mentally-taxing dept.
from the because-addition-is-mentally-taxing dept.
theodp writes "An article in the NY Times begins, 'In the digital age, filing income tax returns should be a snap. Important data from employers and financial institutions has already been sent to government computers. Yet taxpayers are still required to perform the chore of preparing a return from scratch, in many cases paying a software company for the privilege.' Why, if your needs are simple, can't you just download forms pre-filled with whatever data the IRS has received about you, make any necessary adjustments, and automatically get the IRS calculation of your taxes? Sounds reasonable, but the IRS rejected the President's proposal to give taxpayers the option to do so as 'not feasible at this time' due to delays in the receipt of W-2 and 1099 data. However, California managed to offer a pre-filled state tax return, which cost only 34 cents to process compared to $2.59 to process a traditional paper return. Despite the success of the pilot, meager funds have been allotted for the program due to the strength of its political opponents — 'principally, Intuit' — according to the state controller. Intuit argues it would be a 'conflict of interest for government to be both tax collector and tax preparer.'"
In Holland they already do (Score:1, Interesting)
In Holland they already do that. You only have to change everything that you think is incorrect.
Funny that you mention California (Score:4, Interesting)
They still think I owe them over $5,000 for back taxes, even though all the documents were sent directly to them and they know precisely how much I made and/or didn't make, and only ever owed them about a hundred and fifty bucks (which has long since been paid off.) they stole a bunch of my money through withholding to which they were not entitled, and since I passed some arbitrary deadline without getting it all resolved, they intend to keep it. Fuck California and the California Franchise Tax Board in the neck.
With that said, if you don't have to file if you make less than the exemption amount, why should you have to file if you don't have any unusual economic activity to account for? That's ridiculous.
people are lazy (Score:3, Interesting)
intuit is right: the government will claim this or that, and people will just accept it. when an honest mistake by the government, nevermind malicious intent, might wind up overtaxing someone. most people will wind up spending say $2,000 more on their taxes, accepting the government's proposal unseen, rather than reviewing it for mistakes
i don't know about other people, but for me, i'd rather pull my own fingernails out with a wrench than do my taxes. however, the current status quo means that if there is an error, whether honest mistake or malicious, it is usually in favor of the individual, not the government
Re:Beneficial to Be Difficult (Score:5, Interesting)
And of course, why do individuals who know what they are doing have no way to pay or file with the IRS directly? I should be able to submit my 1040 electronically for free, from the IRS.gov website. Instead, I have to go to a 3rd party, where my income levels dictate I have to pay, even though I know what I need. That is just protectionism..
Re:This is how it's done where I'm from... (Score:5, Interesting)
thats quite a reminder that USA is a collection of nations internally while a single nation outwards...
Re:This is how it's done where I'm from... (Score:5, Interesting)
I couldn't find a tax professional prepared to help out either. Most accountants like to keep things within their own borders.
Re:Beneficial to Be Difficult (Score:4, Interesting)
As someone who has previously received a refund on tax paid in error, I think that IRS doesn't use the trick you're wondering about at all. If they find that you have overpaid, they refund the overpayment on their own.
:-)
Of course they can't know what exemptions you are entitled to unless you have told them already, e.g. via the W-4 form that you filed with your employer and which the employer used to determine how much of your income to withhold for the IRS.
For most people, the proposed method would probably work out just fine. Rich people who have complex tax filings would just continue to have their accountant handle the issues. Those who fall in-between could still use TurboTax
Re:UK Tax Returns (Score:3, Interesting)
When I was self-employed in the UK, I didn't have to prepare my tax returns. I simply took all the paperwork to the local Inland Revenue office, sat in their waiting room for a bit, allowed them to go through all the paperwork and at the end of the day, I walked away with a cashier's cheque of how much they owed me. Cost to me: Zero.
It seems that they really try to not tell anyone that they must assist people with their tax returns free of charge.
(When I left the UK middle of the tax year, technically they owe me a few hundred pounds but it didn't seem worth the while to chase up on it afterwards ... the phone calls, postage and time would rapidly eat up the refund.)
Re:This is how it's done where I'm from... (Score:4, Interesting)
I'm missing how its bad for the government. Right now, your employer sends your W2 to you and the IRS. You fill in a 1040 and send it to the IRS. If the IRS agrees, then everything is fine.
Alternatively, the IRS could use the W2 to fill in the 1040 automatically for you and as long as you agree, then everything is fine.
But in both cases, the same data is used and is available. And in both cases, the tax return is only accepted if both parties agree it is correct.
Intuit Isn't the Only Problem (Score:5, Interesting)
Re:What do you think happens today? (Score:3, Interesting)
You're fortunate it was just W-2 errors. If it's just a few one-off's by a few pennies, probably not in their interest to do much more than fix it.
If you had significantly underreported on other forms like property exchange (1099B), or significant amounts on a 1099, it would have automatically triggered a full audit, probably.
That doesn't mean the IRS records are good though, or that everyone always files the proper 1099s against you.
They currently get the best of both worlds:
They are reported the information, they can use to check your filings with.
If less income was reported to them by people paying you than you filed, they either reap the profit, or correct and charge you a penalty for overreporting.
If more income was reported to them for you by others than you reported, then they either fix the error or audit you depending on the circumstances, this might be an ad-hoc audit where IRS officers visit your house and seize your records for review, if the dollar amount is large, they will immediately suspect fraud.
The reports that get filed to them aren't just to correct your errors, they also exist to detect dishonesty on your part.
If they filled in the blanks for you, that would almost completely negate their advantage.
Re:UK Tax Returns (Score:3, Interesting)
Re:This is how it's done where I'm from... (Score:3, Interesting)
It will increase correctly filed taxes for most! (Score:5, Interesting)
You forget that you take responsibility for what is on the form, even if it is pre-filled the moment you sign it. There's nothing stopping the government from sending you a blank or zero form and you'll just sign it and send it in thinking that you won't get prosecuted for the offshore tax haven account that you have. They'll still go after you no matter what.
Less Fraud, More Correct Taxes
There will be no increase of fraud due to this but I predict that most people will actually send their taxes in quicker and more of them will be more correct than the current numbers. We already have the IRS eFile system to let you do the web form part but they are all blank. It would be nice if they were pre-filled in with your information already. You'll just glance at it, take your Standard Deduction instead of Itemized Deduction for most people, type in your bank account or credit card number to pay or receive payment. You wouldn't have to look for or dig out those W2 or 1099 forms trying to figure out all the income.
Special Interests At Work
The simple point is that in the United States the government is run by "special interest" groups. The founding fathers, especially Thomas Jefferson and James Madison warned us about the dire effects that special interest groups will have on the government if they are allowed to mass their money and influence the rule of the country. It's all in their speeches that we all should have been forced to read in elementary and high school history and civics courses. America's educational failure.
Now what do we have, a special interest part such as Intuit who is responsible for the Turbo Tax software and their electronic filing service trying to prevent the government from offering a pre-filled tax form service to the people. Just imagine how quickly Intuit would change its mind if the government approached them and told them that they would be the sole company responsible for getting people's taxes filed and I can guarantee that the first year you'll be presented with almost completed and pre-filled forms once your type in your Tax ID number.
Educational Gaming
We need a multi-genra massively multi-player video game where at first you play a First Person Shooter with friends as a team of The Founding Fathers and you first kick the British out of the colonies, then it switches to Real Time Strategy game where you maneuver the troops during the colonial war, and later it switches to a Civilization type diplomatic game where you negotiate terms of the new constitution and treaties with European countries. It'd be a nice way to have kids experience a modern way of what the history taught us. Sprinkle in a good load of historic facts in the game and you'll have kids arguing their view points because of the game.
After a generation nothing else exists (Score:4, Interesting)
It only takes about a generation and people begin to forget or even lose the imagination of the things the way they used to be.
Government workers used to get paid reasonably close to the private counter parts. FACT. Public service was an honorable profession and for many it was worth the slightly lower wages (but increased stability.) Government workers were not thought of as incompetent crooks; well not all of them were - plus the bad ones tended to stick out MORE because there was more of a contrast and other well intentioned workers less tolerant of them. This was the general case long ago; now people can't even imagine the possibility of what was and did actually exist. Its so bad some people can't believe it ever was any better than it is today.
On a local level, I've SEEN politicians sucker people into undermining and wrecking public services with the INTENT of replacing them with his friend's private business. I've seen this done and sadly; even when its so fast people can remember how much better it was before "reform" and expensive privatization with no real benefits -- not enough people get upset or notice to change the result. It actually takes something really really bad before it can be reversed. Its the fault of the citizens ultimately that this stuff happens. We've had a long term large scale more organized version of this going on in the whole country.
I've seen money wasted on things that could have been done in-house simply because they don't want to compete with the contractors. Its crazy non-thinking behavior. I don't hire someone to cut my grass because I'm afraid I'm unfairly competing with them.
The public and the officials set low expectations-- so we allow bad results because that is what we EXPECT to get. Any manager expecting little will eventually have their expectations met.
Re:Fair Tax (Score:4, Interesting)
I suggest you actually read the fair tax site. The fair tax provides a prebate check for taxes paid up to the poverty line, so the poor pay NO TAXES for spending on basic necessities. ...
Ah! It is good the legally defined poor (... up to the poverty line ...) are spared annihilatory taxation on their subsistence income (but then, they have little wealth to contribute to the public coffers anyway). This then merely dumps even more of the cost of running the government on the Middle Class, who have seen their proportionate burden of taxation greatly increase while their income stagnated over the last generation.
There is always another "fair tax" or "flat tax" stalking horse around the corner designed to further cut the taxes of the wealthy, rich, and super-rich even farther below their already historic lows. As with Intuit, those who already have, never have seem to have enough. It's a shell game and the Middle Class always ends up with the empty shell.
Re:Fair Tax (Score:3, Interesting)
In a recession, spending doesn't necessarily go down. People will actually spend more on consumer durables as the utility they receive from them is greater than the (tiny) interest that they would get in the bank.
Australia has this already (Score:2, Interesting)
Re:This is how it's done where I'm from... (Score:3, Interesting)
You do know, both of you, that the form you fill out is the W-4. That's where you set the projected exemptions that will be used to set withholding. The W2 just reports after the fact, it doesn't make anyone adjust anything in advance.
And yes, you can change it multiple times during the year. I have clients who set their withholding during the early months high, then check their numbers about June and add exemptions or stop having additional amounts withheld to try and target very close to zero either back or owed. Some of them tweak the numbers again about September. I even have one client who does a second W-4 every October, just so that November and December, he gets his full paycheck and the extra goes to Christmas shopping. Then December, he does another to set things back for January.
Re:works fine in Sweden (Score:3, Interesting)
The Swedes may pay more in taxes, but in return get free healthcare, good roads, low crime, free schooling and university, (i believe) free (or heavily subsidised) childcare, efficient public transport, and much more.
When the US is number 36 or 37 in terms of healthcare...but if you're poor...you're living like in a 3rd World country...doesn't say much about this country. I know people are going to bust my balls about how great is all the freedom we "enjoy" in this country. When you have around 17 percent of your population un/underemployed...these members aren't any better of than those living in Central America or Africa. I would love to be able to get my teaching degree...but with the outrageous cost/benefit to do so with governments firing teachers & such...it's not worth it. I would be thousands of dollars in debt & still un/underemployed as much as I am right now.
I know some of you will tell me...love it or leave it. If I could afford to do so...I would move permanently to Canada/Europe in a heartbeat.
They're also very highly rated in terms of their low wealth disparity (road fines for example are based on a percentage of your annual income so that a rockstar in a ferrari feels the same sting in their speeding ticket as does a poor person in a skoda), and human development index.
Can't have that happen...since if you're rich...you're special. It's like the old question...what's the difference between being a porn star & the working poor in the US? The porn star is paid for having it done to them while the working poor gets it done to them for free.
I could go on. The key point is that nations all make decisions about their priorities - the US believes in waging war and keeping the poor unhealthy and uneducated, other nations do not.
As long as you have a religious/moral basis for practicing this type of behavior...it will continue. As a practicing Christian...I find US history/policies SHAMEFUL & not having a conscience to put an end to this behavior. There has to be a point where compassion/ethics/morality become a better way of life than being as rich as you can get. Jesus never said..."Do unto others before they do it to you". This should be put on US money...rather than "In God We Trust"...since it is the truth.
Re:works fine in Sweden (Score:3, Interesting)
OK, so is your point that you want OTHER nations to stop advancing, just because you want them to?
I've never met a "less government libertarian" who didn't ALSO have a boatload of their 401 invested in countries who benefit from the very same policies they object to at home. Which makes me wonder... if it were less tax-favorable to invest outside the USA, would conservative-leaning Americans suddenly be FOR public healthcare and public education (the useful kind, not high school)? I think the answer is yes.
And if you think tax dollar giveaways to healthcare are LESS under the current system, you're not paying attention. The status of the US healthcare even forbids Medicare - BY LAW - from negotiating pharmaceutical prices... something all the private insurers can -and- do.
In an age of fast moving populations, diseases, and bio-terrorism it's pretty "pound foolish" for a nation not even offer free _preventative_ healthcare and checkups.
And I know someone who personally suffered because an insurance company got between the patient and their doctor...
not really (Score:2, Interesting)