Why the IRS Should Automatically Fill In Returns With What It Knows 613
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.'"
This is how it's done where I'm from... (Score:5, Informative)
Re:This is how it's done where I'm from... (Score:5, Informative)
Just wait until you do what I did and live in 4 different states in a year... Seriously 5 tax returns, some owed me, I owed some.
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:4, Informative)
It can be even worse, too. Some counties have special taxes on residents, too.
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:This is how it's done where I'm from... (Score:5, Informative)
In Estonia, you log in to the web page of the IRS equivalent, click "Next" a few times, then click "Confirm" and you're all done. No dead trees involved.
In US private companies do this, only gov't can't (Score:4, Insightful)
--
Perpenso Calc [perpenso.com] for iPhone and iPod touch, scientific and bill/tip calculator, fractions, complex numbers, RPN
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I completely forgot about this. Last year Turbo Tax let me fill out my taxes based on my company. All I did is select my company from a list and it auto-filled all of my data and I checked it over.
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Re:This is how it's done where I'm from... (Score:5, Informative)
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I run a small business and we get nothing but 1099s (from our clients and for our contractors). It's not that hard to pay quarterly taxes. 'How hard' is it to pay quarterly taxes 4 times a year rather than just once? I know roughly what my tax rate is and I set that aside. I don't need Big Brother to run a payment plan for me.
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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 clos
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.
Conflict? (Score:5, Insightful)
Intuit would probably argue that it's a conflict of interest to be both a tax payer and tax preparer.
Re:Conflict? (Score:4, Insightful)
Almost every year about this time I post some sort of rant about how wasteful it is that we don't even have a free, official online tax-filing website. It would save filers tons of time, it would save the IRS tons of money. But the tax preparers don't care about that (after all, $1 of intentional government inefficiency is 25 cents of income for them) and somehow, though I can't figure out how, this tiny special interest has the power to dictate government policy.
Re:Conflict? (Score:4, Informative)
http://www.opensecrets.org/orgs/all_summary.php?id=D000026667&nid=3868 [opensecrets.org]
Intuit Inc
Rank: 598th
2008 total combined contributions: $818,259
2008 federal-level contributions: $394,475
2008 state-level contributions: $423,784
That's a pretty good return on the dollar.
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Almost every year about this time I post some sort of rant about how wasteful it is that we don't even have a free, official online tax-filing website. It would save filers tons of time, it would save the IRS tons of money. But the tax preparers don't care about that (after all, $1 of intentional government inefficiency is 25 cents of income for them) and somehow, though I can't figure out how, this tiny special interest has the power to dictate government policy.
It's not exactly "official", as you have to go to a third party, but you can file online free. I worked as a tax preparer one year, and from my experience, the reason most clients chose $tax_service instead of doing it themselves (paper or online) wasn't because they couldn't, but because $tax_service offered refund anticipation loans. Which means they get a check for several thousand, less a couple hundred in fees, the next day, rather than waiting a week or more for direct deposit of the full refund.
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Is American consumerism so out of control we take out loans on anticipated income now, in order to spend it as soon as possible (with extra fees tacked on due to interest / finance charges) ?
I wonder what happens to consumers who take said loans if the IRS "corrects" their return and eliminates their refund.
I guess they bought their fancy toys/doodads by the time that happens though, and they can default on their anticipation loan in the same way they stopped paying their credit card bills and mortage
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Really? I can prepare my own taxes and file them electronically without paying anybody a cent, regardless of my income level or what forms I am filing?
Can you give a reference for this? The last time I checked the best you could do is have the government pick up the filing tab if your income fell into 1040EZ range. No doubt there would be other limitations like standard deduction only/etc.
My state, on the other hand, lets me file electronically over the web. I don't need to pay for software, or services
Re:Conflict? (Score:4, Informative)
Getting your taxes right is your responsibility. The IRS can send you a suggestion, and for some significant percentage of the population, the IRS will get it right.
Would they get me right? No, probably not. They don't know the cost basis for my stock sales, and they don't know when I bought those stocks, so they don't know short-term vs. long-term capital gain/loss.
Anyone who can do a 1040EZ shouldn't have to do anything.
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Can't we just bring some sanity to the tax code? Something like this: ((AmountEarned*X)-AmountPayed)=AmountOwed where 0
I see no reason the tax code should be so complex that we have to have multiple tax forms.
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.
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Don't blame others when you dropped the ball.
Your argument is that even though California had all the data to know that I didn't owe them the money, it's my fault? Blaming the victim is not only wrong, but will win you no friends.
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California decided that I should pay taxes on all my income as a California resident when I wasn't one. I moved back to CA towards the end of a year and got a job, and they decided I had made all that money in California as a resident when I wasn't one, and hadn't. The W-2s told the whole story, though. They had all the information to know better. I just need to re-file now, but I've been putting it off because I intend to hand a bunch of stuff to an accountant all at once "real soon now" and since I'm cons
works fine in Sweden (Score:5, Informative)
If you want to add information, you can just fill in your own form and send it in, but I think its pretty common to just use the pre-filled tax form.
Re:works fine in Sweden (Score:5, Funny)
You know, when I was reading your post, I thought Sweden, eh? Wavy line... wavy lines...
Knocking at the door. Swedish male citizen goes and answers it.
Beautiful blond is at the door. (Translated to American)"Hi, I'm with the Revenue Service and I have your tax form. Do you want to have sex before or after reviewing your tax form?"
Swedish make citizen: "Um. Let me ask my wife. Honey, should I have sex with the tax collector before or after reviewing the form?"
Beautiful blond Swedish wife walks in: "Listen YOU! We filed jointly so it HAS to be a threesome before AND after reviewing the form!"
Tax collector: "That's IS the law! File jointly and it's a threesome! I'm terribly sorry!"
So this is the way it happens over there, right? Really?!?
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Ah yes is Sweden also not the place with the highest amount of deductions? You get taxed out of the wahzoo, and the only real way to lower your taxes is to start claiming things. So are you saying by not claiming things you are happy to pay such high taxes?
Re:works fine in Sweden (Score:5, Insightful)
Whilst I don't live in Sweden (I'm in the UK), I have to ask quite what your point is?
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.
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.
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.
tl;dr - high taxes are worth paying if you get good services in return. Think of Sweden as the 'Apple' of nations, versus the 'Windows Me' of the USA.
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>Whilst I don't live in Sweden (I'm in the UK), I have to ask quite what your point is?
I do live in Sweden. Let's check your claims...
>The Swedes may pay more in taxes, but in return get free healthcare
Untrue. Low cost only (there are small fees). And (sometimes very long!) queues...
>good roads
Questionable, depends a lot on where you drive! Many smaller roads and streets in towns have suffered badly during the last decades from reduced maintenance.
>low crime free schooling and university
Probably
Re:works fine in Sweden (Score:4, Funny)
My apologies, I now recognise that your country is actually a shithole, and I will never make claims about it being a nice, clean, efficient, liveable place again.
Although, I do apologise for the speeding ticket thing - it's actually Switzerland that bases fines on income.
-Nano.
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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 s
Re:works fine in Sweden (Score:5, Insightful)
Which means that healthy people...
Yeah, because you just know you'll never get cancer or get hit by a car. Or maybe you've got some special ability to plan this not to happen right after you got laid off from a job?
...who don't drive much...
Taxes also pay for other pieces of infrastructure including bicycle paths and subsidies for public transport.
...and are long-ago graduates...
"Hey! I got my free cake courtesy of my parents' generation, now why should I pay for the next generation's free cake?!"
...with no children...
Ok, you may have a point here, were it not for a concept known as "solidarity" (look it up, the word is in practically every dictionary).
...pay to support people who want to freeload off the government.
Most people who are receiving more money than they're contributing tend to feel pretty bad about this but most of the time it's also not as easy as "oh well I guess I'll stop having cancer/being paralyzed/being unemployed and start paying more taxes!". The current swedish government did some amazing arithmetics prior to the last election and claimed over and over and over again that the reason unemployment was so high wasn't because there weren't enough jobs but because those who were unemployed simply weren't looking for jobs hard enough, naturally they ignored people pointing out that all available numbers showed that for every available job there were something like 4-5 unemployed people, kind of hard to get rid of unemployment just by "trying harder to get a job" under those circumstances...
/Mikael
Re:works fine in Sweden (Score:4, Insightful)
[m]ost people who are receiving more money than they're contributing tend to feel pretty bad about this.
That is not a given in the US. It has been my experience that most Americans I know who are big-government, welfare-state liberals grew up in places where government works. By contrast, most of the small-government, go-it-alone conservatives grew up in places where it doesn't. Don't forget that not all governments work...
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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.
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:people are lazy (Score:5, Informative)
I don't have a problem with that. You can't save everyone. The amount of efficiency in the average case would be so great, though, that overall I suspect it would offer more money to both the government AND the taxpayer.
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I have no problem with people paying more if they are lazy.
I'm also pragmatic - most people are probably too lazy to truly review the the information sent to them anyway.
Do you double-check your W2's against your pay stubs? Most people don't.
It might end up being more fair, if the government does it, they might end up being responsible for ensuring you don't get totally screwed. Right now, you're the only one responsible for that.
We've had that for years in Norway (Score:5, Informative)
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The moderators seem to think you're joking, but the right moderation is informative. We actually have passive acceptance, if you have no changes to make you don't have to do anything at all. And the government gets quite substantial amounts of data from employers, banks, property registry, car registry etc. so many people have nothing that needs changing.
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> And the government gets quite substantial amounts of data from employers, banks, property registry, car registry etc. so many people have nothing that needs changing.
And you say that like it's a *good* thing...
Re:We've had that for years in Norway (Score:4, Informative)
And you say that like it's a *good* thing...
You say that as if the government shouldn't know about it in the first place.
You got income? Income tax.
You got deposits? Capital tax on interest, wealth tax on balance
You got loans? Deductions.
You got property? Property tax.
You got a car? Wealth tax.
All of these are things you would have to declare anyway in order to stay legitimate. In many cases the government can't help but to know about it, employers have to file taxes as well including payroll, for properties and cars the government is the one tracking deeds and our version of the DMV registry and so on. All it does is saving you the paperwork, and there are lots of other taxes and deductions you have to correct yourself, it's not trying to cover everything.
We are in fact rather suspicious of data storage and in favor of privacy protection, right now for example there's a debate on EUs data storage directive. Only the largest party of the ruling government is for, five are against and one is undecided but just recently their biggest region took a "no" vote with great majority. If they too oppose the directive, it would become Norway's first EU veto since 1994. I'm hoping that will happen.
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We are in fact rather suspicious of data storage and in favor of privacy protection, right now for example there's a debate on EUs data storage directive.
People in the US think they're so advanced when it comes to privacy protection that they become blind towards what real privacy means in this century. While they are raging against the government surveillance boogyman private companies are trading between themselves databases of their names, addresses, SSNs, phone numbers, family, shopping habits, color
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Interest is income, I get that - but you have to pay a wealth tax on money sitting in the bank? How can you ever retire on more than a government pension?
Yes, the maximum rate is 1.1% on wealth above 540k NOK = 93k USD. So you have to make at least inflation + 1.1% to sustain your wealth. Not saying it's fair but that's the way it is. Actually, I find the inheritance tax nastier. The highest inheritance tax bracket is 15% (10% for direct descendants) above 800k NOK = 140k USD, so if you inherit 1,000,000 dollars the government takes almost 150,000$ just like that.
Conflict of interest (Score:2)
Our current system relies on the taxpayer to disclose income and deductions. Isn't it a conflict of interest to have the person paying the taxes decide what to tell the government? In the current case, only the people who know what information the government collects (W-2, 1099 i.e. people who don't get paid in cash) disclose everything.
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It's a conflict of interest for the clerk at Wal-Mart to tell me how much I owe AND collect my money?
The real conflict of interest is for corporations to give money to election campaigns.
The root cause of this is that corporations have too much power in our system. Corporations buy politicians and they buy court verdicts. It's just wrong, and we need to fix the system, starting with the "golden rule".
In court, make the richer party pay for both lawyers, and eliminate corporate contributions for political ca
Beneficial to Be Difficult (Score:5, Insightful)
Leave it up to the IRS -- they probably have it figured out that if they pre-fill items on forms, that means less error and less money. Plus, this gives them more opportunity to audit and assess fees. Whee!
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: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:Beneficial to Be Difficult (Score:4, Insightful)
"But the government's not completely stupid -- if it was more beneficial, financially, to make the tax code simple, they would have done it years ago, IMHO."
The tax code isn't simple because WE don't want it so. That's right, you and me, want it complex. Well, not exactly. We want deductions for home loan interest, education, and our pet projects. So does everybody else. Congress obliges. Hence the massive and complex tax code.
A simple tax code would have modifications before the ink was dried. In the end, if people don't like the complex forms, they should stop using them. I've filled out many business related forms and found that they are only as complex as you want to make them. If you want to eke out the last penny of tax savings, go ahead. Just don't whine about the effort. Do you really think that if the tax code is simplified that you would pay less in taxes?
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Because they win by making you do it (Score:2)
Either you get it right, in which case same result to them.
Or you pay to much, in which case they win.
Or you pay too little, in which case they hit you with interest and penalties and win again.
Intuit (Score:2)
I don't know how they can possibly defend that position. The very necessity of a tax-preparation industry is insane, and the only way they get away with it ethically is by blaming the government for having such complicated tax laws. But there's no way for them to reasonably object when the government makes things simpler and more efficient.
Intuit is evil anyway. Charging $50 for the same software every year.. Not to mention SafeDisc.. [slashdot.org]
Article is about the USA, UK does this already (Score:2)
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
But IRS does more than this - if your employment is simple, you don't have to fill in any forms at all.
oh, wrong country.
Well, it's a good question - why can't your IRS also do this?
How could they justify an audit? (Score:2)
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In fact, if you ask the IRS for advice on how to handle a tax issue, and they give it to you (which is unusual), they *still* disclaim responsibility for their possibly being wrong, and people have undergone financial and (I think) criminal sanctions *for believing what the IRS told them*.
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In fact, if you ask the IRS for advice on how to handle a tax issue, and they give it to you (which is unusual), they *still* disclaim responsibility for their possibly being wrong, and people have undergone financial and (I think) criminal sanctions *for believing what the IRS told them*.
I know, it's happened to me. In fact, the IRS - for 7 years in a row - assigned my LLC a new EIN every year because of a typo in their systems, and promptly sent the new EIN information to an address I had not lived at for 6 years (even though they had the right address for the proper EIN). It took the better part of 2 years and around $250,000 in costs and lost levies (illegally attached, but after 21 days it doesn't matter - they get to keep the cash regardless of their error in the levy) to get it stra
Re:How could they justify an audit? (Score:4, Informative)
If you get the advice IN WRITING (I think this means dead trees), you can escape penalties and criminal sanctions. You're still on the hook for interest and taxes.
Increases Fraud (Score:5, Insightful)
If the IRS pre-fills what the government knows about on the form, then that tells you what the government doesn't know about, and thus can safely be omitted. If you get a blank form, there's always the risk that the government knows about your offshore account and will prosecute you for omitting it.
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.
UK Tax Returns (Score:5, Informative)
Here in the UK, most people pay tax through the PAYE (Pay-As-You-Earn) scheme. The only people who regularly don't are the self-employed.
This means that the majority of the working population NEVER need to file tax returns.
However, some people do regularly file tax returns -
1. People asked to do so through random audit
2. If you are considered a 'high-rate' taxpayer (meaning you earn more than about £36,000pa).
But, you can elect to file a tax return even if you earn less than the 'high-rate', and you can often get some money back for overpayments.
I still can't believe the amount of hassle you have to go through in the US each year when it comes to tax-time.
-Nano.
Re: (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
Re: (Score:3, Interesting)
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In the UK:
Interest on your bank account is paid net of tax automatically by the bank. If you are an upper rate payer, you declare the interest and pay the extra differential yourself (e.g. you receive gross £5 interest. The bank pays you £4 and the government £1. If you are an upper rate payer, you declare this on your tax return and pay the extra £1). The bank will give you a certificate stating how much interest you received so you can prove the amount you owe if necessary.
EU compa
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The 20% is deducted by default - if in fact you earn less than the threshold for any tax, you notify the bank and they pay you the full gross rate without deductions.
I believe that the deduction is common for all companies - you might need to declare them if you are a top rate earner like the interest on a bank account, but I'm not sure as I've never been one! We have Capital Gains Tax too, if you sell a property other than your main home for example.
The US system of making charity donations deductible to y
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Your ISA sounds like our Roth IRA. Then again, we have the regular ones as well. I guess this would be a 'private pension', but I'm not sure I'd call it a 'pension' as it doesn't necessarily have a fixed pay out at the en
Fair Tax (Score:2)
The IRS shouldn't even exist. Why tax productive work? Why not tax consumption? The more you buy, the more tax you pay. If you save and are thrifty, the less tax you pay.
http://www.fairtax.org/ [fairtax.org]
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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. Used items are also not taxed.
Try reading what it is before commenting.
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.
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Yes, LOW. Stop it using these stupid "X% of total tax" things make it look like the wealthy are unfairly taxed. All it does is show that 1% of people have 25% of the total assets. Income inequality is fine, but don't piss on the poor and tell them it's raining. If people pay the same share regardless of their income or assets then it's regressive and hurts people who make less.
This isn't splitting a restaurant bill, where you only consume the portion you pay for.
If you're going camping with your kids, you d
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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.
IRS reducing their own size? Not likely. (Score:2)
The real issue here isn't companies, but the IRS itself. If it could computerize and provide pre-filled tax forms then the agency would need far fewer auditors, lawyers, data entry folks, and so on. No group, be it inside a company or in government likes to take actions that reduce their size and perceived importance even if it is the best thing to do.
The US greatly needs to simply its tax code, allowing things like pre-generated forms to be accurate for a much larger group of Americans. While this will
A Grand Idea.... (Score:2)
Namely, do away with the retarded fee to file my state taxes online. I purchased TurboTax and it lets me file my federal for free, but there is a fee ($20 or something, I'm not sitting at that machine at the moment so I can't verify it) to file! And if I want to use part of my return to pay that fee, it costs me an extra $30. How retarded is that.
Because they want to see if you'll lie (Score:2)
This should be blatantly obvious. Of course they already know most of the answers. But they're using this as a test of your honesty. Why should the IRS go through a lot of work to make your return slightly easier, when they're benefiting from having you self-report?
If your answers don't match what they already know, they can fine you up the wazoo, charge back interest, etc. Much more profitable and less work.
Intuit Isn't the Only Problem (Score:5, Interesting)
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I see what you did there.
Intuit are evil ... (Score:4, Informative)
Just got a pop-up from Quicken 2007 telling me that it will cease down-loading data from my bank at the end of April. If I want to keep being able to do this, then I'll have to upgrade to Quicken 2010.
This is the second time that Intuit have made an incompatible change to the download data format (at least while I've been using it). So I'm going to assume that their business plan now includes a forced upgrade every three or so years. Time to start researching non-evil alternatives.
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Seems to me it would be good to find out if the government thinks such things... although the hassle of correcting them may not be worth it. For years, the government sent mail to me as Mrs., despite the fact that my first name is David. The hassle of convincing them that I was actually Mr. took about 2 years.
Of course, here in Canada we get a $100 monthly benefit for each child. If the government thinks I have 27 kids, more power to them!
Re:Why they shouldn't.. (Score:5, Funny)
Dear Mrs David Rosboro
Our records show that none of your 27 children are currently in school. We can only assume that you are violating child employment laws or have
eaten them. We will be performing an inspection on the 29th Jan to verify the health and status of your children.
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.
What do you think happens today? (Score:5, Insightful)
Look, it's not like the government takes my word for it on most of the numbers I submit, anyway. If I put in the wrong number from my W-2 or W-9, they replace it with the right number, and either send me the bill or deduct from my account if I underpaid. So if they were consistently lousy with their records, this would be happening all the time.
I once got a letter from the IRS informing me that I didn't report interest income from a bank account I forgot about because it had so little money in it, so since I'd payed by direct deposit they just deducted the $0.15 from my account.
Another time I got a digit wrong on my W-2 amount, and the IRS informed me that they'd corrected the amount and credited me with the $400 I didn't need to pay, and if I thought this was an error to please call them (even if I thought it was, would I?) They do the same thing for math errors you make.
Anyway, my point is, for most of the basic things that you put on a 1040 in a boring year, the government already knows and more to the point already considers the numbers they have to be authoritative unless disputed.
So... My employer and banks still send me the tax info they usually do, the gov sends me their numbers and calculated tax liability, and if it's all right -- which it probably will be, the gov gets their numbers from the same banks and employers I do after all -- then I just pay it and am done with it. If it's not you do the 1040-Difficult like normal. I'm not seeing the huge problem here.
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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
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So let me see if I get this straight...
The current system allows a taxpayer to be dishonest, but catches him if he is.
The proposed change prevents a taxpayer from being dishonest (by informing him of what the IRS already knows of his finances), and only gives him a chance to correct the records.
So how is catching taxpayer dishonesty an advantage, again?
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The proposed change prevents a taxpayer from being dishonest (by informing him of what the IRS already knows of his finances), and only gives him a chance to correct the records.
The proposed system doesn't prevent a taxpayer from being dishonest: it makes it easier, because it informs the taxpayer of exactly which details the IRS is aware, and which they are unaware.
It facilitates the taxpayer knowing what the IRS is unaware of, and thus assists the taxpayer in hiding money in future years..
If the
Exactly right. MOD PARENT UP. (Score:4, Informative)
The U.S. government is so corrupt that it amazes and scares me. Anything for those who want to make money using the power of government. When Saudis attack, invade Iraq? When Intuit wants something, use any foolish excuse to give it? Put a 6 times higher percentage of the population in prison as any European country? All part of U.S. government corruption.
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Yes, you're not seeing the huge problem, but it definitely exists. I'm a professional tax preparer as one of my trades. This year, I have done or assisted on over 50 EIC forms so far for people in the range where Earned Income Credit applies and every single one of them has triggered additional IRS mandated questions, usually three or more per case. Questions such as "You are claiming a child under six - who takes care of that child while you are at work?" or "Your self employed income form shows less than
Why they WON'T (Score:5, Insightful)
Form 4070 (Score:3, Informative)
I think you know little of how waiters work then. They already don't declare their tips fully.
True but if they don't declare at least 8% of their sales as tip income it will almost certainly trigger an audit. This information is required to be reported on form 4070 [irs.gov] and the IRS knows there is a high propensity to cheat.
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If it's an automated system, yes. When you have a $10 check, the IRS assumes automatically that the server received a $1.50 tip - regardless of whether they got a $2 tip or a $.50 tip. At the end of their shift, they are given the opportunity to declare their tips - it's common practice to accept the 15% default as your declaration unless you're a horrible server; but declaring your true 5% will also flag the management system that you're not getting tipped correctly, so they'll usually pull you in for re
Re:Why they shouldn't.. (Score:4, Funny)
what, like '9' ?
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And, um, PS: before you go dissing fairtax.org, *actually read their site*; there are several flat-federal-tax proposals out there, some of which *are* snake oil. Theirs does not appear to be, to me.
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Except it will be the same situation - say, the employer sends in the information too late to make it onto your prefilled form, you cheat and don't pay taxes on it, and then the IRS gets the paperwork and reviews your file. You'll still get busted, just with less paperwork ahead of time!
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+5, "good point"
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Yes, this is why the posters in Europe say, "oh oh we do this already."
You see to get any salvation from the high taxes in Europe you just have to claim. Drive to work? Claim those kilometers. Need education for work, and clothes for work? You need to claim that.
The reality is that in Europe if you were to ok the taxes as is, you would be paying too much. Hence you fill out the tax forms and try to find every taxloophole there is.
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I'm sorry, but the US is the only country in the world I have ever heard of where it is a regular thing for people to claim refunds as if it is a normal thing to do.
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The biggest reason for refunds is the Earned Income Credit. it's a replacement for older welfare systems, and it means there are fewer incentives to not work and just drift on welfare. (fewer, not none). Most US poor are either working or legally disabled. While the EIC isn't all that well implemented, it's probably better for the country as a whole than the system which preceeded it.
The second biggest reason for refunds is people don't try to adjust their withholding so as not to give the government a free
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Hey; there's an echo in here. ;-)
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The IRS is in BUSINESS to collect, process, and audit (the incorrect) returns.
Oh, they audit correct returns, too! And they'll come up with completely bogus numbers as well forcing you into the position of being guilty and having to prove your innocence. If they think you made too little based upon where you live [nwsource.com] - even if you can prove it was enough - you'll still get audited and forced to prove your innocence.
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You know, if Intuit were really smart they wouldn't fight this...but rather got to the IRS and ask, "how can we be contracted to help you."
They'd probably make more. ...
Ah! A proposal to bring back tax farming! (Or actually a suggestion that it would fit into Intuit's corporate strategy to bring it back.)
This privatization of the tax system (And we all know that "privatization" is always a Good Thing! Right?) is one of the things that brought on the French Revolution and sent tax farmers to the guillotines. Can we just move directly to that latter stage? Intuit's executive suite sounds ready for a visit from the Committee of Public Safety right now!