Tax Preparation Industry Alarmed Over Plan For IRS Free Tax-Filing System (nytimes.com) 235
An anonymous reader quotes a report from the New York Times: The Biden administration's $80 billion overhaul of the Internal Revenue Service is facing a new line of attack, this time from lobbyists representing tax preparers who fear that the agency's growing power will cripple their businesses and infringe upon taxpayer privacy. The fight is over a potential plan for the I.R.S. to create its own tax-filing system that would allow taxpayers to submit their returns directly to the federal government at no cost. That type of free service could diminish the need for those provided by tax preparation companies like H&R Block and TurboTax. The idea, which is still being studied, is stoking backlash from Republicans and business groups who argue that President Biden's plans to bolster the I.R.S. will give it even more power over ordinary taxpayers.
The I.R.S. received a giant infusion of money as a result of the Inflation Reduction Act, a sweeping climate and energy bill that Congress passed last year. That legislation set aside $15 million for the I.R.S. to conduct a study to determine how it could develop a program that would let Americans file their tax returns directly with the agency. The I.R.S. is expected in the coming days to release its plan for how it intends to spend the $80 billion that it was allocated as part of that legislation. Republican lawmakers have maintained firm opposition to the funding, which will help the agency hire 87,000 employees, and have been taking steps to claw it back. [...] Democrats have long pushed to make filing free for everyone, seeing that as a way to make the process easier and less costly. But that ambition could upend the business models of the multibillion-dollar tax preparation industry, which earns hefty fees for helping people navigate the tax code.
Several companies already provide free tax-filing services through the I.R.S. website to those who earn less than $73,000, and the agency provides forms that taxpayers who do not need any guidance can use to file their returns for free. Some other software platforms offer limited free services for simple tax returns that also do not offer guidance through the process. Initially, a tax-filing system developed by the I.R.S. would be similar to the existing free options. But proponents of the idea believe that over time it could evolve to become a more comprehensive system that would provide taxpayers with returns that are already filled out based on wage data that the I.R.S. tracks. At that point, taxpayers could just sign off on their returns as easily as responding "yes" to a text message.
The I.R.S. received a giant infusion of money as a result of the Inflation Reduction Act, a sweeping climate and energy bill that Congress passed last year. That legislation set aside $15 million for the I.R.S. to conduct a study to determine how it could develop a program that would let Americans file their tax returns directly with the agency. The I.R.S. is expected in the coming days to release its plan for how it intends to spend the $80 billion that it was allocated as part of that legislation. Republican lawmakers have maintained firm opposition to the funding, which will help the agency hire 87,000 employees, and have been taking steps to claw it back. [...] Democrats have long pushed to make filing free for everyone, seeing that as a way to make the process easier and less costly. But that ambition could upend the business models of the multibillion-dollar tax preparation industry, which earns hefty fees for helping people navigate the tax code.
Several companies already provide free tax-filing services through the I.R.S. website to those who earn less than $73,000, and the agency provides forms that taxpayers who do not need any guidance can use to file their returns for free. Some other software platforms offer limited free services for simple tax returns that also do not offer guidance through the process. Initially, a tax-filing system developed by the I.R.S. would be similar to the existing free options. But proponents of the idea believe that over time it could evolve to become a more comprehensive system that would provide taxpayers with returns that are already filled out based on wage data that the I.R.S. tracks. At that point, taxpayers could just sign off on their returns as easily as responding "yes" to a text message.
Intuit and other leeches (Score:5, Insightful)
Re:Intuit and other leeches (Score:5, Insightful)
Another fake US industry invented to screw over working people while making money for corporations and their owners/investors. The US government knows more about the money I make than I do. They send me all the documents on it, then I have to put numbers they send me on a page and send it back to them. For crying out loud, they had the documents all along!! They don't need me to put them on another piece of paper and send it back.
Re: (Score:2, Interesting)
When you do your tax return you are checking their numbers for accuracy and completeness; or do you just want to blindly trust the government to calculate you return every year and get it right?
Re:Intuit and other leeches (Score:5, Interesting)
Every proposal for having the IRS handle most peoples taxes i've ever seen includes them sending you what is basically the completed return for you to just "sign off", if you find a discrepancy then you have the time and ability to correct it.
Re:Intuit and other leeches (Score:5, Informative)
This is the system here in Finland.
They send a Pre-filled tax calculation either in paper form or if you only want look at it online you can unsubscribe the physical form.
You then look though it and if there is something wrong you either correct them on the paper form and send it or correct them online.
Re:Intuit and other leeches (Score:5, Informative)
Same in Spain. The Tax Agency (AEAT) even provides a free software (PADRE) to fill in your tax returns, which is essentially what everybody (including tax preparers) use.
Re:Intuit and other leeches (Score:5, Informative)
In Sweden we can even correct the information online, no need for dead tree over snail mail to change the information.
Re: (Score:2)
Same here. Probably same in any sane developed country, to be honest :)
Re: (Score:3)
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Because their current system is not designed for citizens to use.
The IRS is dealing with an immense technological deficit, it having been underfunded for decades on the computer front.
As for the the direct file happening, which is the very reason for this article, Biden passed some stuff enabling it, is that various tax preparation companies EXIST on the idea of making most Americans spend $80 or so for them to do their taxes.
I refuse to pay them, so I always find the "Free file" exceptions, but that takes
Re:Intuit and other leeches (Score:4, Interesting)
Uh... Think about that for a moment. I said that their current system isn't designed for citizens. I didn't say that they can't, now that they're getting more funding, fix both problems, both hiring more agents AND addressing the tech deficit. I think that it should be obvious that a new interface/system will need to be created to allow people to file their taxes directly with the IRS online, when the previous was designed for trained professionals with a relatively wide need to pull up the tax records of other people.
Besides, it might be BS, but it's actually a very common government thing(I was a federal employee for 2 decades).
In the government/big business way of doing things, you generally have various pots of money - each with their own spending rules. So X funding can be used for people, but not computers, Y funding for computers, not people, Z funding is to be used for auditing, etc...
And each pot is set by congress and such, with very little mind paid to things like "is this the proper amount?"
There is no "no" (Score:3)
That isn't a "no" though. That's merely rephrasing what I said disagreeably.
Yes, it's been trying to modernize for decades - the net result is a technological deficit, just like I said. Overbudget and late means that the budget wasn't big enough to begin with.
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If the IRS could do my taxes, then I could just review a document and approve it, that would be fine with me
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Honestly, I've heard enough issues about tax preparers and tax preparation software that I'm not sure that it makes any material difference. If you have fairly basic taxes, there's no reason the IRS can't just plop out the right answer. If you have a complicated tax situation, you shouldn't be using freakin' Intuit, but should be going to an accountant.
Re:Intuit and other leeches (Score:5, Insightful)
Checking for accuracy and challenging their numbers can be done in an online form at the IRS and everyone knows it. There is absolutely no need for everyone to have to do all that paperwork since all of the documents come from corporations and the government. Obviously the situation for corporations and the wealthy is different, but for most Americans that use tax filing software, there is no need to this archaic, time consuming and costly system.
Re:Intuit and other leeches (Score:4, Interesting)
Interestingly, when income tax was first implemented, the intention was that only people wealthy enough to need an accountant anyway would even be required to file. Unfortunately, the threshold value wasn't indexed to inflation and so bracket creep eventually brought income tax and the headaches of filing it to the masses.
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Funny thing is? My mom was an accountant. She actually has, framed, an original copy of the first tax return form.
I read it. Compared to today's, it's both extremely simple (one sheet of legal sized paper), and fairly hard, in that a lot of things are still very vague and ill defined.
But the only people expected to deal with it was the top 1% or so, so meh.
Re: (Score:3, Insightful)
Sounds like make work handouts/welfare for slightly educated people. Can't they learn to pick fruit or something useful?
Re:Intuit and other leeches (Score:5, Insightful)
Sounds like make work handouts/welfare for slightly educated people. Can't they learn to pick fruit or something useful?
It's not even make work, the vast majority of returns processed through these companies are never touched by a human.
It's more like make profit. The only folks who get anything out of the current tax preparer system are the shareholders.
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I agree. The tax prep companies have inserted themselves into the tax process to skim their money. It just like the way the credit card companies have inserted themselves into almost every purchase to skim a few percent off the entire economy.
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You can yell 'Shame on you' all while the government does what the corporations want them to do.
Let's not forget that they share data with Meta. (Score:2, Informative)
https://arstechnica.com/tech-p... [arstechnica.com]
Oh Noooooo... (Score:5, Insightful)
A vast majority of people have very simple tax filings. There's absolutely no reason why they shouldn't be able to fill out some simple info from their W2 or 1099(s) and send it through without a bunch of red tape (ironically, less red tape from the IRS than the private sector).
Typical anti-citizen overreach from the republicans. Not surprised there. If it's useful to a lot of 'normal people' and not just the rich, or can be used by people who definitely won't vote for them, they're firmly against it.
Re: Oh Noooooo... (Score:5, Insightful)
Re: Oh Noooooo... (Score:3)
Re: Oh Noooooo... (Score:5, Insightful)
Re: (Score:2)
I’ll start with a giant “I agree” to what you’ve said, but then I’ll also point out that they need your opt-in consent before they can share any of that data with third parties, hence why they almost all have an ominous checkbox along the way that may use dark patterns to try to trick you into agreeing to sharing. The good ones put it right at the start with plain language. The bad ones put it right at the end and will use vague terms that may leave you thinking that they
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No disagreement. There are laws to protect the data, but I agree that we all know how well those work: not especially well.
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And they don't have anything in their TOS that prevents them from selling your data to Meta like many other sites were doing.
https://arstechnica.com/tech-p... [arstechnica.com]
Agreed (Score:5, Insightful)
Not surprised this happened... because it's been proposed before, and was attacked / eliminated by the same groups at that time. I think it was during the Clinton years they wanted to have the IRS just have an eFile form that would probably work for more than 75% of Americans. Any wonder why Intuit and HR Blockheads started frothing at the mouth? Can you imagine the loss of revenue if people weren't intimidated by a lot of paper?
Re:Oh Noooooo... (Score:5, Insightful)
Why even make people fill out a form. The form should be sent to me securely by February 1st, all filled out so that all I need do is either sign and return as-is, make small amendments or replace with forms I filled in myself by the April 15th deadline
If I do nothing at all the form should be considered approved by me after April 15th and I should be able to go back and re-file for previous years should I wish
Re:Oh Noooooo... (Score:4, Insightful)
A vast majority of people have very simple tax filings. There's absolutely no reason why they shouldn't be able to fill out some simple info from their W2 or 1099(s) and send it through without a bunch of red tape (ironically, less red tape from the IRS than the private sector).
It's 2023. There's no reason this shouldn't be automated like it is in most countries. Fine I have a tax agent, but then I have three properties earning revenue in 3 different countries, and calculating the redress from double (triple?) taxation is mission. But before I started moving around the world my tax return consisted of logging into the governments website, clicking "I agree" to my completely pre-filled in tax return based on my employers, banks, insurers, etc, etc, etc delcaration to the government, and filling out maybe one or two deductions. If my tax return took me longer than 5 minutes something complex happened, like I had to change my address or telephone number.
99% of people do not need to report tax, the government already knows everything they need to know about you. Only in America do they still make you jump through these hoops.
Re:Oh Noooooo... (Score:4, Insightful)
Of course. The rich need tax preparation agencies, not because their taxes are complex, but their tax avoidance strategies make it even more complex.
The vast majority of people don't have access to such strategies because many often require a minimum amount of money to take advantage of. So their filings are generally very simple.
The rich realize this because they're going to be hit hardest - they're needing such services but without the proles to finance and pay for most of it, they're going to have to pay more in taxes, or more to companies to handle their tax avoidance.
And that, we know is a very un-American situation.
Dag-Nabbit! (Score:3)
Back in my days before computers we use to be able fill out a 1040EZ tax form. They even had a class that showed you how to fill it out in my High School (it was one class, but still) Fill it out, and mail it in.
It is actually frustrating to have to use a third party company to fill out my taxes. (I tried the free ones, and they had some crappy excuse on why they couldn't electrically send my taxes, where I had to pay to get my taxes done, and that problem didn't exist for them)
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In past years, it has been noted that Big Tax companies have offered "free filing services", where it was exceedingly difficult to get to them, where they offered excuses such as you describe for not being able to file YOUR taxes, etc. I would not put money down that they had changed their stripes.
You may have hit one of those sites.
Joke is on all of them (Score:3)
GPT-4 can already understand the tax code and compute taxes. How long before someone turns this into full-fledged product to compete with Intuit and HR Block? It's going to be hard to compete with a LLM that has a complete understanding of the intricacies of the tax code at a level few humans ever could.
Re: Joke is on all of them (Score:2)
Re: (Score:2)
I don't see why there would be a fine if an IRS approved AI messed up, the taxes would be re-calculated and any difference would be payable/refunded
If of course the AI was lied too, say abut unreported cash income, that should be prosecutable
But then I'm sure there are many people who feel that paying their taxes is always a "fine" and that they have a right to lie to under-count their income
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That's actually a great use case for this type of information and LLM AI systems.
It would need maintaining to be trained on law changes and such, would probably need a LLM base to have the language interpretation and writing skills.
UAT would be a massive effort and all results would need a human review before use (at least for a while).
Medical imaging analysis is another, completely unrelated, area where AI can be applied now.
These systems can effectively address "data analysis" problems but require trainin
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This! All of the keyboard twiddling middleman capitalist busy-workers (KTMCBW) should be quaking in their boots these days.
If your job can be done by voice recognition, pattern matching, and copy/pasting from tables of data then its days are numbered; even the ego stroking the managers require that makes them want a floor full of people to oversee is not going to stop it. The manager that manages the people will likely be replaced by the best actual worker whos new job will now be to supervise and optimize
They already have this. (Score:3)
Every American can already file for free directly on the IRS web site. There are two options, depending on income level. Below a certain income level they walk you through the process, similar to the paid tax software. Above a certain income level there is less hand-holding -- you may have to read instructions and do some (not all) of the math yourself, but it's not that difficult, even if you need to fill out multiple forms and schedules. I've used it for the last several years and it's worked well. So basically this $15M will be spent to study how to do what they already know how to do.
Sadly, the lobbyists for Intuit et al. are constantly trying to get laws passed that would force the IRS to remove this feature.
Re: (Score:2)
My complaint with the FreeFile forms was that that I had to manually re-enter the entire W2 into the system. They already have my W2, why do I need to re-enter it? They have my SSN, so all they need is my employers tax ID and maybe my employee number as a cross check.
Along with the general clunkiness of the web interface at the time it proved to be easier to mail in the forms. A six by nine envelope and the stamp and a half postage is much cheaper than inTuit or anyone else, given my nine page return. (Last
Privacy? (Score:5, Insightful)
How exactly is a tax filing system provided directly by the IRS a threat to privacy?
Your tax filings can either go through a third party first and then to the IRS, so that both the IRS and the third party know the details, *OR* under the new system the same tax filing details can go directly to the IRS so that only the IRS and no third party knows the details.
The IRS gets the information either way, but under a direct system noone else does. If anything, this is BETTER for privacy.
This is just greed and FUD on the part of completely superfluous third parties looking to gouge tax payers.
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The CEO's of these Tax firms, can afford remote mansions where they can live in Private without other people bothering them. I mean this law could force them to live in *gasp* an upscale housing development where they have to interact with neighbors who might know their face if they want to step outside their house.
Re: (Score:2)
All those new agents aren't there to "get the rich".
And despite the fact that upwards of 40% of households effectively pay no federal income tax [cnbc.com], they still go after the deductions of lower earners. A lot [syr.edu].
...
Whenever the IRS ramps up activity, it's always the great mass of taxpayers that are hit the hardest. Not the rich.
Nice. Shill for rich tax cheats pretending to bleed for the poor and middle class.
Half of all unpaid taxes are owed by those in the top 5% of income [treasury.gov]. The top 1% owe 28% of all unpaid taxes. Yes, the IRS is going to go after the biggest tax cheats -- the wealthy and the rich. Although relatively few in number they are the most challenging group from which to collect what they owe since the have the resources (and lobbied-for loopholes) to make collection difficult. And remember they still owe for all those
Join the buggy-whip manufacturers (Score:5, Insightful)
...tax preparers who fear that the agency's growing power will cripple their businesses...
“There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary to the public interest. This strange doctrine is not supported by statute or common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back.” -- Robert A. Heinlein, "Life-Line", August 1939
Re: (Score:2)
"There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary to the public interest. This strange doctrine is not supported by statute or common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back." -- Robert A. Heinlein, "Life-Line", August 1939
If only the above were true. Alas, it no longer is [10isdsstories.org].
Filing taxes does not have to be expensive. (Score:2)
They should just copy the Taxchopper.ca style and plug in the American Tax Return lines and links. Hell, Taxchopper.ca should either just go ahead and make it or someone American should franchise it.
The year after H&R Block dinged me for hundreds of dollars to do my first tax return I was dead set on never paying the 'Ignorance Tax' again. I did paper returns for the next ten years then when I was living with an accountant I was introduced to EFILE and decided to see if there was a good, cheap way for m
Infinge on taxpayers privacy? (Score:2)
About time. (Score:4, Insightful)
-Down with the buggy whip leeches.
Simplify Tax System (Score:5, Insightful)
And then most of us could file our taxes with a postcard. Then all these "tax preparers" could go out and find honest work.
If you like your CPA you can keep your CPA (Score:5, Informative)
Republicans: We don't need new laws, just enforce the ones already on the books.
IRS: Good idea! We'll hire additional staff.
Republicans: You can't do that! Wharrgrrbbblll etc.
IRS: You know what else? The majority of tax returns are easy. Most people take the standard deduction. What if we make our own way to directly file?
Republicans, self interested software companies, and CPAs who wouldn't exist without tax season: WWWHHHAAARRGGGBBBLLLL!
I hate to recycle a GOP talking point, but if you don't want to use the IRS software then don't. But what the IRS has identified here is a whole bunch of unnecessary arbitrage that is affecting much of the tax paying public.
Yea, Republicans pretending to be the party of (Score:2)
small gov't - but what they really mean is, whoever doesn't pay us enough bribe money in the form of 'lobbying'. They're all about trying to legislate their religious shit on everyone else too. Fuck them.
Boo! Bitches (Score:2)
The tax system in the US kinda puzzles me (Score:2)
Taxes over here are quite easy. First, for almost everyone, taxes are already paid before you get your money and tax is included in everything you buy. So there's almost no way you didn't already pay what you owe to the state, at least when it comes to income. For property, you get a mail that you owe X amount and you better pay it because there is very little discussion about whether or not you owe it. It's your property, you owe it. Period. No buts, no ifs, no bullshit. For interest and other financial in
They should compete, then. (Score:3)
If Intuit, et. al. are afraid of this system, then they should build a better one that can do it better than the free solution. Remember, people still purchase Microsoft Windows and Apple Mac OS despite Linux being free.
Why should I have to pay? (Score:2)
Why should it cost me even more money to pay my taxes? Of course the government should provide tax paying services for free. You want my money? Then make it easy for me to give it to you, it is a no brainer.
Heard this one before... (Score:2)
And nothing changed....
How exactly does it work now? (Score:3)
So, how are those tax prepares filing your taxes? Are they printing it out and mailing it in? I doubt that. But if there is already a way to digitally file your taxes by one of those companies as a proxy, why can't you use just that??
Wouldn't it make more sense to provide a general way to electronically file your taxes and then pay tax prepares as necessary to do the work of preparing your tax documents and have them file it using the same interface?
Rent Seekers (Score:2)
Meanwhile .... (Score:2)
In the rest of the world most people never file taxes ... ...if you are employed then the company employing you does it
Paywalled - Here is a GPT-4 Summary (Score:2)
It's paywalled. Here is a GPT-4 generated summary:
---
The Biden administration's proposed $80 billion IRS overhaul aims to modernize the agency, hire more staff, and enhance its technology, thereby increasing its ability to crack down on tax evasion. One major component of the plan is to create a free, direct tax-filing system that allows taxpayers to submit their returns directly to the federal government without any costs. This move could potentially hurt tax preparation businesses like H&R Block and T
I'll believe it when I see it (Score:5, Insightful)
We've heard this song before. I can't remember how long ago it was, but at one point the IRS agreed not to make it's own system if the industry itself made it so a basic w2 filing was made free. Most companies buried this under 10 links and made it nearly impossible to use.
I suspect what will happen is the industry will cry a lot to their bought and paid for politicians and once again, we won't get this IRS tax filing system for our basic w2 returns.
I've heard in a lot of other countries, you don't even have to file. That makes sense because your employer sends the IRS all that information anyway. Why should you have to send the same information again? You get your w2 from your employer anyway. The whole reason a lot of us even have to file is so we can make a middle man rich, aka the tax preparation industry.
I understand if you are a 1099 or trying to take advantage of a lot of various deductions, losses and gains but if all you are doing is submitting a w2 and checking a few boxes for some tax credits, why should that cost you anything? Answer, because this is American and we are all about making businesses rich at the expense of the tax payer, aka the consumer.
It doesn't help that we have an incredibly convoluted tax code designed for big business and the wealthy to take advantage of. Nor does it help that we are trying to promote social justice with that same tax code. It just makes the whole thing a mess.
Why do you think the most audited people tend to be the bottom half of the income earners? Simple answer, because they don't have the money to defend themselves so it's easier to just give over more tax dollars. Large companies and wealthy people have accountants and lawyers. It cost the IRS way to much to go after them but cost practically nothing to go after the middle class and lower.
But that's what the US government is for, big business and the wealthy!
Evolution from Paper (Score:2)
We already "allow taxpayers to submit their returns directly to the federal government". Just print out the completed form and mail it in. The minimal next step would be to also allow PDF uploads. That would accomplish the "at no cost" part. Better would be to create a simple (e.g., CSV or JSON) file format that I could upload, and they could import without risk of image recognition errors.
Even better would be for the IRS to pre-calculate my taxes and supply a CSV/JSON/PDF/US-Mail download for my review
Why free vs. paid tax filing be a privacy issue? (Score:5, Insightful)
Mr. Norquist argued that if the I.R.S. took over the filing process, it would lead to more audits and less privacy.
“If the government does your taxes for you, they have to know everything about you,” he said. “It is the end of economic privacy.”
The idea of a tax return is that the taxpayer voluntarily sends private financial information to the IRS. If the process of creating the return is free instead of for-fee, how does that impact privacy? What would be private that wouldn't be included in current for-fee filings or that wouldn't already be part of the IRS's huge database of financial records?
The tax filing industry collects more then $10 billion in annual revenue. That's the problem with trying to reform "inefficiency" in any economic market. That inefficiency doesn't refer to money that is burnt in a bonfire, but rather someone collects those profits. Some corporations and people get very rich from this inefficiency, but a huge number of people (including ordinary Americans) depend on that inefficiency for their livelihoods. This is also true for railroad workers, longshoremen, factory workers, health insurance industry folks, etc.
garbage competition (Score:3)
I would love to give turbotax the finger. What an annoying piece of parasitic leech. I tried to do just that by trying the HR Block software one year. Complete and utter garbage; had to go back to turbotax.
When the govt takes over, expect real quality stuff. Yeah, right. I'm sure they will make the HR Block POS look like a super winner.
US govt no longer knows how to do anything right. Republicans purged any competent Democrats, Democrats purged any competent Republicans; all that's left is the losers, led by nincompoops.
Free tax services (Score:3)
I've tried the file for free options at some of the online tax service providers. The problem is similar to extended warranties where they have a long list of things that bump you out of the "free" service and require you to pay for it. Not just the income limit but things like if you have dividend income or other common items you get to pay. I would like my tax dollars to be used to help me do my taxes. It's the government's fault they make it so freaking complicated.
Re:I lean both ways on this one... (Score:5, Interesting)
These new IRS agents aren't going to be going after the big, fat cat 1%'ers. Those folks have too much money to spend on lawyers. The IRS will go more after the low hanging fruit, the middle class filer...
Ah, the right-wing talking point pops up. Do they text you the week's talking points every Monday?
Yes, they will go after the rich cheaters. A tax cheat who under-reports ten million dollars of income is a lot more valuable than somebody who mis-reports a thousand dollars of income.
Right now the rich know that the IRS is understaffed and there's a good chance that they will miss underreporting.
Re: (Score:2)
Exact quotes from references below, emphasis mine:
(1) In total, about 59.9 percent of U.S. households paid income tax in 2022. The remaining 40.1 percent of households paid no individual income tax.
(2) Among Disaffected Democrats and Devout and Diverse - which have the lowest family incomes among the typology groups â" fewer than four-in-ten say they are generally satisfied with their finances
So 40% of households pay no income tax, which by definition would be the lowest earners; And the lowest earners
Huh? [Re:I lean both ways on this one...] (Score:2)
But if you believe the IRS is going to focus more on people who aren't paying
Huh? I posted: "they will go after the rich cheaters."
I have no idea how you get from this that they'll focus on "the lowest earners. And the lowest earners are Democrats."
Re: (Score:2)
Because that's where the money is. It's low yield trying to squeeze a few hundred bucks more from someone pulling $40k/year. A multi-billionaire that claims $0 liability is a ripe target.
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This perception about who and why they are going to enforce tax laws though is not really their place or really perogative to discuss in the open nor would I consider it proper for them to say "we're leaving these tax cheats alone" because that's not what they are here to do.
Technically if you are avoiding or cheating on taxes you are breaking the law, middle or upper or lower class. Where else in our law enforcement do we say "these people get a free pass on crime", we just don't know.
Now internally I am
Re: (Score:2)
I can easily promise you that if they hire X new people, this means that these X people will go after the 1%.
That's like saying that you get a bailout if you use it to pay your staff. No problem there. I used to pay a million for my staff, so the million bailout that you pay me now go to my staff and I keep the million I used to spend on my staff for myself. See, I did what I promised to do!
Re: I lean both ways on this one... (Score:4, Insightful)
No, it isn't. The IRS does not care whether you are big or small. They care about whether you paid your taxes or not. The reason the right wingnuts are whining is because the rich rightwing nuts will get nailed. Even so, most taxes are paid by the middle class, and they deserve to pay what they owe.
Re: I lean both ways on this one... (Score:4, Insightful)
As much as I want tax reform, that statement is just not borne out by the data. Considering that 70% of income tax is from the 90th income percentile and above it's not mathematically possible for the middle class to collectively pay "most," unless you have an interesting definition of "middle class" that spans an unusual range of income percentiles.
Or are you talking about other types of taxes in addition to income tax, which seems odd for a discussion on federal income tax.
talking point [Re:I lean both ways on this one...] (Score:5, Insightful)
Irs could very easily sidestep the controversy and say none of the new hires will be deployed against the middle class.
Which is exactly what they did:
Aug 9, 2022: IRS Commissioner Charles Rettig said the resources won't increase “audit scrutiny on small businesses or middle-income Americans.
But they won't do it because the talking point is true this time.
Right-wing talking points don't care about truth one way or the other. It's all about perception, distilled into tiny sound bites that stimulate outrage.
Re:I lean both ways on this one... (Score:5, Informative)
The hiring isn't exclusively about audits and enforcement - it's about providing a simple, basic level of service that supports effective government.
Re: (Score:3, Informative)
Have you ever tried calling the IRS? I have, multiple times, and there was a minimum - minimum - 45 minute wait, on hold, to get a live person on the phone.
I have called a few times in the past year, both personally and professionally, though never during "tax season". Never waited more than a few minutes, and the individuals on the other side were super pleasant.
I lean only on way on this (Score:3)
We're talking about 87k new employees who actually do something vs. the almost 300k in tax prep who only exist via exploitation of the average taxpayer.
No more private companies charging lower to middle-class workers for what could easily be free.
No more lost hours doing tax preparation for many of those same people. (And that's a few hours multiplied by 132 MILLION returns under $100k filed in 2020.)
Less possible to cheat on your taxes.
More folks to audit past returns finding people who did cheat on their
87,000 *employees* not *law enforcement agents* (Score:5, Insightful)
That 87,000 number includes folks working on IT systems, answering phones, processing paper tax returns, updating forms and documentation after every congressional circle-jerk and all sorts of other mundane tasks.
And yes, some of those 87,000 are armed enforcement agents. Which I'd have thought the Republicans would be in favor of, as they still go on and on about "lax" law enforcement. Unless of course it's against one of their own.
Meanwhile, every $1 spent on the IRS yields a roughly $6 increase in revenue, with no change in laws. One would think that investing in something with a six-fold ROI would be a no-brainer?
Re:87,000 *employees* not *law enforcement agents* (Score:5, Insightful)
While it's no guarantee of future results it also doesn't mean a decrease in results either. I mean even if the $1 spent gets $1 in return it's a good thing so they have some runway to work with if that 1:6 ratio is accurate.
It's really a clear cut case of decades of poisoning the well on the issue paying off where such an amount of the public is opposed to both nearly 100k new jobs being created that actually doesn't cost any taxpayer dollars, creates revenue and has the end result of criminals being brought to justice more. Crazy that any of this is controversial imo.
Re: (Score:2)
While it's no guarantee of future results it also doesn't mean a decrease in results either. I mean even if the $1 spent gets $1 in return it's a good thing so they have some runway to work with if that 1:6 ratio is accurate.
It's really a clear cut case of decades of poisoning the well on the issue paying off where such an amount of the public is opposed to both nearly 100k new jobs being created that actually doesn't cost any taxpayer dollars, creates revenue and has the end result of criminals being brought to justice more. Crazy that any of this is controversial imo.
If the IRS didn't have as many horror stories about how they munged up someone's life for a long while - in error (I personally know a few folks who were caught up in a situation that turned out to be IRS' fault) they I wouldn't sweat more. Once upon a time people said Nuclear was so safe that only 1:1,000,000 would melt down, so they wanted to build 10,000 more -- oh goodie, now we have more meltdowns. Apply the same logic to the IRS...
It's not controversial to me - make the tax code simpler, and we will (
Re:87,000 *employees* not *law enforcement agents* (Score:5, Insightful)
Well one could also make the case that an underfunded IRS is more prone to mistakes, we can't go by anecdote. The GAO reports pretty much paint hte picture of an understaffed and underfunded organization [gao.gov].
Second it's a bit of a fallacy to say "more agents and more audits means more mistakes" because we are ignoring the outsized benefit of all the increased enforcement and revenue. Even in the nuclear example with 10k plants a 1:1m chance of meltdown, yes the meltdown chance has increased but we also have all the benefit of 10k nuclear plants producing cheap and available electricity. We can't simply use only the bad part of a cost/benefit calculation, that makes no sense.
We can and should make the tax code simpler but by that logic I would say that enforcement should be even stronger in balance with that. Simpler tax code means I expect to see a high level of compliance and I would want tax cheats caught at the maximum rate possible in that scenario.
Re: (Score:3)
We can and should make the tax code simpler but by that logic I would say that enforcement should be even stronger in balance with that. Simpler tax code means I expect to see a high level of compliance and I would want tax cheats caught at the maximum rate possible in that scenario.
A simpler code should mean the current workforce can enforce. "Should" being the operative term. Besides, what government agency is going to admit to being "overfunded"? :-)
Re: (Score:2)
Should is correct and thankfully we don't have to use self report here, this is not the IRS stating this but the GAO.
Also it's not the IRS's job to write the tax code, just enforce it. Whatever the code is they should have the resources to get maximum compliance.
Re: (Score:3)
Well of course they use information from the IRS but they also do their own indepedent auditing of the agency based on their own investigations, that's kind of their entire purpose. They dont just just ask the agencies for their opinions and take their word on it.
If you want to read up on what the GAO is: https://en.wikipedia.org/wiki/... [wikipedia.org]
Re: (Score:3)
f the IRS didn't have as many horror stories about how they munged up someone's life for a long while - in error (I personally know a few folks who were caught up in a situation that turned out to be IRS' fault)
Disclaimer: Mom was a professional un-munger(IE personal tax accountant). Though she got told by the boss to rewrite a few letters to the IRS before they got sent because the "you guys are idiots" shown through a bit too clearly.
Anyways, a better funded and staffed IRS could fix these situations more easily because manpower to do so would be available.
In addition, most of the horror stories I've heard about were caused by the people themselves, but as long as you didn't go to the level of Wesley Snipes, w
Re: (Score:3)
You got it wrong, filing electronic isn't convenient to you. It is convenient to the IRS, who doesn't need staff members to read the documents and reenter it in, and also have to deal with OCR issues. Taxes done in Crayon, People using their tax form as Toilet Paper before sending it to the IRS...
Re: (Score:2)
. It is simply convenient to file electronically, not necessary as long as you don't need the money you are owed any time soon. Don't want to pay TT or H&R? Fine, 2 first class stamps and 7 additional months of not needing the money from your return is all you need , one for Fed, one for State. Go find something else inconsequential to whine about, as long as you consider that extending a unwanted loan to the government by nearly a year is inconsequential, and that pointing out this huge time penalty for filing on paper is a massive problem for millions of people should be classified as a "whine"
Fixed that for you.
I was lucky to get my return in 8 months when I filed on paper, the IRS was sending status updates that nearly all of the returns filed 18 months prior were done being processed. E-filers got their money within a 3-5 weeks.
Re: (Score:2)
I think it was a typo, should be:
"... will cripple their businesses and infringe upon their ability to violate taxpayer privacy."
Re:Get rid of the 1040 and April 15 (Score:5, Insightful)
The problem with Flat Tax, (such as sales tax) is that the lower income people will be greatly more adversely affected than higher waged folks.
The consumption tax, will also open the door to causing a bunch of other things that can cause problems, such as Value Add tax, and taxes on every-time money is moved. As we need to be sure the wealthy also pay their fair share, but those with extreme wealth can live more affordably than those who are poor.
Re: (Score:2)
To ensure the poor aren't left behind, the government would give every US citizen a monthly check for $X. X would be the calculated monthly consumption taxes paid by someone at the poverty line. Every US citizen would get a check for the same amount.
Re: (Score:2)
Washington State does it this way, but the claim they can't get enough money that way. And it also hurts the poor.
Re: (Score:3)
Re:They Should Fear... (Score:5, Insightful)
It's also a huge handout to the wealthy at the expense of the working class.
All sales taxes are inherently regressive, since the poorer you are the larger the percentage of your income you spend on taxed purchases. And if you're replacing income tax, you'll need at *least* a 30% sales tax to generate anything like the same revenue. Probably closer to 50-70% since most income tax comes from the rich, who won't be significantly subjected to sales taxes.
Because while working class people spend most of their income on necessities and luxuries, which are all subject to sales tax, the rich generate (and spend) an huge portion of their income on investments - currently subjected to capital gains tax (at a much lower rate than earned income for some reason...), but NOT sales tax. And you can't really change that without crippling the market - subjecting stock purchases to sales tax would have a severely chilling effect on the market - a 10% sales tax on stocks means nobody will buy stock unless they're confident it will go up by MORE than 10% so they can get their money back. Capital gains in contrast only taxes the profit, so there's minimal chilling effect - if you sell it for 1% profit you only pay tax on that 1%.
The rich also spend a much larger percentage of their income overseas - a percentage that's only likely to increase if domestic goods have a ridiculous tax imposed. And of course, such high sales taxes also provide huge incentive for the growth of a huge black market to avoid them, along with all the problems those bring.
Finally - assuming you're making businesses pay the same tax on their inputs (as opposed to just giving them a free pass), then you provide a huge incentive to form vertical monopolies - if you convert raw ore to finished products, you only have to pay tax once, for the ore. Rather than taxes adding to the price at every stage of the production chain where goods change hands.
Re:They Should Fear... (Score:4, Insightful)
Ah yes, the tax reform that exempts almost all income from billionaires since sales tax isn't collected on the sale of stocks, bonds, jewelry, coin collections and real estate (all of which are capital gains taxes). Meanwhile, it fucks over the lower classes by increasing the cost of everything they're already having trouble budgeting for.
"But there's a rebate"... yeah, but it also eliminates EITC and CTC, which already provide more than the proposed rebate.
It shouldn't come as a surprise that the FairTax legislation was introduced by a very pro-corporate, pro-billionaire Republican.
Re: (Score:2)
Because, as I understand it "Fair"Tax is basically just sales tax, which means it's directly collected by businesses rather than individuals, which means you need much less bureaucracy to manage it.
Of course, like all sales taxes it's a regressive tax, with the low and middle incomes being hit hardest. So basically just a handout to the poor, hard-working 1% who only control as much wealth as the bottom 80% of the population combined.
Re:They Should Fear... (Score:4, Insightful)
That also is a bit of sleight of hand by the Fairtax people because sales-tax-fraud is in fact a thing that requires investigation and enforcement but currently it's all a state and business issue so it's easy for individuals to mentally handwave it away since they don't interact with it.
With a national sales tax that work still needs to be done, even more so as now there is even a larger incentive for businesses to try and avoid the tax to gain an edge. Years ago when I read the FairTax book there was a whole discussion on the risk of formation of black markets to avoid the now 20-30% tax charge on products and honestly I remeber my feeling at the time that they did not really have a great answer on how to prevent it because I don't think Boortz wanted to admit it would require what is functionally the IRS all over again just with a new directive.
Re: (Score:2)
The problem is that you have to prepare the thing yourself, and most people can't be bothered so hire out to one of these companies to do it for them.
The problem for years is that these companies actively lobby to disallow the government to implement a free competing alternative to their service because their entire business model would go up in smoke. Everyone sees it for what it is, and this is th
Re:Rest of World Stunned by US's Lack of Free Tax- (Score:5, Insightful)
Wait until you read about our healthcare, weekly school shootings, incarcerations per capita, and worker’s rights.