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Why the IRS Should Automatically Fill In Returns With What It Knows

Posted by Soulskill on from the because-addition-is-mentally-taxing dept.

theodp writes "An article in the NY Times begins, 'In the digital age, filing income tax returns should be a snap. Important data from employers and financial institutions has already been sent to government computers. Yet taxpayers are still required to perform the chore of preparing a return from scratch, in many cases paying a software company for the privilege.' Why, if your needs are simple, can't you just download forms pre-filled with whatever data the IRS has received about you, make any necessary adjustments, and automatically get the IRS calculation of your taxes? Sounds reasonable, but the IRS rejected the President's proposal to give taxpayers the option to do so as 'not feasible at this time' due to delays in the receipt of W-2 and 1099 data. However, California managed to offer a pre-filled state tax return, which cost only 34 cents to process compared to $2.59 to process a traditional paper return. Despite the success of the pilot, meager funds have been allotted for the program due to the strength of its political opponents — 'principally, Intuit' — according to the state controller. Intuit argues it would be a 'conflict of interest for government to be both tax collector and tax preparer.'"

17 of 613 comments (clear)

  1. This is how it's done where I'm from... by Louai · · Score: 5, Informative

    In Finland you get a pre-filled tax sheet in the mail, you only have to return it if there are any changes you need to make. I'm currently living in the US, I find the amount of crap you need to go through to get your affairs in order absolutely stunning.

    1. Re:This is how it's done where I'm from... by nedlohs · · Score: 4, 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.

    2. Re:This is how it's done where I'm from... by c-reus · · 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.

    3. Re:This is how it's done where I'm from... by __aasqbs9791 · · Score: 3, Informative

      It can be even worse, too. Some counties have special taxes on residents, too.

    4. Re:This is how it's done where I'm from... by Neoprofin · · Score: 4, Informative

      The bastard thing is that most in the US overpay their taxes by having a portion withdrawn from each paycheck. "Paying our taxes" is just telling them that they ripped us off during the year and we'd like the money back.

  2. works fine in Sweden by BuR4N · · Score: 5, Informative

    pre-filled tax forms that you only have to sign and return have worked well here in Sweden for years, no conflict of interest at all. A couple of years ago, they even started with an SMS option, where you just can "ok" your pre filled tax form with an SMS code.

    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.

    --
    http://www.intellipool.se/ - Intellipool Network Monitor
  3. We've had that for years in Norway by TickTEC · · Score: 5, Informative

    Here in Norway, if you feel you have nothing to add, you don't even have to return the papers. Just sit back and relax. I've never had to fill out anything.

    --
    I'm gonna be famous, tell everyone!
    1. Re:We've had that for years in Norway by Kjella · · Score: 3, 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.

      --
      Live today, because you never know what tomorrow brings
  4. Re:people are lazy by samkass · · Score: 5, Informative

    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 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.

    --
    E pluribus unum
  5. UK Tax Returns by nanoakron · · Score: 4, 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.

  6. Re:Conflict? by nbauman · · Score: 3, Informative

    http://www.opensecrets.org/orgs/all_summary.php?id=D000026667&nid=3868

    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.

  7. Re:How could they justify an audit? by russotto · · Score: 3, Informative

    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*.

    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.

  8. Re:Conflict? by jenn_13 · · Score: 3, Informative

    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.

  9. Re:Conflict? by Ritchie70 · · Score: 3, 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.

    --
    The preferred solution is to not have a problem.
  10. Intuit are evil ... by aegl · · Score: 3, 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.

  11. Exactly right. MOD PARENT UP. by Futurepower(R) · · Score: 3, Informative

    When Ed Foster was still alive, each year his GripeLog would rate the most abusive software companies in the United States. Microsoft was usually first, of course, but once Intuit was rated the most abusive.

    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.

  12. Re:What do you think happens today? by mysidia · · Score: 3, Informative

    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 taxpayer is not presented with the info, then they have to be sure to report everything to really be certain they won't be caught red-handed.

    Probably the real 'big bad guys' such as insiders at the IRS, criminal orgs, etc, already know major blindspots, where they can elude dtection.

    If the IRS always reported everything it knew to the taxpayer... they'd lose a big part of their edge, they'd be opening up insight into the extent of info they get to the general public, resulting in opening up illegal tax fraud to the commoners, instead of just large entities with lots of money....