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Why the IRS Should Automatically Fill In Returns With What It Knows
theodp writes "An article in the NY Times begins, 'In the digital age, filing income tax returns should be a snap. Important data from employers and financial institutions has already been sent to government computers. Yet taxpayers are still required to perform the chore of preparing a return from scratch, in many cases paying a software company for the privilege.' Why, if your needs are simple, can't you just download forms pre-filled with whatever data the IRS has received about you, make any necessary adjustments, and automatically get the IRS calculation of your taxes? Sounds reasonable, but the IRS rejected the President's proposal to give taxpayers the option to do so as 'not feasible at this time' due to delays in the receipt of W-2 and 1099 data. However, California managed to offer a pre-filled state tax return, which cost only 34 cents to process compared to $2.59 to process a traditional paper return. Despite the success of the pilot, meager funds have been allotted for the program due to the strength of its political opponents — 'principally, Intuit' — according to the state controller. Intuit argues it would be a 'conflict of interest for government to be both tax collector and tax preparer.'"
In 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.
Intuit would probably argue that it's a conflict of interest to be both a tax payer and tax preparer.
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.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
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
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
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
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!
I wonder how much the IRS figures into its revenue stream the profit obtained via people filing taxes and not knowing what they're doing. Folks who use professional preparation services no doubt get them correct most of the time and owe the correct amount (or get the right refund), but how many people are just doing it via paper and submitting, and, due to the arcane, maze of rules and regulations, overpay and don't claim the exemptions they should?
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!
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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!
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.
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!
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.
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.
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.
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 campaigns and ballot measures. Then maybe the PEOPLE can run this country.
In the US private companies are able to fill in your data electronically. Your employer, banks, etc can download their data (essentially the forms the IRS has them mail to you) directly into your tax preparation software. It is only the gov't that finds such things infeasible.
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Perpenso Calc for iPhone and iPod touch, scientific and bill/tip calculator, fractions, complex numbers, RPN
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.
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.
The enemies of Democracy are
The tax filing and preparation industry, of which Intuit is a part, has long been an obstacle to any change in the tax code that would serve to simplify and reduce the need for their services. However, they are far from the only special interest group with an incentive to keep the US Tax code as complex, opaque, and unintuitive as possible. The tax attorneys who help the wealthy arrange their affairs to minimize taxes under the complex rules, the Federal Law Enforcement agencies who periodically use the tax code as a tool to prosecute those who they cannot otherwise charge (i.e. organized crime, income from illegal activities, etc) and of course the tax accountants who work at all levels as guides through the byzantine labyrinth of the US tax codes. Each of these groups, and especially the attorneys (who are the number 1 contributors to the Democratic Party btw), lobbies vigorously against any change in the law which they perceive to be a threat to their ongoing and profitable stream of revenue. Few things in life are as certain as death and taxes after all and one would be hard pressed to think of a more stable source of revenue, as an attorney or tax industry insider, than a system mandated by the Federal Government that every American must use at least once per year.
They won't do it because then the tax payer knows what sources of income the government doesn't know about. The uncertainty now is enough to scare some people into declaring their tips, gifts, or private sales. Full disclosure from the government makes it easierto dodge taxes. The correlary is that more people might pay if the simply get a bill in the mail. Of course, that just "puts the burden" on "poor people", because the educated would be smart enough to get away with not declaring an overseas investment, and the poor would be too afraid not to send money they know the government wants.
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.
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.
That's the point at which you go to the pet store and pick up 27 kittens.
When the agents come to inspect the well-being of your children, you show them your "babies".
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.
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.
Setting his threshold to 5, Sparky eliminated most of the trolls on /.
what, like '9' ?
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.
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That "social contract" sounds very much like a Microsoft EULA. I just ignore it.
Set your phasers on "funky"!
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.
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.
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!
Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
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.
Starships were meant to fly, Hands up and touch the sky - Nicky Minaj
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.
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 and the IRS knows there is a high propensity to cheat.
We can already do this in Australia. Electronic submissions have been around for at least the last five years, and you only need to fill out every section of the form the first time you submit electronically. In subsequent years, and info which has not changed (such as address, employer details etc) doesn't need to be manually entered, but is auto-filled from the Tax Office servers. There was also a suggestion recently that they should simplify the system even further, and remove the need for people who only need a "simple" tax return to submit a form at all (I'm not sure how they were going to define "simple"). This supposedly would mean about two million less tax returns every year.
I had tax overpayments from 8 years that were owed to me (>$2000). IRS never said a thing. One year, I had an underpayment of $115. after penalties and fees and interest, IRS (first communication) sent me an "intent to file lein" letter unless I paid them $480. if they owe you money, they'll never look for you
In God we trust,
everyone else we firewall!!
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 loan until they file. Some people actually regard withholding as the only way they can save a large sum each year, which is really saying they lack the discipline to open a savings account with that money instead. It's normal in the US for essentially the same reasons not planning for retirement or not having rainy day savings is pretty normal in the US too.
Who is John Cabal?
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 don't make them carry 1/4th of the total load and break their backs while you whistle Dixie, you give them a load proportional to their ability to carry it. That's because you are sharing a burden together that benefits everyone.
I can explanate how to administrate your network. You must configurate and segmentate it, so it can computate.