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To Fight $5.2B In Identity Theft, IRS May Need To Change the Way You File Taxes
coondoggie writes: Based on preliminary analysis, the Internal Revenue Service (IRS) estimates it paid $5.2 billion in fraudulent identity theft refunds in filing season 2013 while preventing an additional $24.2 billion (based on what it could detect). As a result, the IRS needs to implement changes (PDF) in a system that apparently can't begin verifying refund information until July, months after the tax deadline. Such changes could impact legitimate taxpayers by delaying refunds, extending tax season and likely adding costs to the IRS.
No, that's a terrible idea. With income tax, you can lighten the tax burden on those most affected by using tax rates that scale with your income. If everyone just pays a flat sales tax rate, the poor bear most of the economic burden. Plus, if we eliminate income tax, we have to raise sales tax to cover the deficit, so pretty soon we'll all be paying 20% (or higher) sales tax.
Think of it this way; if you make $24,000 a year, a 20% tax that reduces your income to $18,000 a year is a much greater burden than it is to someone who makes $200,000 a year and has their income reduced to $150,000 a year.
Tax evasions now impossible
You really undermine your own position when you make farcical statements like that. I would say the overwhelming preponderance of Americans on this site are already evading their state's use tax. Did you remit your sales/use tax due for all your online and other purchases across state lines last year?
As for sales tax evasion, well, it already happens today. The IRS would just use it as an excuse to further demand all of our financial transactions. The feds already got 80% of the whole country's personally identifiable credit card transactions last year (for the purposes of protecting us from fraud, of course, *cough*). Next up in your scheme: "friendly visits" from IRS agents who will graciously allow you to prove your innocence if you like to use cash more than they believe you should!
Despite all that, tax evasion will thrive via black markets.
You either had a failure of imagination or you are just too excited about your proposal.
If you make $24k a year, you don't pay income tax and most likely get a nice wad a cash courtesy of the U.S. Tax payers.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
We wouldn't have this problem if we filed our taxes online. Turbotax has prevented that, because they want to charge us for doing what the government could do free, as it does in less corrupt countries.
We've discussed this on Slashdot before. It's like keeping marijuana illegal because the prison guards' unions want to keep their jobs.
http://www.slate.com/blogs/mon...
The Sleazy PR Campaign to Prevent the IRS From Making Your Taxes Simpler
By Jordan Weissmann
Slate
April 14 2014 3:41 PM
Theoretically, it should be far easier for Americans with simple finances to file their tax returns. Instead of making tax filers putz around W-2s and tax prep software, the IRS could electronically prepopulate their paperwork with the information it already receives from banks and employers, and tell filers how much they owe. If the final figure looked about right, you’d have the option to file. As Matt Yglesias wrote here last year, the whole process could be a five-minute snap.
Theoretically. But for years now, Intuit, the maker of TurboTax, has fought tooth and nail to prevent automatic tax filing from becoming a reality, lobbying against bipartisan legislation to introduce it with the help of a powerful tech industry trade group and conservative anti-taxers like Grover Norquist. Intuit and its competitors in online tax prep don’t want the government cutting its market share. The tax-crusaders want to ensure that paying the government remains as much of a painful, resentment-generating slog as ever. And thus a potent alliance has been born.
http://www.propublica.org/arti...
How the Maker of TurboTax Fought Free, Simple Tax Filing
by Liz Day
ProPublica, March 26, 2013, 5 a.m.
So why hasn't it become a reality?
Well, for one thing, it doesn't help that it's been opposed for years by the company behind the most popular consumer tax software — Intuit, maker of TurboTax. Conservative tax activist Grover Norquist and an influential computer industry group also have fought return-free filing.
Intuit has spent about $11.5 million on federal lobbying in the past five years — more than Apple or Amazon. Although the lobbying spans a range of issues, Intuit's disclosures pointedly note that the company "opposes IRS government tax preparation."
The disclosures show that Intuit as recently as 2011 lobbied on two bills, both of which died, that would have allowed many taxpayers to file pre-filled returns for free. The company also lobbied on bills in 2007 and 2011 that would have barred the Treasury Department, which includes the IRS, from initiating return-free filing.
Intuit argues that allowing the IRS to act as a tax preparer could result in taxpayers paying more money. It is also a member of the Computer & Communications Industry Association (CCIA), which sponsors a "STOP IRS TAKEOVER" campaign and a website calling return-free filing a "massive expansion of the U.S. government through a big government program."
Blaming the IRS is a perfectly acceptable American past time.
Not to mention that they actually violated federal law by not having the backups, and that this failure mysteriously affected only the specific people Congress wanted the data from. I'm no tin foil hat-wearing crazy, but even I have to call bullshit on this whole thing.
Middle class income and tax/earned income credits? On what planet!?
On planet Earth, in the USA, we have both middle class income earners and people who make so little that they get to classify their rent and other payments as "earned income tax credits". Those middle class people also get some tax credits, like the ones for installing energy efficient whatsits or getting rid of the clunker cars.
I don't think you know what the word charity means.
There is a reason that charitable deductions exist, and if you don't understand why then you shouldn't be discussing tax policy.