Slashdot Mirror
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.
Let's fix the corporate tax evasion first please.
Let's fix corporate taxes first, so that there is no evasion.
I don't want to achieve immortality through my work. I want to achieve it by not dying. - Woody Allen
Sorry, it's going to be a long time before anyone believes anything the IRS says again.
How about we simplify taxes so there's no need to issue refunds in the first place?
In exchange for bringing all deployed troops home, closing all foreign bases, ending all foreign aid, and ceasing all foreign military contracts. It costs about $1 trillion in annual lost revenue in exchange for saving about $1 trillion in annual expenses.
End income tax.
No more tax returns. Only tax based on use (i.e. Sales Tax) Problem solved in one fell swoop.
Tax evasions now impossible and you encourage people to invest rather than spend.
Oh wait, that's right, we have an entire industry run by blood sucking vampires that need the current system to remain as confusing as possible.
The IRS is raking in record income to the US federal government.
You aren't out of money because the IRS isn't taking it in... you're out of money because you're spending too much of it.
By all means... fix corruption... but while you're at it... balance the fucking budget.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
Let's fix the corporate tax evasion first please.
Let's fix corporate taxes first, so that there is no evasion.
Both. The US has very high corporate taxes (relative to other countries) but also has the most advanced system of tax loopholes ever developed by a corrupt legislature. States frequently offer tax incentives to big companies to move or stay in a state, while leaving the same unpalatable taxes (like business property taxes on machines and furniture) on everyone else.
Tax corps uniformly and quit with the loopholes and the same same income would come in at a lower tax rate, thus addressing both evasion and avoidance.
I should use this sig to advertise my book ISBN-13 : 978-1501515132.
We don't need more rules, more laws, more agents (that cost a shit ton of money at work and in retirement), more jails.
Just banish most taxes, simplify the system to a low rate transaction tax, don't deal with deductions or deciding which charities or legit or not (tax would be too low to matter in individual cases), stop caring if business are on shore or offshore or if couples are married:
http://www.apttax.com/
Of course, by nature, bureacracy always has to build itself up, never deconstruct itself, so don't expect to see it short of in the face of a revolution.
The current IRS regulations effectively require people to overpay their income taxes, which results in nearly everyone getting a refund, which they want processed quickly, because somehow it's okay if the government is holding money you didn't actually owe, until you actually know how much they're holding. If, on the other hand, people have to mail in a check they don't care if it takes the IRS a few months to verify everything.
Simple solution: Eliminate the regulations that require overpayment, such as the regulation that penalizes you for underpaying if your withholdings are inadequate to cover your liabilities and aren't at lease as large as the prior year's withholdings. Some, perhaps many, people will still choose to overpay, as a sort of brain-dead savings plan, but many will reduce their withholdings, and those that still overpay will have no basis for complaint about a slower refund, since it was their choice.
But, then, I think the whole concept of mandatory withholdings is evil and wrong. It's just one of many ways that taxpayers are misled about how much they're paying. It's not the worst of such deceptions, but it's a significant one.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
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."
Tell you what. You loan the US government 1 trillion dollars interest free per year and I'll sign off on your little plan.
Short of that, we're destroying ourselves.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
yawn... you can't raise revenue any higher. They're already raising it as high as they can. If they raised it higher they'd get less money. We've already hit the laffer curve.
Which means we're looking at over 1 trillion in CUTS.
And as to the negative consequences of that... bring it.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
..and really all of the "simple" solutions. It seems like a good idea - just don't spend that $1 Trillion and we can drop our taxes by $1 Trilllion. Except that economies don't really work that way. You can't add or subtract a trillion dollars like that and expect things not to spiral out of control.
Remember the recession that freaked out the entire world? Remember the job losses, the stagnation of the economy, and the general feeling that the world would end? We lost 8.8 million jobs, most of them paying $14-21/hr (if wikipedia is to be believed). Do you know how many jobs $1 Trillion dollars pays for? About 18 Million - more than double what was lost in the great recession.
"But wait," I hear you cry, "that trillion dollars would still be spent by the people who wouldn't have been taxed!" Oh, that's partially true. Understand that 40% of that money would go to multi-millionaires who's purchasing habits generally are not affected by their income. The other 60% probably would be spent, but that 60% would be spent on goods and services in an economy which has almost zero overlap with the manpower which would be idled by the drop of $1T in defense spending. Those are soldiers, intelligence report creators, bomb makers - not really things you purchase in your every day life. And because you can't train and re-purpose people fast enough to build the TVs and tablets and cars and hotel staff to pick up the increase in demand, the prices for all those products would increase. And because of the numbers, dropping the US income tax would result in a net increase in take home pay of about 4%-5% for most people in the middle class (Say, $60-80,000 annual household income) or about $50 a week.
So you're magical tax-free utopia would end up with 18 Million people out of work and without the skills needed to change jobs, inflation in the disposable goods and discretionary services market, and a net effect of $50 a week in the pockets of the people who still have jobs.
Is it just my observation, or are there way too many stupid people in the world?
Or you could just do a federal sales tax. Everyone pays, including corporations, so everyone has skin in the game. No loopholes. No moving out of the country to avoid paying your share. No April 15. No tax forms. No deductions or credits. Everyone knows exactly what they are paying. Everything purchased is taxed, period.
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
Rich people spend less of their money and save more of it than poor people, simply because there's more left over after paying for the necessities. A flat sales tax only plan would significantly raise tax rates for the poor (who currently pay no income tax). So, it would be even more regressive than the current system.
Repeal the 16th Amendment (or just admit it was never legally ratified), reset the legal meaning of "income" from "money given in exchange for labor" back to "capital gains as a result of business profits," and BOOM!
Problem solved.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
> The corporation has a profit margin or they would not be taxed.
FYI, that is factually false. Approximately half of all taxes on business re unrelated to profit, or margin. A few of the taxes I, as a small business person, pay each month or quarter:
Social Security and medicare ...)
Federal Unemployment tax
State unemployment tax
State training tax (in some states)
State workforce disability tax (in some states)
--Note all of the above are for hiring people. As the president has said, if you want people do less of something, put a tax on it.
Business personal property tax (Every year, I pay a tax for owning my 15 year old desk, my pens and pencils, my mouse pad
Franchise tax
Sales and use tax
Income taxes account for only 20% of tax revenue. 80% of the taxes paid are paid whether they bankrupt the business or not.
The Laffer Curve can be proved valid trivially:
If the tax rate is 0%, obviously tax revenue are zero.
If the tax rate is 100%, tax receipts will be very close to zero, as nearly nobody will engage in the taxed activity for no gain.
Between those two endpoints, starting from 0%, the following behavior is observed:
Different activities have different curves. The reason for lower taxes on capital gains is the tax-yield curve for capital gains flattens out at a lower rate than the tax-yield curve for labor.
(1) Our tax structure isn't going to change meaningfully anytime soon
(2) The IRS won't allow or enforce any sort of efile for everyone in the short-term
(3) The IRS does allow you to file Form 14039 which puts a flag on your account which will make it harder for someone to cheat you out of your refund because your account will go through extra checks (such as making sure that your address and other information hasn't changed from last year since most information breaches don't contain all of the information necessary to file your tax return) and will reject fraudulent looking returns
http://www.irs.gov/pub/irs-pdf...
(4) The IRS might decide to, upon filing form 14039 or if you have experienced a fraudulent return filed for you, a distinct PIN which is like a PIN for a credit freeze
Morale of the story if you're concerned about not getting your refund
-file form 8822 when you change address and notify your employees and other agencies which file forms on your behalf to have your current address so all filings point to the same physical address
-file form 14039 to have the identify theft flag added to your profile
-always try to arrange so you owe a little money come tax time (but not so much that you owe a penalty) so your refund is not in purgatory in the event of a fraudulent return filed on your behalf
-if you do indeed get a refund, try to file as early as possible to beat out a fraudster
A flat tax is inappropriate, but an linear tax (tax = rate * income - base) is probably reasonable. or even a quadratic tax (tax = rate1 * income^2 + rate2 * income - base).
For various reasons I prefer the simpler linear tax with a fairly large base, so that people living on minimum wage would actually get a small amount back. The tricky part is defining income...it's got to include ALL sources of income, including long term capital gain, but you don't want to discourage investments. However, that should be done OUTSIDE THE TAX SYSTEM. Keep the tax system as simple as possible.
I think we've pushed this "anyone can grow up to be president" thing too far.