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.

Comments

Re:Corporate taxes

[edawstwin]

Let's fix the corporate tax evasion first please.

Let's fix corporate taxes first, so that there is no evasion.

Did you find that hard drive yet?

[xxxJonBoyxxx]

Sorry, it's going to be a long time before anyone believes anything the IRS says again.

Simplify Taxes

[Anonymous Coward]

How about we simplify taxes so there's no need to issue refunds in the first place?

Re:Simplify Taxes

[mcswell]

New simplified form: Line 1: Enter amount you earned this year: ____ Line 2: Write a check to the IRS for the amount on line 1.

Solution

[Charliemopps]

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.

Re:Solution

[sycodon]

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.

Re:Solution

[CanHasDIY]

End income tax.

Better idea: revert the legal definition of "income" to what it meant pre-1913.

Interestingly, before the oft-questioned "passage" of the 16th Amendment, "labor given in exchange for payment" was just that; income was what a business earned as a result of selling a product or service.

Re:Solution

[Obfuscant]

It is impossible. I am not aware of any merchants that dodge sales tax,

It is quite possible, and if you raise (or create) a sales tax in the amount you'll need to replace the income tax you'll see a lot of them doing it -- because the customers will want it.

If the sales tax is 4%, it's not worth it. When the sales tax goes to 20% or more, look out. Why do you think there is illegal cigarette traffic, because you can't get the smokes that taste right? Or is it tax-stamp created?

You'll also immediately get calls for the return of a tax on those awful rich people who are now avoiding taxation on their luxurious incomes because they don't spend most of it, while the poor folks are stuck paying taxes on every penny they earn because they have to spend it all to get by. Then you'll get a demand for some kind of tax credit for the poor, which will require an IRS and that awful paperwork you're trying to get rid of.

You'll see charity as we know it drying up because there will be no tax benefit to it, and people who could afford to buy a house because the mortgage interest was deductable won't be buying houses.

In fact, all of those social engineering projects that our tax code has been used to promote will go away. At least until you create a paperwork nightmare just as large as the existing one to bring them all back.

Re:Solution

[ArcherB]

gas is taxed.
repairs are taxed
registration is taxed.

Why wouldn't the sale of a car be taxed?

How about clothing? Need clothes to live, right?
Nope. If it makes you feel better, you could make school kids clothing tax free, or only make new clothing taxable. If you don't want to pay the tax, buy second hand.

Now Paris Hilton can buy 400 pairs of shoe tax-free!
So? Why do you care what Paris Hilton does? See, that's the problem. You are so damn worried that a rich person might save $80 on a pair of shoes that you want EVERYONE else to go through hell so a rich bitch won't save a buck.

Watch out for that slippery slope you're on.
Odd. Nearly everyone of the 50 states has programs like this and they don't have a problem. Were you referring to the "slippery slope" fallacy?

Re:Corporate taxes

[Karmashock]

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.

Re:Corporate taxes

[TechyImmigrant]

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.

Apt Tax

[rolfwind]

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.

Thanks for the fraud, Turbotax

[nbauman]

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."

Thus the problem with the TEA party

[Overzeetop]

..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.