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?

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

[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: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.

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."