IRS builds task force to explore running its own free e-file system(federalnewsnetwork.com)
federalnewsnetwork.com
IRS builds task force to explore running its own free e-file system
https://federalnewsnetwork.com/it-modernization/2023/02/irs-builds-out-task-force-to-explore-running-its-own-free-e-file-system/
206 comments
> Just a reminder -- since a lot of people don't know about it -- the IRS has had "Free File Fillable Forms" [1, 2] for many years. Everyone (no income limits) can use it to e-file for free.
Just a reminder, because even *less* people know. This is a third party service not run by the IRS. In past years it was Intuit, this year it looks like according to the site's privacy policy: https://www.freefilefillableforms.com/home/privacy_statement... that it's these randos out in Missouri: https://www.olt.com/main/home/default.asp
Just a reminder, because even *less* people know. This is a third party service not run by the IRS. In past years it was Intuit, this year it looks like according to the site's privacy policy: https://www.freefilefillableforms.com/home/privacy_statement... that it's these randos out in Missouri: https://www.olt.com/main/home/default.asp
I did not know that, thanks! Looking into it, according to Wikipedia it's "operated by a private organization, the Free File Alliance" [1], which is a "public-private partnership with the Internal Revenue Service (IRS) to provide free electronic tax filing services" [2]. The Missouri company you list is one of the "7 participating Alliance members" [2].
I honestly don't know what a "public-private partnership" means, or how that's different from the IRS just contracting a company to build a product. But it seems awfully integrated into the IRS's website, so there's clearly a "partnership" -- it can't be total randos (hopefully??).
I don't see any obvious red flags in the privacy policy, is there something to be worried about?
[1] https://en.wikipedia.org/wiki/Free_File#Free_File_Fillable_F...
[2] https://en.wikipedia.org/wiki/Free_File_Alliance
I honestly don't know what a "public-private partnership" means, or how that's different from the IRS just contracting a company to build a product. But it seems awfully integrated into the IRS's website, so there's clearly a "partnership" -- it can't be total randos (hopefully??).
I don't see any obvious red flags in the privacy policy, is there something to be worried about?
[1] https://en.wikipedia.org/wiki/Free_File#Free_File_Fillable_F...
[2] https://en.wikipedia.org/wiki/Free_File_Alliance
> I don't see any obvious red flags in the privacy policy, is there something to be worried about?
if you’re an idealist like me: you believe the tax code is needlessly complex, and that tax-prep companies like Intuit have a vested interest in keeping the tax code and process unfriendly. hence, you avoid paid tax prep services because you know a portion of your payment will go to lobbying a policy that is against your own interests.
but if IRS contracts with Intuit, then Intuit’s still getting paid either way; their lobbying efforts are still funded either way. any illusion of a moral high ground via self-filing is mostly gone.
if you’re an idealist like me: you believe the tax code is needlessly complex, and that tax-prep companies like Intuit have a vested interest in keeping the tax code and process unfriendly. hence, you avoid paid tax prep services because you know a portion of your payment will go to lobbying a policy that is against your own interests.
but if IRS contracts with Intuit, then Intuit’s still getting paid either way; their lobbying efforts are still funded either way. any illusion of a moral high ground via self-filing is mostly gone.
Red flag from Intuit mentioned in another comment [1].
[1] https://news.ycombinator.com/item?id=34765258
[1] https://news.ycombinator.com/item?id=34765258
[deleted]
I had to give up on e-filing with Free Fillable Forms last year because it claimed an arithmetic error where none existed and it would not allow me to e-file until that non-error was corrected.
The same forms I ultimately generated with both TaxHawk's and H&R Block's software were identical to those I wasn't allowed to submit with FFF.
The same forms I ultimately generated with both TaxHawk's and H&R Block's software were identical to those I wasn't allowed to submit with FFF.
But can one e-File with Free File Fillable Forms? If I have to print out the return and mail it, then it's a no go for me.
Hah, I can't e-file my taxes at all, because it is not possible to e-file as "married, filing separately" if one has a non-resident alien spouse (without SSN or ITIN). Aka married overseas, US hadn't yet granted a visa yet, no point in trying to obtain an ITIN (that's harder than having to mail the form).
The form is totally fine - according to IRS, one just needs to write "NRA" ("non-resident alien") instead of spouse's SSN and that's it. But for some technical reason (despite, AFAIK, IRS having at least 4 iterations of XML schemas) e-filing is said to be not possible - one gotta print and mail it.
Worse, I had to explain how this works to "specialists" at H&R Block, as they almost made a mistake of suggesting to file my returns as "single" (glad I did my own research, huh). And I can't use FreeTaxUSA because they don't support such scenario either.
Edit: Upd: freefilefillableforms.com doesn't let me type in "NRA" in that field either. (Doesn't really matter, works for me as long as I get a PDF out of this)
The form is totally fine - according to IRS, one just needs to write "NRA" ("non-resident alien") instead of spouse's SSN and that's it. But for some technical reason (despite, AFAIK, IRS having at least 4 iterations of XML schemas) e-filing is said to be not possible - one gotta print and mail it.
Worse, I had to explain how this works to "specialists" at H&R Block, as they almost made a mistake of suggesting to file my returns as "single" (glad I did my own research, huh). And I can't use FreeTaxUSA because they don't support such scenario either.
Edit: Upd: freefilefillableforms.com doesn't let me type in "NRA" in that field either. (Doesn't really matter, works for me as long as I get a PDF out of this)
As a taxpayer and software engineer, I think it’s a good thing that the irs built or bought an e-filing system that doesn’t handle every scenario. Because I know if they spec’ed out such a system it would have cost a lot more money, have taken longer to build, and been buggier.
We should all be on the lookout for cases when a system can be developed to handle >99% of cases and kick the hard remaining ones out to a manual process.
We should all be on the lookout for cases when a system can be developed to handle >99% of cases and kick the hard remaining ones out to a manual process.
You are correct, of course. I was writing my comment with two ideas: a) venting some steam as I'm of course upset that I can't e-file; b) telling that things some take for granted, such as an ability to file electronically, aren't really universal.
I suppose the issue is that they had to start from scratch. It's not really about software, it's only a data structure here that's problematic - an XML schema that doesn't allow to make some value kind of optional.
IRS most certainly has an existing data structure that can handle all scenarios. They don't just file outlier cases as a paper in some cabinet - they do digitize those mail-in forms and input them into a computer. I had downloaded back a transcript and it's all in there, my 1040 was digitized, so I know it for a fact.
It's just probably that it's hidden in an ugly giant legacy system (possibly involving some Fortran-running mainframe somewhere) so they weren't able to realistically extract this full schema from there. Or deemed it too flawed.
A shame that they probably will never be able to afford a proper rewrite (sometimes legacy code gets too convoluted it becomes impossible to treat it as anything but a black box).
I suppose the issue is that they had to start from scratch. It's not really about software, it's only a data structure here that's problematic - an XML schema that doesn't allow to make some value kind of optional.
IRS most certainly has an existing data structure that can handle all scenarios. They don't just file outlier cases as a paper in some cabinet - they do digitize those mail-in forms and input them into a computer. I had downloaded back a transcript and it's all in there, my 1040 was digitized, so I know it for a fact.
It's just probably that it's hidden in an ugly giant legacy system (possibly involving some Fortran-running mainframe somewhere) so they weren't able to realistically extract this full schema from there. Or deemed it too flawed.
A shame that they probably will never be able to afford a proper rewrite (sometimes legacy code gets too convoluted it becomes impossible to treat it as anything but a black box).
lol I can't e-file because I claimed software development research credits
that's ironic. can't use software to get the software research credits
that's ironic. can't use software to get the software research credits
Yes. Just click submit at the end, and in somewhere between 15 minutes and a couple of hours you'll get a response from the IRS whether it was accepted or rejected with an error message of what didn't match up.
(Sometimes it takes me 2 or 3 tries because I mistyped a number from a W2 or missed a line or something.)
(Sometimes it takes me 2 or 3 tries because I mistyped a number from a W2 or missed a line or something.)
Yes, it uses the same API backend as the other commercial e file systems.
That’s for federal filing only right? What do you do for your local state taxes?
My state has its own iFile system that works pretty flawlessly as a pseudo-wizard but actually a free fillable form. It expects you to file federal taxes first so your 1040 can be used to fill in the details.
Which state is this and do you mind providing a link?
[deleted]
Not all states have their own income tax
Yeah but those are a small minority -- there is 8. Most of the population lives in states with state-level income taxes.
Those without income taxes have a complex set of sales, property, etc, taxes, and those often come with byzantine exemptions and other rules.
Those without income taxes have a complex set of sales, property, etc, taxes, and those often come with byzantine exemptions and other rules.
Does CRA (Canada) have anything like this?
I tried their fillable forms, but you have to do the math manually and are very error prone
I tried their fillable forms, but you have to do the math manually and are very error prone
Just send the taxpayer a bill that says what the IRS think they owes. That information is already there! It's already being calculated! Just print and send!
(I am being somewhat facetious here, as I'm aware there's always vastly more complexity to anything being done by a bureaucracy the size of the federal government than meets the eye, but still.)
(I am being somewhat facetious here, as I'm aware there's always vastly more complexity to anything being done by a bureaucracy the size of the federal government than meets the eye, but still.)
> That information is already there! It's already being calculated!
This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm.
That's to say, the system you described probably isn't ever going to materialize. The IRS is not some omnipotent entity. They're going to need something akin to TurboTax that asks you a bunch of questions and juxtaposes that with things they know for certain like your net income and net losses that are reported throughout the year. That system also needs to be able to read and adapt to evolving tax code as time goes on.
This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm.
That's to say, the system you described probably isn't ever going to materialize. The IRS is not some omnipotent entity. They're going to need something akin to TurboTax that asks you a bunch of questions and juxtaposes that with things they know for certain like your net income and net losses that are reported throughout the year. That system also needs to be able to read and adapt to evolving tax code as time goes on.
>This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm.
The child tax credit and other tax credits are bad examples. The IRS isn't going to bust your front door open because you didn't take a tax credit. What would end up happening under the push tax system is:
IRS: "We think you owe $4,200.69 in taxes"
Parents: "Not so fast! We had quadruplets this year, we're taking a credit!"
IRS: "Yikes, we'll give you $2,000 this year as a refund, good luck."
(I obviously have no idea what the tax credit for quadruplets is, this is not tax advice.)
It just doesn't make sense that we need to ask these questions every tax year: "Did you have kids? Did you get married? How much money did you make according to the W2 your employer already sent us? What other income did you make according to the 1099s we were already sent by other institutions?"
All of this just so a small group of people can be... checks notes... reminded to take a child tax credit? They can always just put a cute little reminder about the various tax credits on the bill.
The only other examples are highly-regulated or people who are already operating under the table (in which case the IRS already doesn't know and the IRS will continue to not know). Business tax returns are almost always going to have to continue as the IRS pulling the information, but for normal people, tax returns should not be a burden.
The child tax credit and other tax credits are bad examples. The IRS isn't going to bust your front door open because you didn't take a tax credit. What would end up happening under the push tax system is:
IRS: "We think you owe $4,200.69 in taxes"
Parents: "Not so fast! We had quadruplets this year, we're taking a credit!"
IRS: "Yikes, we'll give you $2,000 this year as a refund, good luck."
(I obviously have no idea what the tax credit for quadruplets is, this is not tax advice.)
It just doesn't make sense that we need to ask these questions every tax year: "Did you have kids? Did you get married? How much money did you make according to the W2 your employer already sent us? What other income did you make according to the 1099s we were already sent by other institutions?"
All of this just so a small group of people can be... checks notes... reminded to take a child tax credit? They can always just put a cute little reminder about the various tax credits on the bill.
The only other examples are highly-regulated or people who are already operating under the table (in which case the IRS already doesn't know and the IRS will continue to not know). Business tax returns are almost always going to have to continue as the IRS pulling the information, but for normal people, tax returns should not be a burden.
Interestingly, enough, this is yet another thing to add to the list of things that are impossible to do (according to the Internet) but are already done by someone else that I've encountered in the US:
1. Final price including tax
2. Fiber to the home
3. Optional tax returns
4. High speed rail
5. Unarmed alternatives to police
Of those, the following have (despite being impossible to do though already done) managed to find themselves unimpossibled:
1. Fiber to the home (I had it)
2. High speed rail (Acela)
3. Unarmed alternatives to police (Camden, NJ)
The fascinating thing about the Internet is all these things that just are so impossible to do (usually in the US) but are somehow already done elsewhere and then, given time, the impossible is done. At the rate of impossibilities, I think we might actually be the case that dS<0 is possible globally.
1. Final price including tax
2. Fiber to the home
3. Optional tax returns
4. High speed rail
5. Unarmed alternatives to police
Of those, the following have (despite being impossible to do though already done) managed to find themselves unimpossibled:
1. Fiber to the home (I had it)
2. High speed rail (Acela)
3. Unarmed alternatives to police (Camden, NJ)
The fascinating thing about the Internet is all these things that just are so impossible to do (usually in the US) but are somehow already done elsewhere and then, given time, the impossible is done. At the rate of impossibilities, I think we might actually be the case that dS<0 is possible globally.
The system proposed above is how other countries such as the UK already do it, so hypothesizing that it’s impossible is an easily refutable position.
In countries that do auto withholding/filing, you still need to tell the tax authority about any tax events, but for most workers, most years don’t require you to take any action.
In countries that do auto withholding/filing, you still need to tell the tax authority about any tax events, but for most workers, most years don’t require you to take any action.
To add on to this comment, For the last 5 years filing my taxes in the Netherlands has involved logging into the tax app on my phone and then clicking the "yep looks good" button. This year I bought a house so perhaps it'll get a smidge more complex, but my mortgage has already been sent to the IRS-equivalent so I rather expect it to stay roughly the same level of complexity.
They didn't stop the IRS from telling us what they know and what they expect, and if it's accurate and you don't dispute their information, you pay the bill and attest you have no other income.
I wouldn't care if I over pay. After paying someone hundreds in fees to do my taxes I don't usually get much of any money back. I'd rather let the government keep $400 than give it to a tax company that probably won't actually help me in an audit.
I wouldn't care if I over pay. After paying someone hundreds in fees to do my taxes I don't usually get much of any money back. I'd rather let the government keep $400 than give it to a tax company that probably won't actually help me in an audit.
For those incredibly rare events, the IRS doesn't need perfect omniscience. For the vast majority of the population, for the vast majority of their years filing taxes, it can be extremely simple. A checkbox "did you have a kid, get married or divorced, or die this year" will pretty much cover it for most people.
Business taxes are different. That's fine. Accountants are a cost of doing business.
Business taxes are different. That's fine. Accountants are a cost of doing business.
16% of the US, or roughly 30M people, also own businesses which take advantage of an evolving and incentivized tax code. That's why I said making it more simple doesn't solve the problems people think it does. An e-file system with the appropriate questions asked could leave our tax system in place and eliminate tax processing fees.
Some people have very simple taxes, no doubt, but I wouldn't design a system as important as tax collection that would purposefully over charge a large portion of the population.
Some people have very simple taxes, no doubt, but I wouldn't design a system as important as tax collection that would purposefully over charge a large portion of the population.
Yep, 84% is a pretty big majority, is it not? You aren't really disagreeing with me. The general proposal is that you'd get a "tax bill" that would typically be for $0 for people thanks to automatic payroll deductions, and can be safely ignored if you file your taxes. Businesses would file taxes, the vast majority of people would not.
If your concern is that business owners blindly pay bills without reading bold text that says something along the lines of "if you have additional deductions to report, file your taxes, find more information at https://..." then those business owners weren't going to last a year anyway.
If your concern is that business owners blindly pay bills without reading bold text that says something along the lines of "if you have additional deductions to report, file your taxes, find more information at https://..." then those business owners weren't going to last a year anyway.
>$0 for people thanks to automatic payroll deductions
Only perhaps if you have a single job and no other income. How would one employer know what you (or your spouse) earned at other jobs during the year? They can't deduct the correct amount without knowing your full year result, which is obviously impossible to implement with pay period withholding.
Only perhaps if you have a single job and no other income. How would one employer know what you (or your spouse) earned at other jobs during the year? They can't deduct the correct amount without knowing your full year result, which is obviously impossible to implement with pay period withholding.
I probably conflated OPs argument that the IRS already knows everything they need to know about you, which is not true. Someone else posted the stat on this thread that roughly 40% of Americans could benefit from what the IRS already knows. 60% would not.
> Some people have very simple taxes, no doubt
Looks like 84% are left unless you want to peel off a few more.
> I wouldn't design a system as important as tax collection that would purposefully over charge a large portion of the population.
Nobody is asking you to. I would absolutely do work for 100% of people that only 84% would be able to fully use. Imagine not building roads because only 84% of people drive.
Looks like 84% are left unless you want to peel off a few more.
> I wouldn't design a system as important as tax collection that would purposefully over charge a large portion of the population.
Nobody is asking you to. I would absolutely do work for 100% of people that only 84% would be able to fully use. Imagine not building roads because only 84% of people drive.
> For the average tax payer this might be truthy
It's completely true for most people. "And a new paper estimates that at least 41 percent of American households — some 62 million tax filing units — could have their entire tax returns handled this way with no further intervention necessary." https://www.vox.com/23055489/irs-automatic-filing-prepopulat...
Even if that's too high of an estimate, there are absolutely 10s of millions of people for whom the IRS already has the correct amount of taxes calculated based on the forms they receive from other entities. Sure, you might have to ask people a few questions, but my statement is accurate for an enormous percent of the population.
It's completely true for most people. "And a new paper estimates that at least 41 percent of American households — some 62 million tax filing units — could have their entire tax returns handled this way with no further intervention necessary." https://www.vox.com/23055489/irs-automatic-filing-prepopulat...
Even if that's too high of an estimate, there are absolutely 10s of millions of people for whom the IRS already has the correct amount of taxes calculated based on the forms they receive from other entities. Sure, you might have to ask people a few questions, but my statement is accurate for an enormous percent of the population.
Weird that in other countries it tends to work as described. My experience is from European countries is that most information is automatically filled in, then you fill the corrections. Most years you don't have to correct or add any information as they have already all of it.
It must be pretty disappointing to be a tech-savvy American who has a rough idea of the extent of surveillance that the NSA performs yet is also aware of how little benefit you're able to get from it.
It's sad that the IRS can't prefile taxes. The information is there.
It's sad that the IRS can't prefile taxes. The information is there.
Make a buffer of $3k: you don't owe a return unless the difference between what they have per-calculated and what owe is over that. This would eliminate 95% of returns and tax documents.
This is roughly what the UK does.
This is roughly what the UK does.
The IRS already kind of does this. They know that when someone itemizes their expenses and their net income is x while net losses are y that their itemization has an error threshold of +/-z, where z is an already padded number. All that does is decrease the number of non-random audits they have to do. I'm not sure it'd really make taxes any more simple or complicated than they already are.
It's probably important to note there's many different camps here:
1. People who want a simpler tax code (eg: flat tax)
2. People who don't want to have to pay tax processors
3. People who don't want the IRS submission to be an exercise in hedging
Personally, I'm more in camp 2, because I recognize our tax code is full of levers we use, that change and adapt, to incentivize activity in the economy.
It's probably important to note there's many different camps here:
1. People who want a simpler tax code (eg: flat tax)
2. People who don't want to have to pay tax processors
3. People who don't want the IRS submission to be an exercise in hedging
Personally, I'm more in camp 2, because I recognize our tax code is full of levers we use, that change and adapt, to incentivize activity in the economy.
This covers not only the average but the 90%.
The IRS doesn't have to have facts on your marriage and children; all w2 employees already keep a w4 up to date with this information - or at least are legally bound to.
The IRS doesn't have to have facts on your marriage and children; all w2 employees already keep a w4 up to date with this information - or at least are legally bound to.
This is a political problem. It’s not like people at the IRS don’t see the appeal but that Congress hasn’t authorized doing it:
https://www.propublica.org/article/inside-turbotax-20-year-f...
https://www.propublica.org/article/inside-turbotax-20-year-f...
Yeah, it's largely a problem of Intuit doing a huge amount of lobbying of our elected officials.
It’s not a problem of technology, it’s a political issue thanks to tax software providers.
That is the lobby portion. There is also a fairly large portion of the country that doesn't want to make it easier to file taxes because it encourages complacency with having the government take some of your money.
Not just them. There's a whole contingency of right wing (both D & R) donors who ask for making taxes frustrating for most, as they don't want people to look favorably on the act of paying taxes, to keep people like the late Justice Holmes Jr. a minuscule minority.
That corporatism is a part of it, but not the entire story. It's not like the IRS is a helpless victim of capitalist lobbying here. The IRS, and all parts of government, like having power over peoples' lives.
Here's an interesting and relevant news story.
https://news.yahoo.com/irs-urges-millions-taxpayers-delay-15...
If even the IRS doesn't know what their own rules are within the many pages of vague, complicated, and contradictory rules, what chance does an average person have to not mess up at least one thing in their taxes? The immense complexity of the tax code and the chance for getting something wrong gives them power to theoretically try and ruin anybody they want to go after, or at least have them have a lot of influence over peoples lives.
Governments want power and influence, and the IRS isn't going to vote to give away their own power. Having everybody being afraid of the IRS and making people jump through hoops gives them power and influence. This type of power isn't something that will go away with a fight.
Here's an interesting and relevant news story.
https://news.yahoo.com/irs-urges-millions-taxpayers-delay-15...
If even the IRS doesn't know what their own rules are within the many pages of vague, complicated, and contradictory rules, what chance does an average person have to not mess up at least one thing in their taxes? The immense complexity of the tax code and the chance for getting something wrong gives them power to theoretically try and ruin anybody they want to go after, or at least have them have a lot of influence over peoples lives.
Governments want power and influence, and the IRS isn't going to vote to give away their own power. Having everybody being afraid of the IRS and making people jump through hoops gives them power and influence. This type of power isn't something that will go away with a fight.
> It's not like the IRS is a helpless victim of capitalist lobbying here.
I'm not sure who you think is concerned about the feelings of the IRS, or its victimization. You've got the victims all topsy-turvy. Congress, an unbroken chain of bipartisan administrations, and their IRS are the perpetrators. The corporate cash is literally the only reason they care.
> the IRS isn't going to vote to give away their own power.
The IRS doesn't vote. Your theories of power are weird.
I'm not sure who you think is concerned about the feelings of the IRS, or its victimization. You've got the victims all topsy-turvy. Congress, an unbroken chain of bipartisan administrations, and their IRS are the perpetrators. The corporate cash is literally the only reason they care.
> the IRS isn't going to vote to give away their own power.
The IRS doesn't vote. Your theories of power are weird.
> I'm not sure who you think is concerned about the feelings of the IRS,
The IRS isn't exactly mute and helpless.
If the IRS came out at some inquiry and loudly said "Millionaires and billionaires can hire a tax firm to deal with these piles of paperwork we make people fill out, but it's a disgrace that normal people have to spend a great deal of time/money and life stress dealing with their taxes, when we already very likely know exactly what the upper theoretical bound of their tax payment is."
> The corporate cash is literally the only reason they care.
The reason for anything complicated cannot usually only be attributed to one reason. Money is always big influence, but so is power, and probably other variables.
> The IRS doesn't vote.
They're not literally voting, but they're choosing what benefits them the most, right?
Are you familiar with an exploratory task force or committee being where ideas are sent to be killed?
> Your theories of power are weird.
My theories of power are literally the standard throughout all of human history.
People very rarely voluntarily give up power that exists that benefits them.
Giving up power is so rare that the very few examples of it we have in human history, such as George Washington declining power, are heavily celebrated.
The IRS isn't exactly mute and helpless.
If the IRS came out at some inquiry and loudly said "Millionaires and billionaires can hire a tax firm to deal with these piles of paperwork we make people fill out, but it's a disgrace that normal people have to spend a great deal of time/money and life stress dealing with their taxes, when we already very likely know exactly what the upper theoretical bound of their tax payment is."
> The corporate cash is literally the only reason they care.
The reason for anything complicated cannot usually only be attributed to one reason. Money is always big influence, but so is power, and probably other variables.
> The IRS doesn't vote.
They're not literally voting, but they're choosing what benefits them the most, right?
Are you familiar with an exploratory task force or committee being where ideas are sent to be killed?
> Your theories of power are weird.
My theories of power are literally the standard throughout all of human history.
People very rarely voluntarily give up power that exists that benefits them.
Giving up power is so rare that the very few examples of it we have in human history, such as George Washington declining power, are heavily celebrated.
Congress owns the IRS's budget. They control the tax laws.
What the IRS wants as an org is ultimately irrelevant, they're beholden to elected officials, who are in turn beholden to their voters and donors -- with a strong emphasis on the latter.
What the IRS wants as an org is ultimately irrelevant, they're beholden to elected officials, who are in turn beholden to their voters and donors -- with a strong emphasis on the latter.
Almost every deduction I take is report both by myself as well as the relevant 3rd party. They literally get a report from brokerages on stock transactions and yet I also have to calculate cost basis and all that. Why?!
You don't have to calculate cost basis since the brokerages started reporting it several years ago. You just enter the total form your 1099-Bs onto the Schedule D.
There are a few cases (some crypto 1099s) where they tell you the basis on the statement, but don't actually send that to the IRS since it's not a security. In that case, you'd copy
There are a few scenarios where the brokerage doesn't know the right basis though--examples would be a wash sale across two different accounts.
There are a few cases (some crypto 1099s) where they tell you the basis on the statement, but don't actually send that to the IRS since it's not a security. In that case, you'd copy
There are a few scenarios where the brokerage doesn't know the right basis though--examples would be a wash sale across two different accounts.
You don’t have to. If the bases are all reported to the irs, you just need to put the totals on schedule D.
It’s amazing how much whining there is about these forms. A smart high schooler could do even a moderately complicated tax return. It’s when you own a business of some kind (including investment properties) that things get hard.
It’s amazing how much whining there is about these forms. A smart high schooler could do even a moderately complicated tax return. It’s when you own a business of some kind (including investment properties) that things get hard.
To try to catch you lying of course.
Norway did this by text message 20 years ago.
That the US makes it a labyrinthine game of special exceptions and complexity belies the obvious gamification geared towards the rich and to frustrate everyone that goes well past any excuse of bureaucracy. It's not a conspiracy theory, it's obvious wealth transfer from everyone not obscenely rich or obscenely poor disproportionately excluding centamillionaires and billionaires.
That the US makes it a labyrinthine game of special exceptions and complexity belies the obvious gamification geared towards the rich and to frustrate everyone that goes well past any excuse of bureaucracy. It's not a conspiracy theory, it's obvious wealth transfer from everyone not obscenely rich or obscenely poor disproportionately excluding centamillionaires and billionaires.
My employer over-reported my income in 2021 multiple times on multiple w2s by 1.8x. We are still trying to sort it out.
I don't think I want a system where my employer could financially ruin me by misreporting income to the government.
I don't think I want a system where my employer could financially ruin me by misreporting income to the government.
This is why the IRS sending you a pre-filled return would help with such a situation. Right now the employer can make mistakes and you don't even know.
Similar example from Germany:
In one year I had some "extra income" besides my job and had to file a return and pay some extra money.
The next year they asked me what my "extra income" was for that year and when the letter got lost by me they just assumed the same amount as the prior year and sent me the bill for that.
After the initial shock and beating myself up for that mistake, I could simply file a correction and got it fixed with no problem.
In one year I had some "extra income" besides my job and had to file a return and pay some extra money.
The next year they asked me what my "extra income" was for that year and when the letter got lost by me they just assumed the same amount as the prior year and sent me the bill for that.
After the initial shock and beating myself up for that mistake, I could simply file a correction and got it fixed with no problem.
In which case you'd have the possibility to contest and file something more specific to your situation.
You have that option if you have a very simple tax return. It’s like the IRS’s version of “I’m feeling lucky”.
This is how it works in Norway. Same in the rest of Scandinavia I think.
A direct e-file, obviously, is great, but I really just want to get a document near the beginning of the year where the IRS tells me what they believe my taxes owed/returned should be. Let me accept/verify or contest it and make everyone's lives easier. Anyone who'd need to contest/change theirs, probably already has an accounting firm handling all this anyways.
Any time this comes up, its good to bring up California's 2005 pilot program; ReadyReturn. "When the FTB launched the ReadyReturn website, Intuit sued and lobbied California legislators to kill the program."
https://en.wikipedia.org/wiki/CalFile#ReadyReturn
https://en.wikipedia.org/wiki/CalFile#ReadyReturn
Yes! This podcast episode is an excellent primer on that story: https://www.npr.org/sections/money/2019/04/03/709656642/epis...
On what grounds did they sue? "You're hurting my profits"?
Can't speak for California law, but in NC, when a local municipality set up its own fiber network, they were sued by ... Time Warner Cable (IIRC) on the grounds that cities can't use public funds to 'compete' with private companies. To add insult to injury, they were mostly looking to manage their own fiber network to serve their citizens because TWC had said "no, we're not going to support your region, because it's not profitable". So... it's not profitable for a private company, and public orgs can't compete with private companies..... so... take a hike?
I guess this is a legislative problem that will never be solved for obvious reasons.
I believe I once read the argument is that this would make people pay more in taxes, since presumably the government would seek to assess the highest liability if there's any ambiguity, and people would be less encouraged to find deduction/credit/etc. opportunities.
Of course, what else? It was just worded differently
Yes that is a frequent argument when governments look at building public goods.
Yes, Intuit is a publicly traded company, they have fiduciary duty to do whatever is within their power to return their shareholders a profit, including suing the shit out of IRS for attempting to make their product obsolete.
Welcome to late stage capitalism.
Welcome to late stage capitalism.
The corporate fiduciary duty to maximize profit is a discredited myth that unfortunately has been propagated for decades by persistent misinterpretation of bad case law (Dodge v. Ford), compounded by simple inertia, ignorance, and (I speculate) the partnership of unenlightened neoliberal ideology with the cynical short-term self-interest of wealthy corporate shareholders.
Corporate leaders are expected to act in the interests of shareholders, but their legal obligations are satisfied if they can argue that their business judgment supported their chosen direction. And business judgment can consider the long term, it can consider the value of a thriving society in general, it can consider much besides short-term maximization of profit. Fiduciary duty exists only to curb overtly abusive self-dealing.
For more on this, see The Shareholder Value Myth by Lynn Stout. She has written a gloss on it here [1]. Her seminal 2008 legal review article, "Why We Should Stop Teaching Dodge v. Ford" [2], is a delight to read and I highly recommend it.
[1] https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti...
[2] https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti...
Corporate leaders are expected to act in the interests of shareholders, but their legal obligations are satisfied if they can argue that their business judgment supported their chosen direction. And business judgment can consider the long term, it can consider the value of a thriving society in general, it can consider much besides short-term maximization of profit. Fiduciary duty exists only to curb overtly abusive self-dealing.
For more on this, see The Shareholder Value Myth by Lynn Stout. She has written a gloss on it here [1]. Her seminal 2008 legal review article, "Why We Should Stop Teaching Dodge v. Ford" [2], is a delight to read and I highly recommend it.
[1] https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti...
[2] https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti...
I get it, but you do realize that Intuit does exist because taxes are so damn complicated in the US?
If taxes were simple, their predatory business model really would stop existing. There is no business justification in favor of Intuit to NOT sue the IRS if the IRS tries to make taxes simple.
If taxes were simple, their predatory business model really would stop existing. There is no business justification in favor of Intuit to NOT sue the IRS if the IRS tries to make taxes simple.
What exactly is the difference between it being in their general interests to maximize profit besides where that interest conflicts with the law, and it being their legal duty to do so instead? Does it not result in the same thing? Companies break the law all the time in the interest of the profit motive.
It matters because there is one less rationalization for why we have to tolerate corporate leaders engaging in evil. It is their free choice, not a legal obligation, and that should affect how we think about them as moral agents in society.
Maybe it also helps them realize that they have a choice too, that they are not "just following orders" from the legal system.
Maybe it also helps them realize that they have a choice too, that they are not "just following orders" from the legal system.
This "X company has a fiduciary duty to turn a profit to shareholders regardless of the consequence" thinking is not true but shockingly pervasive across HN recently.
Fiduciary duty responsibilities are about putting the interests of the company in front of personal interests, and are mostly designed to protect shareholders. In other words, not doing things like signing up for a product you don't need just because you happened to angel invest in the company and it would benefit your portfolio. There are other fiduciary responsibilities as well, but certainly none of them are "return as much money to shareholders, or else."
Regardless, if we want this world where the government has publicly funded tax software that just works and is easy (and I personally do), the right way to solve it is through public policy changes.
Fiduciary duty responsibilities are about putting the interests of the company in front of personal interests, and are mostly designed to protect shareholders. In other words, not doing things like signing up for a product you don't need just because you happened to angel invest in the company and it would benefit your portfolio. There are other fiduciary responsibilities as well, but certainly none of them are "return as much money to shareholders, or else."
Regardless, if we want this world where the government has publicly funded tax software that just works and is easy (and I personally do), the right way to solve it is through public policy changes.
How is what you described late stage capitalism as opposed to simply capitalism?
I think late-stage is usually used to imply that while many of these mechanics can be useful as a way to efficiently allocate capital in some earlier stages of capitalism where private companies are more distributed and act less like governments, that when they finally go to their eventual conclusion and companies meaningfully go toe to toe with the government (and even finish regulatory capture), it becomes pathological and harmful.
In the United States in the late 1800s, wealth was incredibly concentrated in a few families and as far as I can tell they ran the government. So it was late stage back then, would that make now post late stage?
On the other hand, I would think that late stage capitalism would be defined when there is regulation of greed to prevent predatory and monopolistic practices that reduce competition. Or maybe that should just be called sustainable capitalism?
On the other hand, I would think that late stage capitalism would be defined when there is regulation of greed to prevent predatory and monopolistic practices that reduce competition. Or maybe that should just be called sustainable capitalism?
I'd say, more succinctly, that late-stage capitalism is when the maximizing of profit ceases to simply be a means to an end, and becomes an end in itself.
At least, that's more or less how I personally view it.
At least, that's more or less how I personally view it.
[deleted]
Because "late-stage" is a buzzword nobody can define.
This is called 'crony capitalism'.
This is called return-free filing and has had bipartisan support for a long time
https://www.propublica.org/article/inside-turbotax-20-year-f...
https://www.propublica.org/article/inside-turbotax-20-year-f...
> and has had bipartisan support for a long time
Not really ... Americans for Tax Reform (Grover Norquist) .. a very influential conservative group, opposes this because they want people to associate taxes with pain. If its easier to do, its less pain.
https://www.propublica.org/article/how-the-maker-of-turbotax...
Not really ... Americans for Tax Reform (Grover Norquist) .. a very influential conservative group, opposes this because they want people to associate taxes with pain. If its easier to do, its less pain.
https://www.propublica.org/article/how-the-maker-of-turbotax...
Sorry, I don't mean to imply it's universally supported, but there is support on both sides of the aisle. But the article you linked does indeed say it has had bipartisan support :)
> When Sens. Ron Wyden, D-Ore., and Dan Coats, R-Ind., introduced a bipartisan tax reform bill in 2011 that included a return-free plan called "Easyfile," Norquist blasted it.
If it were universally supported, this wouldn't have happened
https://www.propublica.org/article/congress-is-about-to-ban-...
> When Sens. Ron Wyden, D-Ore., and Dan Coats, R-Ind., introduced a bipartisan tax reform bill in 2011 that included a return-free plan called "Easyfile," Norquist blasted it.
If it were universally supported, this wouldn't have happened
https://www.propublica.org/article/congress-is-about-to-ban-...
I'll accept the baby step of a fixed historical period of time that they can audit your records. It's incredible nebulous.
For example here's the info on self-employed / business audits: https://www.irs.gov/businesses/small-businesses-self-employe...
> How far back can the IRS go to audit my return?
> Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years.
> The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly most audits will be of returns filed within the last two years.
> If an audit is not resolved, we may request extending the statute of limitations for assessment tax. The statute of limitations limits the time allowed to assess additional tax. It is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds. Extending the statute gives you more time to provide further documentation to support your position; request an appeal if you do not agree with the audit results; or to claim a tax refund or credit. It also gives the IRS time to complete the audit and provides time to process the audit results.
> You don't have to agree to extend the statute of limitations date. However if you don't agree, the auditor will be forced to make a determination based upon the information provided.
So it's three years, but they sometimes go back six years. But they can also go back an arbitrary amount of years, so the three / six is completely meaningless.
For example here's the info on self-employed / business audits: https://www.irs.gov/businesses/small-businesses-self-employe...
> How far back can the IRS go to audit my return?
> Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years.
> The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly most audits will be of returns filed within the last two years.
> If an audit is not resolved, we may request extending the statute of limitations for assessment tax. The statute of limitations limits the time allowed to assess additional tax. It is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds. Extending the statute gives you more time to provide further documentation to support your position; request an appeal if you do not agree with the audit results; or to claim a tax refund or credit. It also gives the IRS time to complete the audit and provides time to process the audit results.
> You don't have to agree to extend the statute of limitations date. However if you don't agree, the auditor will be forced to make a determination based upon the information provided.
So it's three years, but they sometimes go back six years. But they can also go back an arbitrary amount of years, so the three / six is completely meaningless.
It's not nebulous at all, it's incredibly fixed by law.
3 years (from the later of date of filing or the due date) to audit any return, for any reason. The 3 year statute of limitations applies to taxpayers seeking refunds by filing an amended return. Note that because the amended return is essentially a new return, the IRS gets 3 years to audit the amended return.
6 years (from the later of date of filing or the due date) to audit a return with a substantial undereporting of gross income or overstatement of deductions in credits resulting in a 25% or more understatement of taxable income
No deadline for returns that were not filed. Because obviously you can't audit a return that hasn't been filed.
There is also no deadline for fraudulent returns. Fraud is something more than the type of things that would trigger a 6-year audit window, like trying to avoid tax entirely, or taking advantage of a deduction or credit for which it's clear that the taxpayer wouldn't qualify for without some active effort to falsify their return. (Think Wesley Snipes.)
3 years (from the later of date of filing or the due date) to audit any return, for any reason. The 3 year statute of limitations applies to taxpayers seeking refunds by filing an amended return. Note that because the amended return is essentially a new return, the IRS gets 3 years to audit the amended return.
6 years (from the later of date of filing or the due date) to audit a return with a substantial undereporting of gross income or overstatement of deductions in credits resulting in a 25% or more understatement of taxable income
No deadline for returns that were not filed. Because obviously you can't audit a return that hasn't been filed.
There is also no deadline for fraudulent returns. Fraud is something more than the type of things that would trigger a 6-year audit window, like trying to avoid tax entirely, or taking advantage of a deduction or credit for which it's clear that the taxpayer wouldn't qualify for without some active effort to falsify their return. (Think Wesley Snipes.)
They can go extend the statute of limitations *if you agree*.
So, the statute of limitations seems… pretty ironclad. I don’t understand the issue you’re raising. If you don’t want them to look further back, don’t consent to extending the statute of limitations?
So, the statute of limitations seems… pretty ironclad. I don’t understand the issue you’re raising. If you don’t want them to look further back, don’t consent to extending the statute of limitations?
> They can go extend the statute of limitations if you agree.
The way that line is worded, the IRS can compel you to agree by rejecting your current return for lack of documentation.
For example, if you have a capital loss carry over from twenty years ago that you've been rolling over every year (applying the $3,000 deduction limit to ordinary income), they could compel you to allow being audited for the past twenty years or reject allowing you to apply it to the current year.
Since you never know how far back they can go, you effectively have to keep all your documentation forever or risk having them reject your current returns until you comply.
The way that line is worded, the IRS can compel you to agree by rejecting your current return for lack of documentation.
For example, if you have a capital loss carry over from twenty years ago that you've been rolling over every year (applying the $3,000 deduction limit to ordinary income), they could compel you to allow being audited for the past twenty years or reject allowing you to apply it to the current year.
Since you never know how far back they can go, you effectively have to keep all your documentation forever or risk having them reject your current returns until you comply.
That's not correct, at all.
If you are claiming a deduction or credit, you are required by law to maintain the documentation proving that you qualify for that deduction.[1] If you can't provide that documentation, they can reject the deduction because there's no proof that you are actually entitled to that deduction. Your word that you super-duper remember having a capital loss 20 years ago that you can still deduct on your current return isn't good enough. They're not "compelling" you to allow your previous 20 years of returns to be audited, they're just upholding the law.
And quite frankly, they aren't going to audit anyone for 20 years of returns over $3000. They don't have the manpower for that.
[1] Once the SOL expires, you can discard that documentation. Tax advisors will generally tell you to keep your documentation for 7 years from when you receive it (because the 6 year window starts in the following year when you file the tax return including that information.)
If you are claiming a deduction or credit, you are required by law to maintain the documentation proving that you qualify for that deduction.[1] If you can't provide that documentation, they can reject the deduction because there's no proof that you are actually entitled to that deduction. Your word that you super-duper remember having a capital loss 20 years ago that you can still deduct on your current return isn't good enough. They're not "compelling" you to allow your previous 20 years of returns to be audited, they're just upholding the law.
And quite frankly, they aren't going to audit anyone for 20 years of returns over $3000. They don't have the manpower for that.
[1] Once the SOL expires, you can discard that documentation. Tax advisors will generally tell you to keep your documentation for 7 years from when you receive it (because the 6 year window starts in the following year when you file the tax return including that information.)
If you’re claiming a capitol loss from 20 years ago in your tax return from 2 years ago, then yes, of course you need to retain that documentation.
You should retain *all* supporting evidence for your returns filed in the last 3 years. If that includes information from years before that, then you should be retaining supporting information for those filings.
There’s no ambiguity there.
You should retain *all* supporting evidence for your returns filed in the last 3 years. If that includes information from years before that, then you should be retaining supporting information for those filings.
There’s no ambiguity there.
My understanding is that contributions to retirement are similar. The origin of any contribution needs to be identifiable in perpetuity.
I absolutely agree with this. I have CPA's and lawyers do my taxes and I still get the IRS arguing about what I owe and by the time they tell me I am already receiving a penalty. Battling it out with the IRS takes ages and the IRS courts that's really a thing are only open part of the year which can drag things out even longer leading to more penalties even if they agree the original amount was incorrect.
> I have CPA's and lawyers
How complex are your taxes that you need more than one CPA and lawyers to do them?
How complex are your taxes that you need more than one CPA and lawyers to do them?
There are a couple edge cases where CPAs are poorly equipped. ISOs are one of them. Out of state ISOs even more so.
I moved out of CA and had to pay taxes on my ISOs. Financially it was a good move as the market soured after I sold them. Even after paying taxes to two states, I came out ahead. However, my life was misery just trying to do the right thing.
It took three CPAs. One quit after he was sufficiently intimidated after calling the FTB for instructions, one just gave up, and the third told me correct enough instructions that I paid and filed. I apparently still did something wrong per California and had to write them another check. I have no idea if I overpaid or not. It’s simply not worth the fight but if I did think it was, in come the lawyers.
I just want to get to a point where I am not living with monthly taxation discussions so I’m ok with being done with it, whatever overpayment I may have made.
I moved out of CA and had to pay taxes on my ISOs. Financially it was a good move as the market soured after I sold them. Even after paying taxes to two states, I came out ahead. However, my life was misery just trying to do the right thing.
It took three CPAs. One quit after he was sufficiently intimidated after calling the FTB for instructions, one just gave up, and the third told me correct enough instructions that I paid and filed. I apparently still did something wrong per California and had to write them another check. I have no idea if I overpaid or not. It’s simply not worth the fight but if I did think it was, in come the lawyers.
I just want to get to a point where I am not living with monthly taxation discussions so I’m ok with being done with it, whatever overpayment I may have made.
What's an ISO?
I'm going to over-simplify the answer a bit, but without going into details the CPA's have to keep up to date on ever changing finance laws, deduction rule changes, etc... and much of the discovery process is on me. While this does not really change YoY the institutions I deal with also make mistakes, sometimes because of mergers and acquisitions and so I end up missing documents that somehow the IRS knows about but the institutions neglect to provide. The lawyers don't do my taxes so to speak but they review the work of the CPA and are supposed to help catch mistakes, but that is also not guaranteed for the institutional reasons I mentioned. It's more complicated than this but if I didn't need those people I certainly would not be paying for their services.
This is why I would love to see the IRS just show me what they think I owe and if I see any red flags I should be able to click a line item and dispute it, otherwise just click a button, do a wire transfer and be done with it. IRS gets their money and I get my time back for more important things like commenting on HN.
Someone might suggest that the lawyers should go after both the IRS and the institutions for their mistakes and the lawyers would totally agree with big dollar signs in their eyes. They've tried to egg me on in the past.
This is why I would love to see the IRS just show me what they think I owe and if I see any red flags I should be able to click a line item and dispute it, otherwise just click a button, do a wire transfer and be done with it. IRS gets their money and I get my time back for more important things like commenting on HN.
Someone might suggest that the lawyers should go after both the IRS and the institutions for their mistakes and the lawyers would totally agree with big dollar signs in their eyes. They've tried to egg me on in the past.
If your return is complicated enough that you need CPAs and lawyers to handle it, the IRS won't be able to give you a ready return of what it thinks you owe because it doesn't have access to all of the information it would need to do that.
I end up missing documents that somehow the IRS knows about but the institutions neglect to provide.
The IRS knows about these because your counterparties to these transactions filed their own documents, and you were reported in these documents in some fashion. If you are failing to file those documents, that is absolutely a failure of your tax advisors to properly handle your compliance, and you should absolutely demand they make you whole for penalties and interest owed on these failures, and sue them for malpractice if they do not. (99% of the time they will just pay you without needing a lawyer to get involved, though this might come in the form of a credit against current/future services if you are still a client.)
I end up missing documents that somehow the IRS knows about but the institutions neglect to provide.
The IRS knows about these because your counterparties to these transactions filed their own documents, and you were reported in these documents in some fashion. If you are failing to file those documents, that is absolutely a failure of your tax advisors to properly handle your compliance, and you should absolutely demand they make you whole for penalties and interest owed on these failures, and sue them for malpractice if they do not. (99% of the time they will just pay you without needing a lawyer to get involved, though this might come in the form of a credit against current/future services if you are still a client.)
It CPAs are external they may not even be aware of said documentation.
That would literally be malpractice.
If the CPA is aware of the transaction, then they are aware that the documentation by the counterparties exists (or should exist), and of their client's legal responsibility to file similar documentation.
If they are not competent to handle the compliance associated with an M&A transaction, then they have no business providing accounting services to a client that engages in M&A transactions regularly.
If the CPA is aware of the transaction, then they are aware that the documentation by the counterparties exists (or should exist), and of their client's legal responsibility to file similar documentation.
If they are not competent to handle the compliance associated with an M&A transaction, then they have no business providing accounting services to a client that engages in M&A transactions regularly.
On the contrary, the IRS's interpretation of your income is going to be very uncharitable. My tax liability last year has 6 figures of variability depending on who you ask, and I assume the button-clicking machine will decide on the high end. That's what their automated letter-writing machine does too, and it's very annoying to get letters from it.
The last one I got claimed I owed $10,000 and I had to write a very nice letter back explaining that they actually owed me $45. I got my check 6 months later.
The last one I got claimed I owed $10,000 and I had to write a very nice letter back explaining that they actually owed me $45. I got my check 6 months later.
Literally every other first-word country has implemented this by now. Why the US is such a holdout is beyond me (I know why, lobbying.. but still).
Nope, Canada is also a holdout :(
The government can’t magically know what your expenses and deductions are. Got married, had a baby, used a home office, paid a plumber to fix your rental property? Deducting mortgage interest?
If none of these things apply to you and your taxes are really just a single w2 income it’s pretty simple to just fill out a paper 1040 form (or even 1040ez). You just need your w2 and an hour of time.
If none of these things apply to you and your taxes are really just a single w2 income it’s pretty simple to just fill out a paper 1040 form (or even 1040ez). You just need your w2 and an hour of time.
> If none of these things apply to you and your taxes are really just a single w2 income it’s pretty simple to just fill out a paper 1040 form (or even 1040ez). You just need your w2 and an hour of time.
I think their point was that this case should be "log in, check the totals match, click OK", not an hour of your time.
Or better yet, not require you to do anything if you believe your withholdings were sufficient.
I think their point was that this case should be "log in, check the totals match, click OK", not an hour of your time.
Or better yet, not require you to do anything if you believe your withholdings were sufficient.
87% of people take the standard deduction: https://www.irs.gov/statistics/soi-tax-stats-tax-stats-at-a-...
And taxes have never taken "just" an hour of my time. It's an entire afternoon of frustrated reading up on tax esoterica so I can figure out e.g. whether I should itemize or take the standard deduction (which I always wind up doing anyway). And 14 other things that I promptly forget about.
And taxes have never taken "just" an hour of my time. It's an entire afternoon of frustrated reading up on tax esoterica so I can figure out e.g. whether I should itemize or take the standard deduction (which I always wind up doing anyway). And 14 other things that I promptly forget about.
Also, if the IRS provided people with completed tax forms to use as a baseline, it would be an educational process.
My taxes for the first few years as an earning adult were fairly simple. Yet, I was never sure I did it right. I’m still not sure I’ve ever done my taxes correctly.
Having a filled in form from the IRS for those first few years would have taught me what correct taxes look like, at least for the simplest of cases.
Now as there are more complications in my taxes, with marriage, multiple jobs, etc. at least I would have the confidence I got my basics right and it would just be a matter of learning about those complications instead.
My taxes for the first few years as an earning adult were fairly simple. Yet, I was never sure I did it right. I’m still not sure I’ve ever done my taxes correctly.
Having a filled in form from the IRS for those first few years would have taught me what correct taxes look like, at least for the simplest of cases.
Now as there are more complications in my taxes, with marriage, multiple jobs, etc. at least I would have the confidence I got my basics right and it would just be a matter of learning about those complications instead.
Only an afternoon?
When I traveled freelance, it was an easy 40 hours. If I'd hired a bookkeeper and an accountant I might have saved most of it but it would have cost me more than I saved.
When I traveled freelance, it was an easy 40 hours. If I'd hired a bookkeeper and an accountant I might have saved most of it but it would have cost me more than I saved.
How many people have expenses and deductions that impact their taxes AND that the government doesn't know about?
Something like 85% of people take the standard deduction. I itemize most years, and pretty much everything I itemize (taxes and mortgage interest) are things the government already knows about. I think the only exception is charitable donations.
It would be a great time saver to just get a form from the IRS saying "here's everything we know, edit any mistakes or things we missed".
Something like 85% of people take the standard deduction. I itemize most years, and pretty much everything I itemize (taxes and mortgage interest) are things the government already knows about. I think the only exception is charitable donations.
It would be a great time saver to just get a form from the IRS saying "here's everything we know, edit any mistakes or things we missed".
Marriage and birth are both a matter of public record, are they not? The government wouldn’t need magic to know those things, when that information is registered with the government. Employers could also report work situations to the government, as could mortgage companies. If the details of your mortgage debt is readily available to agencies that determine your credit score, why should it not be available to the government as well?
It would be a lot easier in most cases then you’re making it out to be - and even in exceptional cases, you would only have to address those exceptions, and skip the drudgery of regurgitating all the information the government could have easily found for itself.
It would be a lot easier in most cases then you’re making it out to be - and even in exceptional cases, you would only have to address those exceptions, and skip the drudgery of regurgitating all the information the government could have easily found for itself.
Marriage and birth, like most things in an Americans life, are registered with the individual State governments since that power rests with the State. The Federal government has no jurisdiction over those matters and there is no implication that they would know. It becomes even more complicated when things like birth and marriage happen outside the US.
The details of mortgage debt are reported to the IRS on a standard form already.
The details of mortgage debt are reported to the IRS on a standard form already.
> the details of your mortgage debt
This is already reported to the IRS by servicers via Form 1098.[1]
[1]: https://www.irs.gov/forms-pubs/about-form-1098
This is already reported to the IRS by servicers via Form 1098.[1]
[1]: https://www.irs.gov/forms-pubs/about-form-1098
I think a lot of people would object to a system that reported every detail of your life to the IRS.
So presently the government gives you a birth certificate for your baby, and you go to the government to apply for a marriage license, but you are worried that the government might find out you've married and had a baby? You want to have to do extra paperwork to avoid accidentally committing tax fraud?
If you have to report every detail to them anyways, what exactly changes besides making it easier?
This is true. But my browser cannot possibly know whether I want:
- page zoom at 100% or different
- hardware acceleration on or off
- autofill on
- history tracked
- cookies recorded
And it is able to do it. Software engineering is usually far ahead of most other fields, it is true, but I think this concept https://en.wikipedia.org/wiki/Default_(computer_science) is transferable without it being too much trouble.
- page zoom at 100% or different
- hardware acceleration on or off
- autofill on
- history tracked
- cookies recorded
And it is able to do it. Software engineering is usually far ahead of most other fields, it is true, but I think this concept https://en.wikipedia.org/wiki/Default_(computer_science) is transferable without it being too much trouble.
What if I mess up my 1040EZ? I input something wrong and take more of a deduction than I should get?
You end up with a situation where if the IRS ignores it, then I’m getting away with paying less than my fair share. If they don’t ignore it, then it’s a lot of unavoidable hassle for me.
If the IRS gives me their calculations (which they do already!) then I know the baseline they’re using. If something looks wrong, or they don’t cover some scenarios in my life, I can simply adjust those situations from the IRS baseline.
This leads to a much more transparent, less stressful, more efficient process.
I think the less discussed part about this is the philosophical aspect of it as well. The current system frames the IRS-taxpayer relationship as adversarial. Now, this may be naturally true for 2-3% of high earners. But it’s not for 90+% of people who are basically just receiving a paycheck.
Starting with the IRS baseline allows the process for that 90+% to be more collaborative as opposed to adversarial, with either side trying to see how much they can get away with in the latter system.
You end up with a situation where if the IRS ignores it, then I’m getting away with paying less than my fair share. If they don’t ignore it, then it’s a lot of unavoidable hassle for me.
If the IRS gives me their calculations (which they do already!) then I know the baseline they’re using. If something looks wrong, or they don’t cover some scenarios in my life, I can simply adjust those situations from the IRS baseline.
This leads to a much more transparent, less stressful, more efficient process.
I think the less discussed part about this is the philosophical aspect of it as well. The current system frames the IRS-taxpayer relationship as adversarial. Now, this may be naturally true for 2-3% of high earners. But it’s not for 90+% of people who are basically just receiving a paycheck.
Starting with the IRS baseline allows the process for that 90+% to be more collaborative as opposed to adversarial, with either side trying to see how much they can get away with in the latter system.
> Got married, had a baby, used a home office, paid a plumber to fix your rental property?
The first two would be minor corrections. The latter two would naturally require more attention and detail, but they don't apply to most people.
> Deducting mortgage interest?
The IRS has my 1098s. They know the mortgage interest, principal, and origination date.
The first two would be minor corrections. The latter two would naturally require more attention and detail, but they don't apply to most people.
> Deducting mortgage interest?
The IRS has my 1098s. They know the mortgage interest, principal, and origination date.
>The IRS has my 1098s. They know the mortgage interest, principal, and origination date.
But they don't know what you used the proceeds for. Not all mortgage interest is deductible. Nor do they know what use you make of the property that secures the mortgage (primary residence, rental, other). They also don't know about prior year points you paid to originate a mortgage.
But they don't know what you used the proceeds for. Not all mortgage interest is deductible. Nor do they know what use you make of the property that secures the mortgage (primary residence, rental, other). They also don't know about prior year points you paid to originate a mortgage.
The IRS can reasonably assume my primary residence address from my prior year's tax return, then match that to the 1098 with the same address. The other, less common situations are covered by my comment on the home office and rental-property plumber: some things will require corrections with additional details to substantiate them.
>But they don't know what you used the proceeds for. Not all mortgage interest is deductible
You failed to address this important point. There is a difference between acquisition debt and equity debt that the IRS has no information about your situation. Also the "primary residence address" is not required to be provided on the tax return, so no they can't "reasonably assume".
You failed to address this important point. There is a difference between acquisition debt and equity debt that the IRS has no information about your situation. Also the "primary residence address" is not required to be provided on the tax return, so no they can't "reasonably assume".
You do know that in most countries optional returns are the norm, right?
Sure, if you have a bunch of weird expenses/deductions you can file, but for most people, the numbers the government has are already correct.
Sure, if you have a bunch of weird expenses/deductions you can file, but for most people, the numbers the government has are already correct.
If I'm remembering correctly, primary home mortgage interest is the single biggest deduction (also known as a "loophole") in our (the US) tax code.
We would need a fair few laws for the government to be able to get the information to cover most people's taxes, though I think this is less true after the standard deduction was doubled during the Trump years. (Banks have reporting duties, but are not run by the government so anything not directly related to fraud prevention isn't covered under the law)
We would need a fair few laws for the government to be able to get the information to cover most people's taxes, though I think this is less true after the standard deduction was doubled during the Trump years. (Banks have reporting duties, but are not run by the government so anything not directly related to fraud prevention isn't covered under the law)
That deduction is no longer generally useful to take. The 2017 tax act basically made that not necessary for most people -- almost everyone just takes the standard deduction now.
The government already has all the info they need to create near perfect tax returns for everyone. The IRS doesn't necessarily have it, but the information exists in databases that can be accessed.
The way it's done in Japan, they send you a form. If it's right, you're good and you do nothing. If it's not, you send them a correction.
The government already has all the info they need to create near perfect tax returns for everyone. The IRS doesn't necessarily have it, but the information exists in databases that can be accessed.
The way it's done in Japan, they send you a form. If it's right, you're good and you do nothing. If it's not, you send them a correction.
The return free model works in several other countries. Even if it wasn’t accurate, it saves hours in filing taxes.
EZ doesn't exist any more. The new 1040 is basically the same stuff though.
There days 90% of filers use standard deduction. If they can automate the simple cases its a good start.
> the IRS tells me what they believe my taxes should be
File for an extension. Then after April 15, download your wage & income transcripts from the IRS. Use that to reconcile with your own records and file before October
File for an extension. Then after April 15, download your wage & income transcripts from the IRS. Use that to reconcile with your own records and file before October
I just wanted to add that an extension is not an extension to the time you have to pay your taxes.
So if you file for an extension, don’t pay anything by April 15, and then it turns out you owe $1000 in taxes in October, you will now have to pay $1000 + penalty + interest on the $1000.
Filing for an extension only extends the time to file your taxes. Not the time to pay your taxes (I think the one exception to this was when COVID hit, where even the date to pay taxes was extended, but I’m not a 100% sure).
So if you file for an extension, don’t pay anything by April 15, and then it turns out you owe $1000 in taxes in October, you will now have to pay $1000 + penalty + interest on the $1000.
Filing for an extension only extends the time to file your taxes. Not the time to pay your taxes (I think the one exception to this was when COVID hit, where even the date to pay taxes was extended, but I’m not a 100% sure).
Wait what? Can you explain this approach a little further?
We have that in Germany. It's called a "pre-filled tax declaration" and even if things differ in the end, you can still use it as base for your actual declaration. Though I still pay the 15€ a year for a tool for convenience
> but I really just want to get a document near the beginning of the year where the IRS tells me what they believe my taxes owed/returned should be.
This is what we have in New Zealand, and it's wonderful; most people simply don't need to do anything other than check their assessment and get on with their lives. Even if you've got e.g. investments you can usually do your filing with no more effort than taking the PAYE (income tax) assessment and bolting on your additional sources of income.
Much like the US banking system, it bemuses me how backward the US is in this regard.
This is what we have in New Zealand, and it's wonderful; most people simply don't need to do anything other than check their assessment and get on with their lives. Even if you've got e.g. investments you can usually do your filing with no more effort than taking the PAYE (income tax) assessment and bolting on your additional sources of income.
Much like the US banking system, it bemuses me how backward the US is in this regard.
After Trump’s tax law increasing the standard deduction, about 14% itemize. https://taxfoundation.org/standard-deduction-itemized-deduct...
So what you’re proposing would work for most individuals. I don’t agree with the “accounting firm handling all this” for the remaining thought (unless you count TurboTax as an accounting firm).
So what you’re proposing would work for most individuals. I don’t agree with the “accounting firm handling all this” for the remaining thought (unless you count TurboTax as an accounting firm).
The TCJA saves me a day every year doing taxes. Love it.
If you file an extension, after Aprilc 15 you will be able to see on the IES tr
Came here to say this. It's so obvious and the downstream political implications are hugely positive.
This is how they do it in most of europe iirc
We're once more, really laughing at this, over here, again, annual-like.
That would lead to lots of under collection of taxes. The benefit of the current approach is that the IRS ends up collecting more money.
It should be done in such a way that preparing and filing your tax returns doesn't share your financial information with some company that uses it for other purposes.
I have some faith we'll get this right, because I can see some details of how the IRS does things (despite the complexity nightmare handed to them by lawmakers), and the impression I get is that there must be a lot of people there who are working conscientiously and effectively.
I have some faith we'll get this right, because I can see some details of how the IRS does things (despite the complexity nightmare handed to them by lawmakers), and the impression I get is that there must be a lot of people there who are working conscientiously and effectively.
"and the impression I get is that there must be a lot of people there who are working conscientiously and effectively."
Totally agree. The IRS is not the problem but the people in Congress who do everything they can to obstruct them.
Totally agree. The IRS is not the problem but the people in Congress who do everything they can to obstruct them.
The government should send everyone an itemized bill that you can correct. The idea that we have to figure it out ourselves is unnecessary and has created significant emotional/financial pain and an entire cottage industry of nonsense. Of course when this was being piloted, guess who paid to squash it? The cottage industry.
A non-US perspective (Irish). My employer reports my pay, deductions, benefits in kind, income tax, etcetera every month to the Revenue (goes by the acronym PAYE - Pay As You Earn). At any point up to three years after the end of a tax year, I can log in and adjust my tax credits, such as medical, carer benefit (ie, taking care of someone long term) and so on. I'll get refunds within a week if I'm owed one; I just did this for 2021's tax credits for working from home (electric, natural gas, broadband). The only paper paperwork I have to do at the moment is capital gains on shares or property.
I have no idea if this approach is compatible with the various state and federal taxes that the US has to deal with; I just know it's so much easier now than when I was a student in the US.
I have no idea if this approach is compatible with the various state and federal taxes that the US has to deal with; I just know it's so much easier now than when I was a student in the US.
I'm not an expert, but I think the state/local issues just complicate the implementation. But that sounds wildly better than our increasingly archaic rituals.
Meh.. every year this happens around tax season. Every year Intuit and grover norquist ensures the momentum crashes and burn. lets see how many days after April 15 this gets dumped.
The scope of the study predetermines its outcome. The reality is there is no need for the vast majority of Americans to file anything. The IRS has all of their pay information and must merely send a bill or refund. The only thing a taxpayer in this scenario would need to file for is a mistake.
The IRS doesn't know about the loopholes we want to use though and there is the rub.
There is no rub. Here[1] are 2010 numbers from the IRS showing 42% of Americans used 1040A or EZ. Many more /could have/. Since 2010 the standard deduction has gone up and there's no reason for a lot of people to itemize.
In many other countries the government provides you a pre-filled form. You can sign and return or file your own with relevant "loopholes."
There are two groups of people who want to keep tax filing difficult. Grover Norquist feels if paying taxes is too easy people won't be angry about it. This increases support for cutting taxes. The other group are tax preparers, like Intuit.
[1] http://www.freeby50.com/2012/12/what-percent-of-people-file-...
In many other countries the government provides you a pre-filled form. You can sign and return or file your own with relevant "loopholes."
There are two groups of people who want to keep tax filing difficult. Grover Norquist feels if paying taxes is too easy people won't be angry about it. This increases support for cutting taxes. The other group are tax preparers, like Intuit.
[1] http://www.freeby50.com/2012/12/what-percent-of-people-file-...
> Since 2010 the standard deduction has gone up
Nothing special happened in 2010. Beginning 2018 there was a temporary change (TJCA) that increased the standard deduction, but that ends in 3 years unless extended by Congress.
>There are two groups of people who want to keep tax filing difficult.
No, there is a third, much larger group, of taxpayers who want to keep loopholes, grey areas, and little things you can cheat on and get away with. This is only possible with the current system.
Nothing special happened in 2010. Beginning 2018 there was a temporary change (TJCA) that increased the standard deduction, but that ends in 3 years unless extended by Congress.
>There are two groups of people who want to keep tax filing difficult.
No, there is a third, much larger group, of taxpayers who want to keep loopholes, grey areas, and little things you can cheat on and get away with. This is only possible with the current system.
> Nothing special happened in 2010. Beginning 2018 there was a temporary change (TJCA) that increased the standard deduction, but that ends in 3 years unless extended by Congress.
My understanding was that the personal exemption was temporarily removed, but the standard deduction was changed moving forward...but what do I know? I want the government to give me a default option that has a correct answer.
> No, there is a third, much larger group, of taxpayers who want to keep loopholes, grey areas, and little things you can cheat on and get away with. This is only possible with the current system.
Huh? All people are asking for is that the IRS fill out your 1040 for you as one option for paying taxes. No loopholes, grey areas, or enforcement changes. If you're talking about possible knock-on effects; people not paying attention to taxes, therefore paying more, or not paying enough attention that taxes get raised with out noticing--that's literally Grover Norquist's position.
You say a "much larger group." When California had a pilot program[1], the only opposition was from Intuit. "99 percent stated they were satisfied with ReadyReturn, 97 percent stated this is the type of service government should provide, 96 percent stated it was more convenient than how they filed in the past, 95 percent stated it saved them time, and 98 percent stated they would use it again."
[1] https://en.wikipedia.org/wiki/CalFile#ReadyReturn
My understanding was that the personal exemption was temporarily removed, but the standard deduction was changed moving forward...but what do I know? I want the government to give me a default option that has a correct answer.
> No, there is a third, much larger group, of taxpayers who want to keep loopholes, grey areas, and little things you can cheat on and get away with. This is only possible with the current system.
Huh? All people are asking for is that the IRS fill out your 1040 for you as one option for paying taxes. No loopholes, grey areas, or enforcement changes. If you're talking about possible knock-on effects; people not paying attention to taxes, therefore paying more, or not paying enough attention that taxes get raised with out noticing--that's literally Grover Norquist's position.
You say a "much larger group." When California had a pilot program[1], the only opposition was from Intuit. "99 percent stated they were satisfied with ReadyReturn, 97 percent stated this is the type of service government should provide, 96 percent stated it was more convenient than how they filed in the past, 95 percent stated it saved them time, and 98 percent stated they would use it again."
[1] https://en.wikipedia.org/wiki/CalFile#ReadyReturn
>All people are asking for is that the IRS fill out your 1040 for you as one option for paying taxes. No loopholes, grey areas, or enforcement changes
Then how do you solve this scenario? Suppose my tax liability according to tax law in all its complexity is $1,000. However because it can't know everything, the IRS sends me an "optional" tax return with $800 liability, no questions asked, just sign here. What is to stop me from cheating in this case? It is only the risk of being audited that keeps most people somewhat honest under the current system.
Then how do you solve this scenario? Suppose my tax liability according to tax law in all its complexity is $1,000. However because it can't know everything, the IRS sends me an "optional" tax return with $800 liability, no questions asked, just sign here. What is to stop me from cheating in this case? It is only the risk of being audited that keeps most people somewhat honest under the current system.
So many countries already have it figured out. My understanding is by law income already needs to be reported to the IRS (from your employer or by you). I would imagine that's all you'd be legally signing off on. That's all I remember confirming when living abroad. If your income is accounted for correctly is there a scenario that would increase your tax liability assuming you already qualify for a standard deduction?
Somewhere around 90% of Americans take the standard deduction and the IRS is in a better position to judge eligibility for most of the adjustments outside that (e.g. EITC) than many taxpayers are. There's always going to be a way to fill out your own taxes for people with complicated tax situations, so there's no harm in simplifying things and reducing mistakes/fraud for the vast, vast majority of people.
Most people don't qualify for those. If you think you can (legally) pay less tax, great, go for it. I'm sure you'd still be able to file taxes the hard way if you want. That's how it works in most non-US countries. The government tells you how much you owe, and you can either accept it or file paperwork demonstrating that you can pay less than that.
They actually do know about all the loopholes you're using. Using a loophole isn't about changing how you file your taxes, it's changing how you live your life to be more tax-efficient.
I need a job so I applied to Intuit. Happily they rejected me so I don't have to hold my nose to work for the company responsible for lobbying against this basic service for over two decades. They've spent $41 million dollars ensuring the tax system remains opaque so that Americans feel that need their software.
The vast majority of Americans - 87% - simply take the default deductions and don't have complex investments or custom deductions to deal with. We shouldn't need to pay Intuit every year just to make sure we fill out the forms correctly and get a refund in a timely manner.
The vast majority of Americans - 87% - simply take the default deductions and don't have complex investments or custom deductions to deal with. We shouldn't need to pay Intuit every year just to make sure we fill out the forms correctly and get a refund in a timely manner.
As this is not in any way complicated, a number of companies ranging from fly by night to massive lobbyists manage to do it just fine, and the IRS doesn't have to figure out how they're going to find the tax expertise, I don't know what a "task force" has to "explore." If they really wanted to do it, they'd just announce that they're doing it. This is the IRS hiring external consultants to generate reasons why they can't do it.
> The legislation gave the IRS $15 million to stand up the task force, as well as nine months to deliver a report to Congress on whether the direct e-file system would be cost-effective for the IRS to operate, and whether taxpayers would use the system, rather than rely on third-party tax preparers.
For whatever reason this reminded me of something (and I don't have the exact quote) that Steve Jobs apparently said about Wozniak and a (again iirc) a basic compiler that Apple needed (maybe in discussion with Microsoft?).
'If we need one Woz can write that over the weekend'.
Point is amazing that they are spending $15m to just put together a task force and a report to analyze the idea.
(How many on HN remember the quote that I am referring to I was not able to easily find it).
For whatever reason this reminded me of something (and I don't have the exact quote) that Steve Jobs apparently said about Wozniak and a (again iirc) a basic compiler that Apple needed (maybe in discussion with Microsoft?).
'If we need one Woz can write that over the weekend'.
Point is amazing that they are spending $15m to just put together a task force and a report to analyze the idea.
(How many on HN remember the quote that I am referring to I was not able to easily find it).
Or could just have one person go through the top 10 free versions of existing offering and make a page showing taxpayers how to avoid paying the "upgrade offer" for each service.
Also highlight the companies that offer free state returns as well.
Also highlight the companies that offer free state returns as well.
I get that, but I'm also opposed to the idea of a middleman with no value-add for what is purely a government process. The IRS should offer the baseline service and then third parties can add value where they see fit.
They finally woke up. Next step - eliminate "tax filing" altogether.
I hope this ultimately results in tax filing for simple returns to be free for everyone. I’m tired of lobbyists for Intuit and other corporations attempting to prevent this.
Me too. I use free fillable forms to efile, and any years they aren't offered by my state, I file paper returns.
And I always wish it were simpler.
And I always wish it were simpler.
This is a significant problem to solve. How do you think they will build the task force to build a plan? As a product manager, I am terrified this is a class he what would it take to build this and a complex answer would come back that make.
What advice would you give the team scoping the problem -- outside of changing the tax system?
What advice would you give the team scoping the problem -- outside of changing the tax system?
Buying one of the dozen companies who do it already? The tax code may be rocket science, but the IRS don't lack the expertise. If aaafreetaxfile.biz can handle it, I bet the IRS can figure it out.
Doesn't the IRS already audit the Turbotaxes of the world? IIRC the IRS checks the software you use before you can use it. If they already check someone else's software..
Heck being a US Taxpayer looks stressful. Useless comment, but my lord y’all have made live way too complicated!
[deleted]
The task force should be comprised of a PM, 2 seasoned tax professionals, an accountant, 2 backend engineers and 2 programmers. That task force should report to the head of the IRS with all communications available to the public and all meetings streamed live. Getrdone.
There is an episode of Yes (prime?) minister Where Sir Humphrey explains that to avoid implementing a popular, good idea you don't refuse, you bury it in a fact finding, task force, committee of investigation.
You don't need some complicated new "system"; you need some API that takes some structured data, validates it and processes it (in the system you already have). That's it.
After working on APIs from FMCSA, it's not easy, because they have no customer. My org was required by law to meet their deadlines. They setup a test api 2 months after the deadline. Their backup method of sending the data was another 2 weeks after that. It was through soap because they said that was the most secure. We had a team contact them about ambiguity in their documentation and it took 6 months to get a reply.
They never caught Trump for tax evasion because he does what all rich people do: hires the top lawyers and accountants to handle it. If they could bust Trump they could bust the rest of them.
The whole tax code is a legal maze to protect the wealthy and keep the middle class down.
That's why it can't be simple. There is no place to hide ulterior motives in simple.
The whole tax code is a legal maze to protect the wealthy and keep the middle class down.
That's why it can't be simple. There is no place to hide ulterior motives in simple.
That has nothing to do with e-file, though, or even pre-file, where they just send you the total and you can choose to pay it or file the hard way. It has nothing to do with the tax code being simple. It does have to do with class, because paying to file taxes a good way to separate innumerate broke people from a day's pay, every year.
If you do it aboveboard using lawyers and accountants to minimize the amount of tax you owe, it's tax avoidance. Legal as church on Sunday. Tax evasion, on the other hand, is a crime. That only comes into play when you commit some manner of fraud to get out of taxes.
Difference between the two:
1) You get $4,000,000 from (complicated but legal business deal) and report it on your return. Your lawyers and accountants successfully argue that due to subparagraph q of the Arglebargle Business WhangoZango Act of 1919, originally designed to allow orphanages to deduct the cost of gruel, this money is not subject to taxes (or gets taxed at a lower rate, or whatever). That's tax avoidance -- perfectly legal -- and that's why people like Trump, the Pelosis, the Kennedy family, the Zuckerbergs, the Kochs, the Heinz-Kerrys...pay accountants and lawyers big bucks.
2) You get $4,000,000 from your meth business and don't report it at all, having failed to take your attorney Saul Goodman's advice on how to launder it. That's tax evasion, and that's what gets you sent to PMITAFP.
Difference between the two:
1) You get $4,000,000 from (complicated but legal business deal) and report it on your return. Your lawyers and accountants successfully argue that due to subparagraph q of the Arglebargle Business WhangoZango Act of 1919, originally designed to allow orphanages to deduct the cost of gruel, this money is not subject to taxes (or gets taxed at a lower rate, or whatever). That's tax avoidance -- perfectly legal -- and that's why people like Trump, the Pelosis, the Kennedy family, the Zuckerbergs, the Kochs, the Heinz-Kerrys...pay accountants and lawyers big bucks.
2) You get $4,000,000 from your meth business and don't report it at all, having failed to take your attorney Saul Goodman's advice on how to launder it. That's tax evasion, and that's what gets you sent to PMITAFP.
One question I had was would it be possible to stop using paper returns? If the IRS forced it, how many filers would be dropped through the cracks today? 10 years from now?
french tax code has a semi-official DSL syntax
https://github.com/MLanguage/mlang
just adopt theirs, add a message layer, and call it done
https://github.com/MLanguage/mlang
just adopt theirs, add a message layer, and call it done
Something I’ve wondered: Why not just include taxes at every point of use of a service that is funded by tax?
Like say fuel prices (to pay for roads), police interactions, etc.
Like say fuel prices (to pay for roads), police interactions, etc.
Consumption taxes are regressive, so this would shift a lot of tax burden from the rich to the poor.
True, though I wonder to what degree a per-person dividend (some sort of universal income) could offset the regressivity of consumption taxes.
That is, we go ahead and tax consumption of land, road space, emissions, extraction, etc and everyone receives the same monthly sum that is enough to cancel out the taxes paid by a person who uses a minimal share of resources.
(Though I'm not sure I'd consider police interactions as a source of consumption taxes as per the original poster.)
That is, we go ahead and tax consumption of land, road space, emissions, extraction, etc and everyone receives the same monthly sum that is enough to cancel out the taxes paid by a person who uses a minimal share of resources.
(Though I'm not sure I'd consider police interactions as a source of consumption taxes as per the original poster.)
I don't think that scheme changes the progressive/regressive nature of a system at all because the incremental increases in wealth are regressive. You are basically setting up a charitable floor on a regressive system.
Consider the differences in tax rates under your system between someone making 200k and 2 million. And you will see near identical percentages (fractions of a percent difference) because the floor you set is a fraction of their earnings and they are being taxed evenly on all the rest.
So it is regressive between those income ranges, but progressive if you compare someone making 20k with 200k.
Consider the differences in tax rates under your system between someone making 200k and 2 million. And you will see near identical percentages (fractions of a percent difference) because the floor you set is a fraction of their earnings and they are being taxed evenly on all the rest.
So it is regressive between those income ranges, but progressive if you compare someone making 20k with 200k.
1. Rich people consume; some consume a lot. Not just individually; they have businesses that consume voraciously.
2. Tax credits can relieve regression in consumption taxing; small consumers can pay as little as nothing.
2. Tax credits can relieve regression in consumption taxing; small consumers can pay as little as nothing.
> Rich people consume; some consume a lot.
Rich people consume a lot absolutely and individually, not proportionately as compared to anyone else. Wealthy people do not spend their entire income every year on consumption, which is what probably 60% of Americans do.
Rich people consume a lot absolutely and individually, not proportionately as compared to anyone else. Wealthy people do not spend their entire income every year on consumption, which is what probably 60% of Americans do.
It treats everyone equally. That is a good thing. Progressive taxes are a sham to make more people ok with income taxes and collect more in taxes. It is a win-win for the IRS.
It does not, unless you define "equally" in a very particular way. Under consumption-based tax schemes, poor people spend a larger portion of their income on taxes than rich people (because they spend more of their income, and consumption taxes are a tax on spending).
I'm not sure what you mean when you say that progressive taxes are a sham. The goal of taxing rich people at a higher rate than poor people seems pretty obviously good. Maybe the implementation issues wherein unrealized capital gains aren't captured? But that's particular to our implementation of taxes, not to progressive taxes generally.
I'm not sure what you mean when you say that progressive taxes are a sham. The goal of taxing rich people at a higher rate than poor people seems pretty obviously good. Maybe the implementation issues wherein unrealized capital gains aren't captured? But that's particular to our implementation of taxes, not to progressive taxes generally.
I support progressive taxes and that is not my motivation or reasoning at all.
It is a recognition of an increased share of discretionary income and the diminishing returns of higher incomes on quality of life.
We have to fund the government services, so it makes sense in my mind to do it with discretionary income and income that has diminishing returns in the quality of the life of the taxpayer. It is solid public policy IMO.
Second, the terminology is strange, because everyone is treated equally. No matter your race, sex, age, you are progressively taxed more based on your actions/earnings for the year. [Outside of carveouts for all the various tax credits and deductions, but within those carveouts it is equally progressive.]
It is a recognition of an increased share of discretionary income and the diminishing returns of higher incomes on quality of life.
We have to fund the government services, so it makes sense in my mind to do it with discretionary income and income that has diminishing returns in the quality of the life of the taxpayer. It is solid public policy IMO.
Second, the terminology is strange, because everyone is treated equally. No matter your race, sex, age, you are progressively taxed more based on your actions/earnings for the year. [Outside of carveouts for all the various tax credits and deductions, but within those carveouts it is equally progressive.]
I don't think that idea can go very far before running into serious problems. Gas taxes to pay for roads is straightforward, but what would taxing at point of use for "police interactions" even look like? Are you suggesting that police departments be funded entirely by traffic tickets and the like, or that every time you call 911 should add a toll to your phone bill? The conflicts of interest and other perverse incentives are rampant. What is the "point of use" for services like the military, whose whole purpose is to prevent ordinary citizens from having to directly participate in the national defense?
Depending on your political philosophies many people are looking for a much more progressive tax structure, the one you outlined is very regressive if not done very carefully. I am not commenting on whether that is right or wrong, but that is why many would be against that.
Ooh, I especially like the idea of the fire department doing this. A burly guy with a steel helmet and an axe goes around with a credit card reader before they turn on the hoses. I'd pay up!
Also, I am not exactly sure how you price police interactions, that sounds like a fun one to theorize about because of all the different factors. But probably a poor idea.
Related:
IRS Free File: Do Your Taxes for Free - https://news.ycombinator.com/item?id=34462122 - Jan 2023 (247 comments)
TurboTax’s fight against free tax filing - https://news.ycombinator.com/item?id=31072202 - April 2022 (394 comments)
Filing taxes could be free & simple. H&R Block & Intuit lobby against it (2017) - https://news.ycombinator.com/item?id=30856968 - March 2022 (114 comments)
FTC sues Intuit for its deceptive TurboTax “free” filing campaign - https://news.ycombinator.com/item?id=30846071 - March 2022 (555 comments)
Ask HN: How does TurboTax get away with dark patterns? - https://news.ycombinator.com/item?id=30409523 - Feb 2022 (122 comments)
Filing Taxes Could Be Free and Simple. But H&R Block and Intuit Lobby Against It (2017) - https://news.ycombinator.com/item?id=30185484 - Feb 2022 (18 comments)
Killing TurboTax - https://news.ycombinator.com/item?id=26330584 - March 2021 (662 comments)
Show HN: ustaxes.org – open-source tax filing webapp - https://news.ycombinator.com/item?id=26138446 - Feb 2021 (219 comments)
TurboTax Tricked You into Paying to File Your Taxes (2019) - https://news.ycombinator.com/item?id=26102695 - Feb 2021 (306 comments)
TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free (2019) - https://news.ycombinator.com/item?id=26060414 - Feb 2021 (199 comments)
FTC Is Investigating Intuit over TurboTax Practices - https://news.ycombinator.com/item?id=24409093 - Sept 2020 (194 comments)
IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax - https://news.ycombinator.com/item?id=21923220 - Dec 2019 (448 comments)
IRS Tried to Hide Emails That Show Tax Industry Influence over Free File Program - https://news.ycombinator.com/item?id=21393758 - Oct 2019 (188 comments)
TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free - https://news.ycombinator.com/item?id=21281411 - Oct 2019 (447 comments)
TurboTax to charge more lower-income customers - https://news.ycombinator.com/item?id=20461169 - July 2019 (81 comments)
Congress Scraps Provision to Restrict IRS from Competing with TurboTax - https://news.ycombinator.com/item?id=20119916 - June 2019 (18 comments)
TurboTax Uses a “Military Discount” to Trick Troops into Paying to File Taxes - https://news.ycombinator.com/item?id=19994118 - May 2019 (42 comments)
Listen to TurboTax Lie to Get Out of Refunding Overcharged Customers - https://news.ycombinator.com/item?id=19870242 - May 2019 (44 comments)
TurboTax and H&R Block Saw Free Tax Filing as a Threat - https://news.ycombinator.com/item?id=19810981 - May 2019 (143 comments)
TurboTax Hides Its Free File Page from Search Engines - https://news.ycombinator.com/item?id=19758126 - April 2019 (262 comments)
TurboTax Uses Dark Patterns to Trick You into Paying to File Your Taxes - https://news.ycombinator.com/item?id=19718284 - April 2019 (274 comments)
Congress Is About to Ban the US Government from Offering Free Online Tax Filing - https://news.ycombinator.com/item?id=19613725 - April 2019 (696 comments)
How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - https://news.ycombinator.com/item?id=19392673 - March 2019 (253 comments)
H&R Block and Intuit Lobby Against Free and Simple Tax Filing (2017) - https://news.ycombinator.com/item?id=18956883 - Jan 2019 (190 comments)
Would You Let the I.R.S. Prepare Your Taxes? (2015) - https://news.ycombinator.com/item?id=17751383 - Aug 2018 (424 comments)
Why I'm boycotting TurboTax this year - https://news.ycombinator.com/item?id=16844458 - April 2018 (23 comments)
H&R Block and Intuit Lobbying Against Simpler Tax Filing (2017) - https://news.ycombinator.com/item?id=16841449 - April 2018 (232 comments)
H&R Block and Intuit Are Lobbying Against Making Tax Filling Free and Easy - https://news.ycombinator.com/item?id=13922482 - March 2017 (234 comments)
How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - https://news.ycombinator.com/item?id=13853150 - March 2017 (439 comments)
TurboTax Takes Aim at Smaller Rival in Fight for Filers - https://news.ycombinator.com/item?id=11150694 - Feb 2016 (87 comments)
Would You Let the I.R.S. Prepare Your Taxes? - https://news.ycombinator.com/item?id=9381437 - April 2015 (150 comments)
Would You Let the I.R.S. Prepare Your Taxes? - https://news.ycombinator.com/item?id=9380232 - April 2015 (124 comments)
Filing taxes: It shouldn't be so hard - https://news.ycombinator.com/item?id=5488084 - April 2013 (56 comments)
How the Maker of TurboTax Fought Free, Simple Tax Filing - https://news.ycombinator.com/item?id=5443203 - March 2013 (330 comments)
IRS Free File: Do Your Taxes for Free - https://news.ycombinator.com/item?id=34462122 - Jan 2023 (247 comments)
TurboTax’s fight against free tax filing - https://news.ycombinator.com/item?id=31072202 - April 2022 (394 comments)
Filing taxes could be free & simple. H&R Block & Intuit lobby against it (2017) - https://news.ycombinator.com/item?id=30856968 - March 2022 (114 comments)
FTC sues Intuit for its deceptive TurboTax “free” filing campaign - https://news.ycombinator.com/item?id=30846071 - March 2022 (555 comments)
Ask HN: How does TurboTax get away with dark patterns? - https://news.ycombinator.com/item?id=30409523 - Feb 2022 (122 comments)
Filing Taxes Could Be Free and Simple. But H&R Block and Intuit Lobby Against It (2017) - https://news.ycombinator.com/item?id=30185484 - Feb 2022 (18 comments)
Killing TurboTax - https://news.ycombinator.com/item?id=26330584 - March 2021 (662 comments)
Show HN: ustaxes.org – open-source tax filing webapp - https://news.ycombinator.com/item?id=26138446 - Feb 2021 (219 comments)
TurboTax Tricked You into Paying to File Your Taxes (2019) - https://news.ycombinator.com/item?id=26102695 - Feb 2021 (306 comments)
TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free (2019) - https://news.ycombinator.com/item?id=26060414 - Feb 2021 (199 comments)
FTC Is Investigating Intuit over TurboTax Practices - https://news.ycombinator.com/item?id=24409093 - Sept 2020 (194 comments)
IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax - https://news.ycombinator.com/item?id=21923220 - Dec 2019 (448 comments)
IRS Tried to Hide Emails That Show Tax Industry Influence over Free File Program - https://news.ycombinator.com/item?id=21393758 - Oct 2019 (188 comments)
TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free - https://news.ycombinator.com/item?id=21281411 - Oct 2019 (447 comments)
TurboTax to charge more lower-income customers - https://news.ycombinator.com/item?id=20461169 - July 2019 (81 comments)
Congress Scraps Provision to Restrict IRS from Competing with TurboTax - https://news.ycombinator.com/item?id=20119916 - June 2019 (18 comments)
TurboTax Uses a “Military Discount” to Trick Troops into Paying to File Taxes - https://news.ycombinator.com/item?id=19994118 - May 2019 (42 comments)
Listen to TurboTax Lie to Get Out of Refunding Overcharged Customers - https://news.ycombinator.com/item?id=19870242 - May 2019 (44 comments)
TurboTax and H&R Block Saw Free Tax Filing as a Threat - https://news.ycombinator.com/item?id=19810981 - May 2019 (143 comments)
TurboTax Hides Its Free File Page from Search Engines - https://news.ycombinator.com/item?id=19758126 - April 2019 (262 comments)
TurboTax Uses Dark Patterns to Trick You into Paying to File Your Taxes - https://news.ycombinator.com/item?id=19718284 - April 2019 (274 comments)
Congress Is About to Ban the US Government from Offering Free Online Tax Filing - https://news.ycombinator.com/item?id=19613725 - April 2019 (696 comments)
How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - https://news.ycombinator.com/item?id=19392673 - March 2019 (253 comments)
H&R Block and Intuit Lobby Against Free and Simple Tax Filing (2017) - https://news.ycombinator.com/item?id=18956883 - Jan 2019 (190 comments)
Would You Let the I.R.S. Prepare Your Taxes? (2015) - https://news.ycombinator.com/item?id=17751383 - Aug 2018 (424 comments)
Why I'm boycotting TurboTax this year - https://news.ycombinator.com/item?id=16844458 - April 2018 (23 comments)
H&R Block and Intuit Lobbying Against Simpler Tax Filing (2017) - https://news.ycombinator.com/item?id=16841449 - April 2018 (232 comments)
H&R Block and Intuit Are Lobbying Against Making Tax Filling Free and Easy - https://news.ycombinator.com/item?id=13922482 - March 2017 (234 comments)
How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - https://news.ycombinator.com/item?id=13853150 - March 2017 (439 comments)
TurboTax Takes Aim at Smaller Rival in Fight for Filers - https://news.ycombinator.com/item?id=11150694 - Feb 2016 (87 comments)
Would You Let the I.R.S. Prepare Your Taxes? - https://news.ycombinator.com/item?id=9381437 - April 2015 (150 comments)
Would You Let the I.R.S. Prepare Your Taxes? - https://news.ycombinator.com/item?id=9380232 - April 2015 (124 comments)
Filing taxes: It shouldn't be so hard - https://news.ycombinator.com/item?id=5488084 - April 2013 (56 comments)
How the Maker of TurboTax Fought Free, Simple Tax Filing - https://news.ycombinator.com/item?id=5443203 - March 2013 (330 comments)
The difference is that instead of being a "wizard" interface like other tax software, it's just online fillable versions of the tax forms, that do 99% of the math for you based on the values you enter and automatically add forms and link values between forms as necessary.
I've used it for well over a decade, and at the end of the day it's just the same "doing your taxes" that my parents and grandparents did, but on your computer and easier. For anyone who has an engineer mindset it's entirely doable, even if you have to Google a few things to make sure you're doing it right (e.g. what's a qualified dividend vs. a regular one?). The real secret is keeping a PDF of your previous year's return next to you while you do this year's, because you'll usually just be filling out mostly the same lines in the same way with different values.
[1] https://www.irs.gov/e-file-providers/free-file-fillable-form...
[2] https://en.wikipedia.org/wiki/Free_File#Free_File_Fillable_F...