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Why the IRS Should Automatically Fill In Returns With What It Knows

Soulskill posted more than 4 years ago | from the because-addition-is-mentally-taxing dept.

The Almighty Buck 613

theodp writes "An article in the NY Times begins, 'In the digital age, filing income tax returns should be a snap. Important data from employers and financial institutions has already been sent to government computers. Yet taxpayers are still required to perform the chore of preparing a return from scratch, in many cases paying a software company for the privilege.' Why, if your needs are simple, can't you just download forms pre-filled with whatever data the IRS has received about you, make any necessary adjustments, and automatically get the IRS calculation of your taxes? Sounds reasonable, but the IRS rejected the President's proposal to give taxpayers the option to do so as 'not feasible at this time' due to delays in the receipt of W-2 and 1099 data. However, California managed to offer a pre-filled state tax return, which cost only 34 cents to process compared to $2.59 to process a traditional paper return. Despite the success of the pilot, meager funds have been allotted for the program due to the strength of its political opponents — 'principally, Intuit' — according to the state controller. Intuit argues it would be a 'conflict of interest for government to be both tax collector and tax preparer.'"

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Why they shouldn't.. (1, Insightful)

Anonymous Coward | more than 4 years ago | (#30879604)

Because we would find out how poor the government is about actually keeping track of data..

Seriously.. you'd probably log in to find that you have 27 kids and are 3 years of age.. and your income is the same as your zip code..

Re:Why they shouldn't.. (2, Insightful)

drosboro (1046516) | more than 4 years ago | (#30879682)

Seems to me it would be good to find out if the government thinks such things... although the hassle of correcting them may not be worth it. For years, the government sent mail to me as Mrs., despite the fact that my first name is David. The hassle of convincing them that I was actually Mr. took about 2 years.

Of course, here in Canada we get a $100 monthly benefit for each child. If the government thinks I have 27 kids, more power to them!

Re:Why they shouldn't.. (5, Funny)

Anonymous Coward | more than 4 years ago | (#30879802)

Dear Mrs David Rosboro

Our records show that none of your 27 children are currently in school. We can only assume that you are violating child employment laws or have
eaten them. We will be performing an inspection on the 29th Jan to verify the health and status of your children.

Re:Why they shouldn't.. (1)

Zippy_wonderslug (990892) | more than 4 years ago | (#30880084)

What's the problem then? I see a boom in the population of the New England states with smaller ZIP Codes. Screw California and those digits that start with 9.

This is how it's done where I'm from... (5, Informative)

Louai (1243284) | more than 4 years ago | (#30879612)

In Finland you get a pre-filled tax sheet in the mail, you only have to return it if there are any changes you need to make. I'm currently living in the US, I find the amount of crap you need to go through to get your affairs in order absolutely stunning.

Re:This is how it's done where I'm from... (0)

Anonymous Coward | more than 4 years ago | (#30879684)

In the UK, if you fulfil some rather basic conditions, you don't even have to file a tax return at all.

"If you have relatively straightforward tax affairs and already pay tax through PAYE (Pay As You Earn) you probably won't need to complete a tax return. "

http://www.hmrc.gov.uk/SA/need-tax-return.htm

Arguably, a far better choice due to the time saved. "Processing cost: $2"? Screw that. What's the cost per year of making sure you have all the needed data and knowing how to fill in the form?

Re:This is how it's done where I'm from... (4, Informative)

nedlohs (1335013) | more than 4 years ago | (#30879716)

Just wait until you do what I did and live in 4 different states in a year... Seriously 5 tax returns, some owed me, I owed some.

Re:This is how it's done where I'm from... (5, Interesting)

hitmark (640295) | more than 4 years ago | (#30879796)

thats quite a reminder that USA is a collection of nations internally while a single nation outwards...

Re:This is how it's done where I'm from... (3, Informative)

nextekcarl (1402899) | more than 4 years ago | (#30880044)

It can be even worse, too. Some counties have special taxes on residents, too.

Re:This is how it's done where I'm from... (5, Interesting)

danpat (119101) | more than 4 years ago | (#30879896)

I had the same problem when I worked in 3 different countries in the space of 18 months. What made it even worse was that each required you declare your "overseas income" for their tax year, and none of the three countries had tax years that lined up (some when from July->June, some when from October->September, the other, Jan->December). And on top of that, there were tax treaties between each that allowed for special rates for certain types of income. You'd get totally screwed if you didn't take advantage of the treaties, but it also required reading said treaties. Fortunately, many tax treaties are structured the same otherwise it'd be damn near impossible.

I couldn't find a tax professional prepared to help out either. Most accountants like to keep things within their own borders.

Re:This is how it's done where I'm from... (0)

Anonymous Coward | more than 4 years ago | (#30879876)

It is not a good idea because it promotes high taxes and cheating...

Imagine the following. Accountant sits at table. Let's see what the government thinks you owe, and let me calculate what you should owe. Oh look, the government does not know about that. I suppose lets let sleeping dogs sleep...

A French citizen once told me the reason why French taxes are so high is because they expect you to hide half of it. I thought that was crazy, until I started living there. It was at that point people asked, "ok so will you be paying this with receipt or in cash? We need to know so that everybody in the food chain will do the same."

Pre-filling is NOT a good idea... Or let me rephrase this. Its great for the taxpayer, really bad for the government.

Re:This is how it's done where I'm from... (5, Informative)

c-reus (852386) | more than 4 years ago | (#30879958)

In Estonia, you log in to the web page of the IRS equivalent, click "Next" a few times, then click "Confirm" and you're all done. No dead trees involved.

In US private companies do this, only gov't can't (4, Insightful)

perpenso (1613749) | more than 4 years ago | (#30880018)

In the US private companies are able to fill in your data electronically. Your employer, banks, etc can download their data (essentially the forms the IRS has them mail to you) directly into your tax preparation software. It is only the gov't that finds such things infeasible.

--
Perpenso Calc [perpenso.com] for iPhone and iPod touch, scientific and bill/tip calculator, fractions, complex numbers, RPN

In Switzerland (1)

rduke15 (721841) | more than 4 years ago | (#30880048)

In Switzerland, authorities don't get information from employers or banks, so they cannot pre-fill the forms.

However, they do offer a free tax program for download, which makes things much easier. It takes care itself of the very complex rules for various deductions, so it makes the forms quite easy to fill. It also shows directly how much you will have to pay, and prints the forms out for sending.

(and it's a Java program with Windows, Mac and Linux installers; only Amiga users have been left behind...).

Conflict? (5, Insightful)

mapinguari (110030) | more than 4 years ago | (#30879616)

Intuit would probably argue that it's a conflict of interest to be both a tax payer and tax preparer.

Re:Conflict? (0)

oddaddresstrap (702574) | more than 4 years ago | (#30879756)

Actually, in TFA they argue that it's a conflict of interest to be both a tax collector and tax preparer.

Re:Conflict? (1)

nextekcarl (1402899) | more than 4 years ago | (#30880088)

The OP meant they wouldn't be surprised if Intuit tried to argue you can't pay your taxes as well as prepare them yourself.

Re:Conflict? (3, Insightful)

timeOday (582209) | more than 4 years ago | (#30879772)

Oh yes, the tax preparation services will fight this tooth and nail.

Almost every year about this time I post some sort of rant about how wasteful it is that we don't even have a free, official online tax-filing website. It would save filers tons of time, it would save the IRS tons of money. But the tax preparers don't care about that (after all, $1 of intentional government inefficiency is 25 cents of income for them) and somehow, though I can't figure out how, this tiny special interest has the power to dictate government policy.

MakeWork America (1)

Neuroelectronic (643221) | more than 4 years ago | (#30879854)

Haven't you heard? We're the most productive people on the face of the planet.

Re:Conflict? (3, Informative)

nbauman (624611) | more than 4 years ago | (#30879944)

http://www.opensecrets.org/orgs/all_summary.php?id=D000026667&nid=3868 [opensecrets.org]

Intuit Inc

Rank: 598th
2008 total combined contributions: $818,259
2008 federal-level contributions: $394,475
2008 state-level contributions: $423,784

That's a pretty good return on the dollar.

Re:Conflict? (3, Informative)

jenn_13 (1123793) | more than 4 years ago | (#30880118)

Almost every year about this time I post some sort of rant about how wasteful it is that we don't even have a free, official online tax-filing website. It would save filers tons of time, it would save the IRS tons of money. But the tax preparers don't care about that (after all, $1 of intentional government inefficiency is 25 cents of income for them) and somehow, though I can't figure out how, this tiny special interest has the power to dictate government policy.

It's not exactly "official", as you have to go to a third party, but you can file online free. I worked as a tax preparer one year, and from my experience, the reason most clients chose $tax_service instead of doing it themselves (paper or online) wasn't because they couldn't, but because $tax_service offered refund anticipation loans. Which means they get a check for several thousand, less a couple hundred in fees, the next day, rather than waiting a week or more for direct deposit of the full refund.

Re:Conflict? (0)

nbauman (624611) | more than 4 years ago | (#30879774)

They did.

Either you are very insightful, or you read TFA.

Re:Conflict? (1)

Ironsides (739422) | more than 4 years ago | (#30880112)

Not only have they, they also have a point based on current IRS rules/laws. Currently, if the IRS tax software screws up, it's your fault. The burden is always on the tax payer, not the IRS even if the IRS is the one that is at fault. So, who are you going to trust? The IRS who would prepare your Tax Return AND is the one who will penalize you if the Tax Return is wrong? Or the third party that guarantees their software is correct and backs it up with cash if it is wrong?

That said, I wish we could go to a simpler system that means we wouldn't need to wrack or brains in frustration every year. We could replace the entire Federal Income Tax with a 12.68% flat tax and still collect the same amount of money as we are now. See Cell B 57 [irs.gov]

In Holland they already do (1, Interesting)

Anonymous Coward | more than 4 years ago | (#30879624)

In Holland they already do that. You only have to change everything that you think is incorrect.

Funny that you mention California (3, Interesting)

drinkypoo (153816) | more than 4 years ago | (#30879626)

They still think I owe them over $5,000 for back taxes, even though all the documents were sent directly to them and they know precisely how much I made and/or didn't make, and only ever owed them about a hundred and fifty bucks (which has long since been paid off.) they stole a bunch of my money through withholding to which they were not entitled, and since I passed some arbitrary deadline without getting it all resolved, they intend to keep it. Fuck California and the California Franchise Tax Board in the neck.

With that said, if you don't have to file if you make less than the exemption amount, why should you have to file if you don't have any unusual economic activity to account for? That's ridiculous.

Re:Funny that you mention California (1)

TomXP411 (860000) | more than 4 years ago | (#30879804)

It's not THAT hard to file a corrected tax return. Just download the forms from the FTB site and do it. And file electronically next time. The $40 is well worth it to make sure it's not "lost in the mail". Don't blame others when you dropped the ball.

Re:Funny that you mention California (2, Insightful)

drinkypoo (153816) | more than 4 years ago | (#30879852)

Don't blame others when you dropped the ball.

Your argument is that even though California had all the data to know that I didn't owe them the money, it's my fault? Blaming the victim is not only wrong, but will win you no friends.

works fine in Sweden (5, Informative)

BuR4N (512430) | more than 4 years ago | (#30879638)

pre-filled tax forms that you only have to sign and return have worked well here in Sweden for years, no conflict of interest at all. A couple of years ago, they even started with an SMS option, where you just can "ok" your pre filled tax form with an SMS code.

If you want to add information, you can just fill in your own form and send it in, but I think its pretty common to just use the pre-filled tax form.

Re:works fine in Sweden (0, Troll)

timeOday (582209) | more than 4 years ago | (#30879812)

In the US, we do whatever rich special interests tell us to do. Look at the health care industry, and still reform is apparently about to fail. It's disgusting.

Re:works fine in Sweden (0)

Anonymous Coward | more than 4 years ago | (#30879870)

Thats the price you have to pay to be a "superpower", population is controlled, subtle like in the US, or not-so-subtle like in China or Soviet Union.

Re:works fine in Sweden (5, Funny)

Anonymous Coward | more than 4 years ago | (#30879858)

You know, when I was reading your post, I thought Sweden, eh? Wavy line... wavy lines...

Knocking at the door. Swedish male citizen goes and answers it.

Beautiful blond is at the door. (Translated to American)"Hi, I'm with the Revenue Service and I have your tax form. Do you want to have sex before or after reviewing your tax form?"

Swedish make citizen: "Um. Let me ask my wife. Honey, should I have sex with the tax collector before or after reviewing the form?"

Beautiful blond Swedish wife walks in: "Listen YOU! We filed jointly so it HAS to be a threesome before AND after reviewing the form!"

Tax collector: "That's IS the law! File jointly and it's a threesome! I'm terribly sorry!"

So this is the way it happens over there, right? Really?!?

Re:works fine in Sweden (1)

SerpentMage (13390) | more than 4 years ago | (#30879890)

Ah yes is Sweden also not the place with the highest amount of deductions? You get taxed out of the wahzoo, and the only real way to lower your taxes is to start claiming things. So are you saying by not claiming things you are happy to pay such high taxes?

Re:works fine in Sweden (5, Insightful)

nanoakron (234907) | more than 4 years ago | (#30880020)

Whilst I don't live in Sweden (I'm in the UK), I have to ask quite what your point is?

The Swedes may pay more in taxes, but in return get free healthcare, good roads, low crime, free schooling and university, (i believe) free (or heavily subsidised) childcare, efficient public transport, and much more.

They're also very highly rated in terms of their low wealth disparity (road fines for example are based on a percentage of your annual income so that a rockstar in a ferrari feels the same sting in their speeding ticket as does a poor person in a skoda), and human development index.

I could go on. The key point is that nations all make decisions about their priorities - the US believes in waging war and keeping the poor unhealthy and uneducated, other nations do not.

tl;dr - high taxes are worth paying if you get good services in return. Think of Sweden as the 'Apple' of nations, versus the 'Windows Me' of the USA.

Re:works fine in Sweden (0)

Anonymous Coward | more than 4 years ago | (#30880090)

The same for Spain: by mail, by internet (via web, or a full app), by SMS...
They got all my bank, and employer data, and even donations are automatically added. They have retirement funds, mortgage, etc.
It can't be easier, to pay taxes! We're so happy!

people are lazy (3, Interesting)

circletimessquare (444983) | more than 4 years ago | (#30879640)

intuit is right: the government will claim this or that, and people will just accept it. when an honest mistake by the government, nevermind malicious intent, might wind up overtaxing someone. most people will wind up spending say $2,000 more on their taxes, accepting the government's proposal unseen, rather than reviewing it for mistakes

i don't know about other people, but for me, i'd rather pull my own fingernails out with a wrench than do my taxes. however, the current status quo means that if there is an error, whether honest mistake or malicious, it is usually in favor of the individual, not the government

Re:people are lazy (5, Informative)

samkass (174571) | more than 4 years ago | (#30879742)

the government will claim this or that, and people will just accept it. when an honest mistake by the government, nevermind malicious intent, might wind up overtaxing someone. most people will wind up spending say $2,000 more on their taxes, accepting the government's proposal unseen, rather than reviewing it for mistakes

I don't have a problem with that. You can't save everyone. The amount of efficiency in the average case would be so great, though, that overall I suspect it would offer more money to both the government AND the taxpayer.

Re:people are lazy (2, Informative)

Klinky (636952) | more than 4 years ago | (#30879784)

If there is an error in favor of the individual, if it's significant, the IRS may bring on an audit. If you catch the mistake after you file, your amended return gets more scrutiny and you have a higher chance of audit. I wouldn't sleep soundly if I knew there was an error and just let it slide because it gave me a couple extra bucks. Basically, if there is an error it needs to be fixed, you don't just want to sleep on it and go "well at least this worked out in my favor". As far as people being duped into what they owe. There could be a very simple summary provided, along with the pre-filled forms. "You made X, so you are in this tax bracket, so we need this much money and you paid this much money, so this is how much you get back or you owe". If the values don't jive, then people can review the actual forms or take it to a professional to review. Even professional tax preparers mess up & the individual may not know it at all, so I don't see much danger with a pre-filled tax form. Frankly Intuit & the like make too much money on what basically amounts to a couple data entry boxes & a macro that pre-fills forms w/ simple mathematics. That'll be $49.95 please, let's not get started on the B&M places that like to charge $100+ so you can have a human go to the website for you.

Re:people are lazy (1)

AnonymousCactus (810364) | more than 4 years ago | (#30879888)

I have no problem with people paying more if they are lazy.

I'm also pragmatic - most people are probably too lazy to truly review the the information sent to them anyway.

Do you double-check your W2's against your pay stubs? Most people don't.

It might end up being more fair, if the government does it, they might end up being responsible for ensuring you don't get totally screwed. Right now, you're the only one responsible for that.

Re:people are lazy (1)

Capt. Skinny (969540) | more than 4 years ago | (#30880076)

i'd rather pull my own fingernails out with a wrench

A wrench? Good luck with that.

We've had that for years in Norway (5, Informative)

TickTEC (909288) | more than 4 years ago | (#30879642)

Here in Norway, if you feel you have nothing to add, you don't even have to return the papers. Just sit back and relax. I've never had to fill out anything.

Re:We've had that for years in Norway (2)

Kjella (173770) | more than 4 years ago | (#30879824)

The moderators seem to think you're joking, but the right moderation is informative. We actually have passive acceptance, if you have no changes to make you don't have to do anything at all. And the government gets quite substantial amounts of data from employers, banks, property registry, car registry etc. so many people have nothing that needs changing.

Re:We've had that for years in Norway (1)

jra (5600) | more than 4 years ago | (#30879850)

> And the government gets quite substantial amounts of data from employers, banks, property registry, car registry etc. so many people have nothing that needs changing.

And you say that like it's a *good* thing...

Re:We've had that for years in Norway (1)

Watson Ladd (955755) | more than 4 years ago | (#30880040)

This is a state that got burned badly when the Nazi's came and used the records. Now they have very strict laws on how to handle it. I would not be surprised if the contingency plans include destroying every record when invaded, to make a real mess for the occupying power.

We have it already.. (1)

EyelessFade (618151) | more than 4 years ago | (#30879644)

In Norway we have had pre-filled tax sheets for several years. Now we don't even have to send it in if its already correct.

An invitation to defraud (1, Insightful)

Anonymous Coward | more than 4 years ago | (#30879646)

If the IRS were to list everything it knows, wouldn't that be an invitation to cheat on your taxes? As it stands, we have an incentive to report everything, because if the IRS knows about income and we don't include it on our 1040, we get busted. But if the IRS tells us what it knows, many (if not most) people would simply pay the tax on that, and neglect to report the rest.

Re:An invitation to defraud (2, Insightful)

drosboro (1046516) | more than 4 years ago | (#30879720)

Except it will be the same situation - say, the employer sends in the information too late to make it onto your prefilled form, you cheat and don't pay taxes on it, and then the IRS gets the paperwork and reviews your file. You'll still get busted, just with less paperwork ahead of time!

Re:An invitation to defraud (1)

jra (5600) | more than 4 years ago | (#30879722)

+5, "good point"

Re:An invitation to defraud (1)

SerpentMage (13390) | more than 4 years ago | (#30879914)

Yes, this is why the posters in Europe say, "oh oh we do this already."

You see to get any salvation from the high taxes in Europe you just have to claim. Drive to work? Claim those kilometers. Need education for work, and clothes for work? You need to claim that.

The reality is that in Europe if you were to ok the taxes as is, you would be paying too much. Hence you fill out the tax forms and try to find every taxloophole there is.

Since I get paid to be paranoid (0, Troll)

jra (5600) | more than 4 years ago | (#30879654)

I'll post here the same scenario I email to Stross -- and *damn* that story made it up fast; @NYTimes just tweeted it like 20 minutes ago; did we roto-root the pipeline?

If you're the government, and you know you don't have to take responsibility for the results (since the law says they don't; it's all on the taxpayer), don't you think you're gonna err on the high side?

Rebate form return percentages (I think they plan on 40% coming back in) prove that lots of people are just going to take your word for it -- and if you don't think that's a reasonable assumption, you're probably a slashdotter. Or some other sort of geek. Nerdview is great.

And if people *do* correct the amount down, a lot of them probably won't say anything about it, on the theory that they got away with something, and don't want to queer the pitch, so aggregating data on how *often* the IRS gets away with it is less likely.

www.fairtax.org, people. If there's *no* IRS, this stuff's all not a problem.

Just sayin'

Re:Since I get paid to be paranoid (2, Informative)

jra (5600) | more than 4 years ago | (#30879706)

And, um, PS: before you go dissing fairtax.org, *actually read their site*; there are several flat-federal-tax proposals out there, some of which *are* snake oil. Theirs does not appear to be, to me.

Re:Since I get paid to be paranoid (1)

jra (5600) | more than 4 years ago | (#30880028)

And no, I'm not trolling, nor am I paid by fairtax.org.

Normal procedure in Denmark (0)

Anonymous Coward | more than 4 years ago | (#30879660)

Prefilled electronic tax returns have been the normal procedure in Denmark for a few years. No papers need be sent either way even if changes are required by the tax payer.

Done in Norway (0, Redundant)

Dionysus (12737) | more than 4 years ago | (#30879662)

Every April, you get pre-filled form. If you disagree with the return, you just update with the correct information. If you do, you just send in the finished form.

Conflict of interest (1)

mspohr (589790) | more than 4 years ago | (#30879664)

Interesting logic on Intuit's part. It shows the extent to which corporations will go to justify their existence.

Our current system relies on the taxpayer to disclose income and deductions. Isn't it a conflict of interest to have the person paying the taxes decide what to tell the government? In the current case, only the people who know what information the government collects (W-2, 1099 i.e. people who don't get paid in cash) disclose everything.

Re:Conflict of interest (2, Informative)

TomXP411 (860000) | more than 4 years ago | (#30879934)

It's a conflict of interest for the clerk at Wal-Mart to tell me how much I owe AND collect my money?

The real conflict of interest is for corporations to give money to election campaigns.

The root cause of this is that corporations have too much power in our system. Corporations buy politicians and they buy court verdicts. It's just wrong, and we need to fix the system, starting with the "golden rule".

In court, make the richer party pay for both lawyers, and eliminate corporate contributions for political campaigns and ballot measures. Then maybe the PEOPLE can run this country.

Beneficial to Be Difficult (4, Insightful)

tarsi210 (70325) | more than 4 years ago | (#30879674)

I wonder how much the IRS figures into its revenue stream the profit obtained via people filing taxes and not knowing what they're doing. Folks who use professional preparation services no doubt get them correct most of the time and owe the correct amount (or get the right refund), but how many people are just doing it via paper and submitting, and, due to the arcane, maze of rules and regulations, overpay and don't claim the exemptions they should?

Leave it up to the IRS -- they probably have it figured out that if they pre-fill items on forms, that means less error and less money. Plus, this gives them more opportunity to audit and assess fees. Whee!

Re:Beneficial to Be Difficult (4, Interesting)

QuantumRiff (120817) | more than 4 years ago | (#30879780)

And of course, why do individuals who know what they are doing have no way to pay or file with the IRS directly? I should be able to submit my 1040 electronically for free, from the IRS.gov website. Instead, I have to go to a 3rd party, where my income levels dictate I have to pay, even though I know what I need. That is just protectionism..

Re:Beneficial to Be Difficult (4, Interesting)

Swave An deBwoner (907414) | more than 4 years ago | (#30879898)

I wonder how much the IRS figures into its revenue stream the profit obtained via people filing taxes and not knowing what they're doing. Folks who use professional preparation services no doubt get them correct most of the time and owe the correct amount (or get the right refund), but how many people are just doing it via paper and submitting, and, due to the arcane, maze of rules and regulations, overpay and don't claim the exemptions they should? Leave it up to the IRS -- they probably have it figured out that if they pre-fill items on forms, that means less error and less money. Plus, this gives them more opportunity to audit and assess fees. Whee!

As someone who has previously received a refund on tax paid in error, I think that IRS doesn't use the trick you're wondering about at all. If they find that you have overpaid, they refund the overpayment on their own.

Of course they can't know what exemptions you are entitled to unless you have told them already, e.g. via the W-4 form that you filed with your employer and which the employer used to determine how much of your income to withhold for the IRS.

For most people, the proposed method would probably work out just fine. Rich people who have complex tax filings would just continue to have their accountant handle the issues. Those who fall in-between could still use TurboTax :-)

Re:Beneficial to Be Difficult (1)

OzPeter (195038) | more than 4 years ago | (#30879922)

In Australia a few years back (well more than 10 or 15) they streamlined the process for filling out taxes. The government produced a really nice paper document that walked you through the exact process of what to fill out and where to do it. In the following years tax revenue was down because people were claiming exactly what they were entitled to. Later on the process was made slightly more confusing. I remember cynically thinking at the time why things were changing again.

Tax return by SMS (0)

Anonymous Coward | more than 4 years ago | (#30879680)

In Norway, unless you had any changes to perform, you could accept the tax papers by SMS since 2003. In fact, so few people made changes that since last year you don't even need to reply unless you have changes. Reply can be by post or on the Web site of the tax authorities.

Because they win by making you do it (1)

nedlohs (1335013) | more than 4 years ago | (#30879686)

Either you get it right, in which case same result to them.

Or you pay to much, in which case they win.

Or you pay too little, in which case they hit you with interest and penalties and win again.

Intuit (1)

Brian Gordon (987471) | more than 4 years ago | (#30879698)

I don't know how they can possibly defend that position. The very necessity of a tax-preparation industry is insane, and the only way they get away with it ethically is by blaming the government for having such complicated tax laws. But there's no way for them to reasonably object when the government makes things simpler and more efficient.

Intuit is evil anyway. Charging $50 for the same software every year.. Not to mention SafeDisc.. [slashdot.org]

Re:Intuit (1)

frdmfghtr (603968) | more than 4 years ago | (#30880050)

SafeDisc is why I use H&R Block TaxCut.

As an independent tax preparer... (1)

the roAm (827323) | more than 4 years ago | (#30879700)

I must say, shut up! I like my easy money, damn!

Private monopoly? (0)

Anonymous Coward | more than 4 years ago | (#30879712)

I don't understand why americans (or at least some of them) defend that their own government, an organization which should at least in principle defend their own best interests, should just avoid providing any service which is remotely related to any offering made by a private entity. I mean, if you happened to get together with a group of friends and decided to provide a service for free and some company happened to already provide it for a price would it made any sense to get people complain and whine about your free service just because a private company is already providing it? That doesn't make sense to me.

Because they don't have to (1)

Gothmolly (148874) | more than 4 years ago | (#30879714)

It's Schernau's Razor - "if you do the work, then I don't have to". The IRS is in BUSINESS to collect, process, and audit (the incorrect) returns. They are not required to show any efficiencies, why would they? Every little Napoleon in the org chart beefs up his staff as much as he can.

Re:Because they don't have to (1)

LynnwoodRooster (966895) | more than 4 years ago | (#30879900)

The IRS is in BUSINESS to collect, process, and audit (the incorrect) returns.

Oh, they audit correct returns, too! And they'll come up with completely bogus numbers as well forcing you into the position of being guilty and having to prove your innocence. If they think you made too little based upon where you live [nwsource.com] - even if you can prove it was enough - you'll still get audited and forced to prove your innocence.

It's very possible (1)

JoostT (88174) | more than 4 years ago | (#30879730)

At least in the Netherlands. We have digital form, that downloads the data the goverment posseses when you start it up with your social security number. The conflict of interest line is bullshit to me: You only get the figures the goverment got from banks and employers, nothing more (or less). Works like a charm, I get my taxes done (and those of my wife) in about an hour. (And businesses are required to use a digital tax return and all vendors of accounting software can file a tax return from within the accounting software, this is not exactly rocketscience. Intuit should be the one asking for a facillity to make this possible in their program)

Joost

Wrong Question. (-1, Troll)

Anonymous Coward | more than 4 years ago | (#30879732)

Why can't the federal government pre-fill out my tax form for me? That's the wrong question. A better question is, why am does the federal government insist on an income tax model which requires citizen to pre-pay their taxes, by way of required employer deductions, before they actually make any money and then require the citizens to shoulder the responsibility of proving that they don't owe any more money by filling a tax return form, even though the minimal required deductions are usually too large, resulting in interest free loans that the federal government seizes.

Let's ask the real question. How can we move to a federal tax system that will work, with the massive waste of time and energy required by the current income tax/IRS model. www.fairtax.org.

Re:Wrong Question. (1)

jra (5600) | more than 4 years ago | (#30879864)

Hey; there's an echo in here. ;-)

Article is about the USA, UK does this already (1)

StrawberryFrog (67065) | more than 4 years ago | (#30879744)

Why, if your needs are simple, can't you just download forms pre-filled with whatever data the IRS has received about you, make any necessary adjustments, and automatically get the IRS calculation of your taxes

But IRS does more than this - if your employment is simple, you don't have to fill in any forms at all.

oh, wrong country.

Well, it's a good question - why can't your IRS also do this?

4-0 SWE - USA (1)

ard (115977) | more than 4 years ago | (#30879760)

* Pre-filled tax returns - Check
* All banks require login and signing via OTP pads - Check
* Bank-ID provides electronic signatures - Check
* The SSID-equivalent "personnummer"/birthdate is publically available without posing risks since its not used for authentication - Check

Re:4-0 SWE - USA (1)

ard (115977) | more than 4 years ago | (#30879764)

err, SSN, not SSID of course :)

How could they justify an audit? (1)

LynnwoodRooster (966895) | more than 4 years ago | (#30879826)

After all, if the Government makes all the claims about you, and fills out your form, how can they hold you liable for their mistakes? Makes getting people charged with tax fraud and perjury and threatening them with jail time if they do not pay up the dollars demanded pretty hard...

Re:How could they justify an audit? (1)

jra (5600) | more than 4 years ago | (#30879880)

In fact, if you ask the IRS for advice on how to handle a tax issue, and they give it to you (which is unusual), they *still* disclaim responsibility for their possibly being wrong, and people have undergone financial and (I think) criminal sanctions *for believing what the IRS told them*.

Re:How could they justify an audit? (1)

LynnwoodRooster (966895) | more than 4 years ago | (#30879956)

In fact, if you ask the IRS for advice on how to handle a tax issue, and they give it to you (which is unusual), they *still* disclaim responsibility for their possibly being wrong, and people have undergone financial and (I think) criminal sanctions *for believing what the IRS told them*.

I know, it's happened to me. In fact, the IRS - for 7 years in a row - assigned my LLC a new EIN every year because of a typo in their systems, and promptly sent the new EIN information to an address I had not lived at for 6 years (even though they had the right address for the proper EIN). It took the better part of 2 years and around $250,000 in costs and lost levies (illegally attached, but after 21 days it doesn't matter - they get to keep the cash regardless of their error in the levy) to get it straightened out and PROVE their error and that no, I did not fail to report income on 7 other businesses.

And of course, when I went to counter-sue for the damages it was immediately dismissed because I could not provide evidence the IRS acted with malice or intent to damage. Basically the courts will indemnify errors by the IRS as "honest mistakes" but Mr. Taxpayer is treated as the scum of the earth and forced into near-bankruptcy (or forced to admit that which didn't happen - capitulate) to PROVE their innocence.

Innocent until proven guilty doesn't exist for tax laws; it's guilty as charged unless you can prove beyond any doubt that you were innocent, and even then you have to bear all costs associated with your own defense.

Re:How could they justify an audit? (3, Informative)

russotto (537200) | more than 4 years ago | (#30880082)

In fact, if you ask the IRS for advice on how to handle a tax issue, and they give it to you (which is unusual), they *still* disclaim responsibility for their possibly being wrong, and people have undergone financial and (I think) criminal sanctions *for believing what the IRS told them*.

If you get the advice IN WRITING (I think this means dead trees), you can escape penalties and criminal sanctions. You're still on the hook for interest and taxes.

Re:How could they justify an audit? (0)

Anonymous Coward | more than 4 years ago | (#30880004)

1) "By signing here, you indicate that you have fully read these forms and that all information is correct, blah blah blah"

2) It's generally self-employed people claiming rather questionable deductions who have trouble with audits, not regular 'workers'.

works in Estonia (1)

heitikender (655816) | more than 4 years ago | (#30879836)

In Estonia you log into e-tax dept webpage via bank or ID-card and click OK couple of times on prefilled form and that's it. If surplus, they transfer it to your bank account.

Increases Fraud (4, Insightful)

mikeplokta (223052) | more than 4 years ago | (#30879842)

If the IRS pre-fills what the government knows about on the form, then that tells you what the government doesn't know about, and thus can safely be omitted. If you get a blank form, there's always the risk that the government knows about your offshore account and will prosecute you for omitting it.

Re:Increases Fraud (1)

mathcam (937122) | more than 4 years ago | (#30880064)

+1 insightful

UK Tax Returns (4, Informative)

nanoakron (234907) | more than 4 years ago | (#30879878)

Here in the UK, most people pay tax through the PAYE (Pay-As-You-Earn) scheme. The only people who regularly don't are the self-employed.

This means that the majority of the working population NEVER need to file tax returns.

However, some people do regularly file tax returns -

1. People asked to do so through random audit
2. If you are considered a 'high-rate' taxpayer (meaning you earn more than about £36,000pa).

But, you can elect to file a tax return even if you earn less than the 'high-rate', and you can often get some money back for overpayments.

I still can't believe the amount of hassle you have to go through in the US each year when it comes to tax-time.

-Nano.

Fair Tax (1)

Edward Teach (11577) | more than 4 years ago | (#30879886)

The IRS shouldn't even exist. Why tax productive work? Why not tax consumption? The more you buy, the more tax you pay. If you save and are thrifty, the less tax you pay.

http://www.fairtax.org/ [fairtax.org]

Re:Fair Tax (1)

Watson Ladd (955755) | more than 4 years ago | (#30880094)

Because of deadweight loss.

Chile Does it (0)

Anonymous Coward | more than 4 years ago | (#30879912)

I have to file income tax returns in Chile and the United States. My tax returns take about 5 mins to file in Chile including logging in, reviewing the information, and hitting the submit button on their web site (yes, it is free). I spend far more time deciding where to spend my refund, than doing my tax returns every year.

By contrast, it takes me nearly one to two weeks on average ( perhaps 40 hours in total ) to do my taxes in the States (The IRS estimates 120 hours for the forms I have to fill out). The really sad things is I don't even owe the U.S. any money. That is just to tell them I don't owe them any money.

anyone can, few do (1)

ticktickboom (1054594) | more than 4 years ago | (#30879932)

if people actually glanced at the tax code, within the first page it states that the act of paying tax is VOLUNTARY.
that's why they should do it for you, its voluntary. when it becomes mandatory, they could do that...

go to the public library, look at the 2009 tax code. opposite the front cover, there it is..

this does not mean you don't have to pay tax. if you don't pay the protection money, they will fine or jail you.

What happens here (0)

Anonymous Coward | more than 4 years ago | (#30879946)

That's what happens here (Costa Rica). Your employer submits withholding tax like any other place - but you don't have to file anything at the end of the year unless you have additional deductions to make, or have other taxes you need to declare.

In the simple case where you only have a regular job and your kids go to public school, you generally have no reason to file anything.

IRS reducing their own size? Not likely. (1)

Above (100351) | more than 4 years ago | (#30879948)

The real issue here isn't companies, but the IRS itself. If it could computerize and provide pre-filled tax forms then the agency would need far fewer auditors, lawyers, data entry folks, and so on. No group, be it inside a company or in government likes to take actions that reduce their size and perceived importance even if it is the best thing to do.

The US greatly needs to simply its tax code, allowing things like pre-generated forms to be accurate for a much larger group of Americans. While this will save billions in costs at the IRS and in money spent preparing taxes, and thus is a net win for the economy in the long term it will have the effect to putting hundreds of thousands of people out of work in the short term. All our elected officials think about is the short term, so that trumps.

If you want to fix the root of the problem, then implement term limits. If our elected officials could only serve one or two terms then they would be much less incentivized to figure out how to make a career out of corporate contributions, and much more likely to do what is right for the future.

In Canada I owned a small limited company. (1)

JoshDD (1713044) | more than 4 years ago | (#30879964)

In 2006 I dissolved to company got everything in order forgot about it. Then a couple years later Revenue Canada contacted me about a T-5 slip that hadn't been properly filed, turns out the accountant goofed. Well I got everything in order and it was determined that the gov actually owed me money. Well they went and instead of paying me levied a penalty for late filing, which I paid. Well when it was their turn to pay they said your company doesn't exist any more we can't pay you. Funny how I had to pay them from my own pocket for a company that didn't exist but then they don't pay me what they owe me.

A Grand Idea.... (1)

Shaltenn (1031884) | more than 4 years ago | (#30879966)

This is a grand idea that I am mostly in favor of, but before we proceed to that there is something I would like to see first...

Namely, do away with the retarded fee to file my state taxes online. I purchased TurboTax and it lets me file my federal for free, but there is a fee ($20 or something, I'm not sitting at that machine at the moment so I can't verify it) to file! And if I want to use part of my return to pay that fee, it costs me an extra $30. How retarded is that.

Tax returns violate the 5th Amendment (1)

MyFirstNameIsPaul (1552283) | more than 4 years ago | (#30879972)

But who cares about that? When the Federal Government first started offering 'free' electronic filing for 1040EZ, I took advantage of it, only to discover that I was forced to use 3rd-party software, all of it online. I tried two different vendors; one was Intuit and the other I forget. I could not do anything close to just quickly filling in the information because they wanted to treat me as a 1040A filer or something and force me to answer a million questions about everything. Then, after answering all the questions, they claimed I was not an EZ filer and thus had to pay money. This was false because there was no way I had enough deductions to waive the standard deduction, especially based on the information they asked for. I tried for 4 hours to navigate their byzantine system and was never able to get my 'free' return.

I ended up going to the IRS website and in less than 5 minutes I found, downloaded, filled out, printed, signed and had the sealed envelope in the mailbox. I've been paper filing ever since and I won't change until I have to fill out something besides an EZ.

This would lead only to more cheating. (0)

Anonymous Coward | more than 4 years ago | (#30879992)

Imagine that the IRS only fills in 2/3rds of your income. Are you honest enough to add in the missing 1/3 or are you
a cheat and are going to "feel lucky" that they don't know about your missing income?

Most of you are cheats and you know it.

As an accountant, I can say this won't work (1)

cualexander (576700) | more than 4 years ago | (#30879996)

I have since gotten out of this business, but I used to prepare tax returns in a small town. People would come to us with 1 W-2, and a few dependents to claim. Take me all of 5 minutes to do the return, especially if they were a previous client as it would pre-fill prior information. We would collect anywhere from $150 to $200 for a return like this, because we would file it rapid refund so they could get a check back from the bank the next day. I told people they could E-file the whole thing for $75 and get the money in a couple weeks, sometimes less than that if you timed it right, but they wanted the money the next day. Sometimes people would even pay more and get $1000 instantly, and the rest the next day. These same people wouldn't drive 2 blocks down the road to the public library and file for free and wait for their refund, so what makes you think they would file it for free with the IRS? Also a lot of these people were lower income people who didn't even have a bank account because they don't trust banks, what makes you think they are going to trust that the government is not screwing them on their tax return? I wouldn't trust the IRS. I personally saw many mistakes the IRS would make processing people's returns, which would cause them lots of time and money to get straightened out. For the above reasons, this will never happen.

Because they want to see if you'll lie (1)

whterbt (211035) | more than 4 years ago | (#30880012)

This should be blatantly obvious. Of course they already know most of the answers. But they're using this as a test of your honesty. Why should the IRS go through a lot of work to make your return slightly easier, when they're benefiting from having you self-report?

If your answers don't match what they already know, they can fine you up the wazoo, charge back interest, etc. Much more profitable and less work.

Simplified filing. (1)

Retief-CDT (409607) | more than 4 years ago | (#30880032)

Back years ago there was a push to have simplified tax filing. It lasted for only a short time for reasons that never were explained. I used HRB filing software and instead of printing out all the form data you could chose to print out only the amounts on a one page return, sign and mail. It was much easier than what was to come of printing out reams worth of paper ( I had a small business then). Initially the 1040EZ back then was in truth "Easy" and the 1040A was fairly straight forward. Not anymore.

  Every year there is talk about making filing better and every year it gets more complicated. It should be able to simply be done without having to pay a preparer for the majority of people.

Even better idea... (0)

Anonymous Coward | more than 4 years ago | (#30880062)

www.fairtax.org

Postcard for taxes (0)

Anonymous Coward | more than 4 years ago | (#30880066)

Any tax system that doesn't handle every income tax situation on a postcard is abusive.

You've all heard of the Fair Tax http://en.wikipedia.org/wiki/FairTax [wikipedia.org] - basically a national sales tax that attempts to be revenue neutral. Best of all people not paying taxes today will pay in the future. People not in the country legally won't get their "food rebates", so they will pay a higher tax than others (which seems fair to me).

I hate the 20+ hours I spend working through my personal taxes every year. Something needs to change and paying an accountant, CPA or tax attorney isn't my idea of good change.

Tsk, tsk... (0, Troll)

srussia (884021) | more than 4 years ago | (#30880068)

Everybody's hot and bothered about the HOW, begging the question of the LEGITIMACY of taxes in the first place.

Obligatory Pynchon quote: "“If they can get you asking the wrong questions, they don’t have to worry about answers.”

U.S. Government Policy... (1)

Anna Merikin (529843) | more than 4 years ago | (#30880092)

has, is -- and will be in the foreseeable future -- not to provide services for free which are already provided by commercial ventures unless the citizen can prove very low income and inability to pay.

Some cynics may even say the entire tax code is a guarantee of lifetime employment for accountants, but that may be far-fetched.

Or not.

From experience, advantages of prefilled in forms (0)

Anonymous Coward | more than 4 years ago | (#30880116)

In France you get pre-filled filled in forms where as in Ireland they not (including the online tax returns)

I find the advantages of pre-filled in forms are
Easier to return the correct figures.
Easier to spot any mistakes the tax office may have.
Could end up paying less tax, as it is easier to claim all your allowances.
Saves having to look up details on the website (or phoning them) just to give it back to them a few minutes later.

How is it a conflict of interest for a government dept to be doing what should have being doing all along, but was too expensive to implement in the past. If I was in the USA I would think of boycotting Intuit for their stance.

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