[HN Gopher] IRS will look into setting up a free e-filing system
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IRS will look into setting up a free e-filing system
Author : susiecambria
Score : 435 points
Date : 2022-09-07 16:53 UTC (6 hours ago)
(HTM) web link (www.washingtonpost.com)
(TXT) w3m dump (www.washingtonpost.com)
| rlewkov wrote:
| From the article: "The Internal Revenue Service will spend $15
| million _studying_ a free, government-backed tax filing system ".
| It's a long way from studying to implementing. Intuit pays their
| lobbyists to make sure this doesn't happen.
| bastard_op wrote:
| The stock price of Intuit dropped by like 10,000% with the sheer
| insinuation of such a thing occurring.
| mrtweetyhack wrote:
| perfectstorm wrote:
| They are going to look into it for $15 million dollars. Give that
| $15 million to a company like VMWare Tanzu Labs and they will
| deliver quality software which we can all use.
|
| That being said, i don't expect this to happen in the next
| 5-10yrs because of ~bribing~ err lobbying (because this is
| America). TurboTax and H&R Block are not going to let this
| happen.
| smm11 wrote:
| Only in the US would there be a system where you have to pay
| money to pay taxes.
| LinuxBender wrote:
| Will there be a beta or early adopter version for people to
| provide feedback and will it have a security/privacy bug bounty
| program from day 1?
| aaaaaaaaaaab wrote:
| Turbotax: _*sweating intensifies*_
| exabrial wrote:
| I would just rather get rid of taxes. Sort of tired of paying for
| the 1%'s beach vacations.
| kibwen wrote:
| Taxes don't pay for beach vacations of the 1%. At worst, they
| pay for the beach vacations of defense contractors and health
| insurance middlemen. The 1% pay for their beach vacations via
| record-high executive bonuses that are siphoned from the
| corporate profits that they refuse to share with their
| employees.
| exabrial wrote:
| Not quite.
|
| Where do you think all of this "student loan forgiveness"
| money is going?
| kibwen wrote:
| Now I'm interested to see where this is going. The
| plutocracy do not tend to regularly take out student loans.
| Federal student loans, the one the federal government has
| the power to discharge, were paid out of the pockets of
| taxpayers, where it was then used to fund the beach
| vacations of university administrators, a decade or two
| ago. Meanwhile, in the present, the beneficiaries of loan
| forgiveness are the lower-middle class college-educated who
| were poor enough to need a loan, rich enough to consider
| college in the first place, and unlucky enough to not take
| the one major (computer science) that would allow them to
| pay back their loan in the modern economy. Say what you
| will about student loan forgiveness, but at no point is any
| facet of it an appreciable vector of plutocratic wealth
| concentration.
| metadat wrote:
| Archive link: https://archive.ph/TtmGY
|
| https://web.archive.org/web/20220907130035/https://www.washi...
| exabrial wrote:
| The real solution to taxes and filing is: Have the government
| send me a bill each month.
| rconti wrote:
| One reason this has been difficult to get approve is that low-tax
| crusaders have been blocking it. However you want to frame that
| -- people who want no taxes at all, people who simply don't want
| taxes to go up more, whatever.
|
| Automatic income tax withholding was opposed for the reason
| reason(s). People who want taxes to be lower don't want the
| "pain" of taxes to be hidden. They want people to cringe every
| time they write a check for tens of thousands of their hard-
| earned dollars, not just have it magically spirited off to the
| government.
|
| Filling out taxes helps share some of the same pain. Every year,
| every tax filer thinks "man, taxes suck." This undoubtedly has at
| least some effect on voters' willingness to pay even more.
| ChicagoBoy11 wrote:
| I'm sympathetic to this argument IFF the standard were that I'd
| get my full pay, for instance, and then would be responsible
| for taxes later. I'd hazard a guess that conversation would not
| go over very well at all with my HR department.
| Spivak wrote:
| Which is fine, if you want the number to be front and center
| then do that, have the pain be in the sticker shock not the
| process of paying it.
| throwayyy479087 wrote:
| I agree - a better way to accomplish this aim is to have a
| free system, then send out a receipt to every filer saying
| "YOU PAID $133,349 IN TAXES"
|
| The IRS being the only org most people have to figure out
| what they owe money to is bizarre, especially given the
| penalties.
| divbzero wrote:
| > _People who want taxes to be lower don 't want the "pain" of
| taxes to be hidden. They want people to cringe every time they
| write a check for tens of thousands of their hard-earned
| dollars, not just have it magically spirited off to the
| government._
|
| This argument against automated tax filing seems to make sense
| to me. But if it's true, shouldn't we have manual tax returns
| for vehicles, real estate, sales, and fuel?
| RappingBoomer wrote:
| oh, that's nice of them to "look into it". Just about all the
| other western nations either do taxes for the citizens or provide
| a free system for citizens...
|
| a neoliberal exploitation plantation, if you can keep it...
| mikece wrote:
| Or they could save a TON of time and money by abolishing the
| income tax and going to a direct, national sales tax.
|
| (Or a 1% wealth tax on everyone... but our Billionaire Class
| won't stand for that.)
| candiddevmike wrote:
| National LVT is a better solution IMO
| Akronymus wrote:
| A wealth tax? Very bad idea.
|
| Is debt counted in? Is it a difference in wealth from one year
| to the next? What if someone has a reduction in wealth? What IS
| wealth? Is thr same asset taxed multiple times? What if someone
| has to liquidate something because of such taxes?
| ceejayoz wrote:
| > Is debt counted in?
|
| Typically, no. Assets minus liabilities.
|
| > Is it a difference in wealth from one year to the next?
|
| No.
|
| > What if someone has a reduction in wealth?
|
| They owe less the next year.
|
| > What IS wealth?
|
| Assets minus liabilities.
|
| > Is thr same asset taxed multiple times?
|
| It's taxed every year, to the person who owns it. If it
| changes hands mid-year, prorate.
|
| > What if someone has to liquidate something because of such
| taxes?
|
| Their asset becomes cash, they pay the tax with it, and their
| wealth is smaller next year. Hopefully they plan ahead better
| for it.
|
| Wealth taxes exist. Entire nations manage to get this all
| sorted out effectively.
| nightski wrote:
| It would be interesting seeing just how difficult it is to
| value assets effectively.
| jedberg wrote:
| Most countries that had a wealth tax repealed it or
| partially repealed it because it was too complicated.
|
| Namely, how do you value private assets? How much is a
| paining worth? Or your private company?
|
| Houses are easy to do because there is a ton of data and
| comparables (and even then wealthy people contest those
| assessments). Now imagine the government getting into the
| business of valuing private companies.
| ceejayoz wrote:
| Again, this is already done. Switzerland: (https://www.we
| althandpolicy.com/wp/BP133_Countries_Switzerla...)
|
| > The value of private companies is determined each year
| by the cantonal tax authorities based on an inter-
| cantonal administrative guideline agreed upon by the
| cantonal tax departments. Taxpayers may challenge the
| application of this guideline in court but appeals are
| rarely successful (cf. an example in section 0, below).
| In case the fair-market value of operational companies
| cannot easily be assessed (e.g. because of lack of recent
| sales between independent third parties), their value is
| determined according to the formulaic method, called the
| practitioner's method. A company's value is determined by
| calculating the weighted average of its 'earnings value'
| and its net asset value (i.e. fair market value of assets
| minus liabilities), thereby counting the earnings value
| twice. The earnings value is determined by capitalising
| the adjusted average net profit of the last two or three
| years with a capitalisation rate (of currently 7%), which
| applies uniformly to all industries. Holding companies or
| real-estate companies are valued based on the net asset
| value of the underlying assets.
|
| It won't be perfect, but it's predictably imperfect.
| jedberg wrote:
| The way they do it just kicks the the can down the road.
| The company is "net asset value", but how do you value of
| the software they have, or the data they hold, or the
| paintings the company holds, or all their other assets?
|
| When a company is sold the value of the assets is
| negotiated for sometimes years. And is different for
| every acquirer. How is the government going to do that
| for everyone every year?
| ceejayoz wrote:
| > The way they do it just kicks the the can down the
| road.
|
| No, it accepts that some wealth may require estimates,
| eventual corrections, and occasionally court resolution.
| (The doc cites an example of a $2M painting hung in a
| kitchen being deemed non-household goods.)
|
| The "there's an edge case, therefore it can't work"
| argument is hard to sustain when there are countries
| making it work. The Swiss handle paintings, private
| companies, and _presumably_ IP (I can 't find specific
| details in here) in their system.
| jedberg wrote:
| I'm not saying it can't work because of an edge case. I'm
| saying the system has fundamental flaws and here are some
| examples.
|
| And I can turn the same logic around on you: Why do you
| think this will work when just one country is claiming to
| do it successfully? Especially after other countries
| tried it and then repealed or at least partially repealed
| their wealth taxes to exclude hard to value items?
| ceejayoz wrote:
| Switzerland is not the only one with a wealth tax; I use
| it as an example here.
| jedberg wrote:
| Yes, there are two other countries that have one. And 180
| that don't.
| [deleted]
| jayd16 wrote:
| You'd still need to file taxes to declare the number that
| wealth tax applies to...
| PaulDavisThe1st wrote:
| Sales taxes are regressive, and the current US tax system is
| _deliberately_ progressive, in order to reflect our
| understanding of the marginal value of income.
| millimeterman wrote:
| The regressiveness of sales taxes is fairly irrelevant since
| the government can simply perform direct redistribution to
| achieve any desired level of progressivity.
| nightski wrote:
| The FairTax proposal improved on this by providing a rebate
| to everyone to cover tax for essentials. It also removed
| taxation on businesses which would likely cause prices to
| come down. There were many benefits and their research showed
| that overall tax burden would actually be less for the lower
| & middle class and higher for upper class (which avoids
| income tax anyways). Unfortunately it was too radical I
| believe, there's no way the U.S. would make that big of a
| leap.
|
| It might still be slightly regressive, but that's not such a
| bad thing when overall tax burden would be reduced.
| greedo wrote:
| If you think businesses will lower prices if taxation is
| removed, I think you're far off base.
| SoftTalker wrote:
| If they are in competitive markets they will have no
| choice.
|
| If they are monopolies that's a problem regardless of tax
| policies.
| PaulDavisThe1st wrote:
| Can you cite any known examples of reductions in some
| kind of non-explicit tax leading to reductions in prices
| (other than in cases where the tax is an explicit
| component of total cost, such as airline ticketing (at
| least since 2001)) ?
| kelseyfrog wrote:
| Would my children have to pay FairTax when making
| purchases?
| gamblor956 wrote:
| Your children already pay sales taxes when they buy
| things...
|
| The FairTax is just a version of a GST.
| kelseyfrog wrote:
| Right, but my kids don't fund the federal government
| solely through a federal sales tax which is what this
| proposes. It just doesn't sound fair that they should be
| taxed to this degree without representation - it violates
| the social contract.
| SoftTalker wrote:
| Non-citizen adults don't have a vote and they all have to
| pay taxes. You're not suggesting that all resident aliens
| should not pay taxes?
| kelseyfrog wrote:
| Would you do me a favor and summarize what you think I
| said? I feel like what I'm writing and what you're
| reading are two different things.
| PaulDavisThe1st wrote:
| I think you said that taxation on your children without
| their (democratic) representation (via voting) was not a
| good thing and broke the social contract.
|
| SoftTalker then noted that we tax resident aliens but do
| not allow them to vote, presumably seeing some similarity
| in terms its impact on the (implicit) social contract.
|
| What do you see as the difference?
| kelseyfrog wrote:
| Thank you. A lot of times people end up talking Past each
| other in these sorts of threads. Appreciate it!
|
| Yes. That is a contradiction. Categorically, it's not
| fair to expect someone to pay for things without letting
| them have some degree of decision making in how the money
| is spent. Otherwise it's simply robbery.
| PaulDavisThe1st wrote:
| Yet that is precisely how our system works vis-a-vis
| resident aliens ("green card holders"). They have all the
| responsibilities of citizens but no right to vote.
| kelseyfrog wrote:
| Sounds messed up. I'd really hate to get into a dialog
| where this sort of stuff is justified because it's just
| running rampant and it's just easier to give up and
| convince oneself that it's actually ok because the
| alternative is simply too difficult to imagine.
| [deleted]
| nightski wrote:
| Yes with the money they received that was income tax free
| from either yourself or their own job.
| kelseyfrog wrote:
| Oh cool! And they get the right to vote too?
| nominusllc wrote:
| taxation without representation
| zibby8 wrote:
| Even if the rate is variable, sales taxes are still
| regressive. Poor people spend a much larger % of their
| income on goods compared to rich people. For me,
| personally, my sales tax would need to be around 1,000%
| (for every dollar I spend, I pay $10 in tax) to match what
| I pay in income tax.
| nightski wrote:
| Depends on what they are spending it on. If poor people
| are buying food & housing it would be tax free. If they
| are buying large screen TVs maybe not so much. But even
| then the claim was that prices would come down
| eliminating most of the cost of the tax (due to no taxes
| on businesses including payroll taxes). It also might
| mean higher wages. Obviously there was no way to prove
| these things as it hasn't been tried, but there was a lot
| of research done trying to model it out.
| zibby8 wrote:
| > But even then the claim was that prices would come down
| eliminating most of the cost of the tax (due to no taxes
| on businesses including payroll taxes)
|
| We actually frequently try lowering corporate taxes. What
| we find is that prices stay high, wages stay low, but
| profits increase. Crazy.
| nightski wrote:
| Not payroll and other taxes. You are talking taxes on
| corporate profits.
| PaulDavisThe1st wrote:
| Fairly sure most people would consider that "corporate
| tax" (even if some other things might also be "corporate
| tax")
| nightski wrote:
| I'm not following, it doesn't really matter what they
| consider it - I don't remember it being done before
| (reducing payroll taxes). Currently both the employer and
| the employee pay a big chunk here. In addition sole
| proprietors and self employed individuals pay even more.
| RappingBoomer wrote:
| but almost all the so-called 'socialist' nations in
| europe have heavier sales taxes...but we cannot do it
| here because it's regressive and we are so much more
| leftist than europe...tee hee...
| zibby8 wrote:
| "Socialist" nations also have income tax. The topic of
| discussion is replacing income tax with a larger sales
| tax.
| PaulDavisThe1st wrote:
| I have no interest in reducing the overall tax burden, and
| it would be helpful if proponents of ideas like FairTax
| were more explicit if this is the goal.
|
| I want the various governments of the US to have control
| over a larger slice of GDP, not less.
|
| Please cite one of those studies that claimed that higher
| income quintile and higher wealth quintiles would pay more
| under a "FairTax"-like system, because I've never seen one
| that makes that claim. Here is that specifically rebuts
| your claim:
|
| https://www.jstor.org/stable/23059394
|
| "The FairTax is promoted as being progressive, but there is
| considerable skepticism of this claim. We examine the
| distributional effects of the FairTax, as well as the
| current system it intends to replace, under both annual
| income and lifetime income approaches. Global measures of
| progressivity suggest that the current federal tax system
| is progressive while the FairTax is regressive. Our results
| are also robust to different assumptions used for
| estimation."
| adventured wrote:
| > abolishing the income tax and going to a direct, national
| sales tax
|
| Sales taxes are regressive. It's the rich and upper classes
| that stand to gain the most by the abolition of income taxes.
| They don't consume enough to drive up huge sales tax bills. In
| terms of positive generation, mostly they accumulate income and
| asset gains. Overwhelmingly they don't spend their wealth on
| buying Ferraris and mansions. In the US the top 10% pay 71% of
| all income taxes (while taking home 30% of the income). Their
| consumption is not high enough to offset if you switch to a
| sales tax system. It would do something beyond brutalizing the
| bottom 3/4 of people; it would destitute the majority of
| workers in the country if you attempted it and were serious
| about trying to bring in enough revenue to offset the loss of
| the income tax.
|
| The US has a very progressive income taxation system, far more
| so than most of Europe (including all of Scandinavia). The US
| middle class and below pay exceptionally low income taxes, the
| burden is overwhelmingly carried by the higher income brackets
| already.
| dragonwriter wrote:
| > The US has a very progressive income taxation system
|
| It has strongly progressive main rates for income tax, but it
| has extremely regressive exclusions from income taxation and
| from the main rates, and it has a whole separate regressive
| system of taxation on labor income not characterized as an
| income tax in its payroll taxes.
|
| It also, viewing state and federal systems combined, has a
| very large portion of total taxes in other, non-income, taxes
| which tend to be regressive.
| yamtaddle wrote:
| > The US has a very progressive income taxation system, far
| more so than most of Europe (including all of Scandinavia).
| The US middle class and below pay exceptionally low income
| taxes, the burden is overwhelmingly carried by the higher
| income brackets already.
|
| We have progressive _wage_ income taxes (much less so if you
| include highly-regressive FICA contributions at ~7.5% for W2
| and ~15% for 1099 employees--but still) but overall the US
| income tax scheme is quite regressive, thanks to how capital
| gains taxes work, which leads to things like Warren Buffet
| observing that he enjoys a lower tax rate than his secretary
| does.
| RappingBoomer wrote:
| yeah, america is definitely more progressive than
| scandanavia...just look at our oh so progressive tax system..
| tee hee...
| s1artibartfast wrote:
| I wouldn't be surprised if the US had more progressive
| taxes, at least at the federal level. 50% of people pay
| zero federal income taxes.
| avgcorrection wrote:
| Also more egalitarian...
| kepler1 wrote:
| This doesn't go far enough! If you really believe in equality,
| we need to have a flat tax on everyone. Each person should just
| pay $1000 per year, and that's it. That is truly fair. /s
| mythrwy wrote:
| Land and resource usage taxes (aluminum, oil, whatever) might
| be more efficient and produce better outcomes.
|
| It seems easier to come up with that value every year and let
| the taxed pass the costs on to final consumers rather then
| chasing around a million waitresses for unreported tips.
|
| Taxing labor was never a good idea in my opinion.
| jedberg wrote:
| Besides the regressive nature of that, do the math to see how
| high that sales tax would have to be to replace the income tax.
|
| To give you an idea, total sales in the USA was about $6
| trillion, and income tax revenue was $2 trillion. So you'd need
| a 33% national sales tax.
|
| How do you think someone who makes $50,000 a year and spends it
| all would feel about paying 33% in taxes, when today they
| probably pay closer to 10% today?
|
| Or if you make housing and food tax free, you'd need an even
| higher tax rate to make up for it.
|
| Most countries that do a national sales tax do it in addition
| to an income tax.
| phpisthebest wrote:
| >>So you'd need a 33% national sales tax.
|
| or you know a massive reduction in Federal Spending, the fact
| that US Sales was 6 trillion, and the US Government spent 4
| Trillion should be ringing some alarms bells in people....
|
| If we need a 33% national sales tax, that tells me the
| federal government SPENDS FAR TOOO MUCH MONEY
| jedberg wrote:
| Our government spends in line with most other western
| economies as a percent of GDP.
|
| Percent of sales doesn't tell you much about government
| spending.
| phpisthebest wrote:
| this seems to be a "If all your friends jumped off a
| bridge would you" type of response.
|
| Just because other western nations also have
| irresponsible levels of spending does not justify the US
| spending
| mywittyname wrote:
| Thank you for doing the math on this.
|
| For some added support that your numbers are not crazy:
|
| https://en.wikipedia.org/wiki/Value-added_tax#Tax_rates
| uticus wrote:
| Disagree slightly. It seems to me that the issue isn't _how_
| the taxation happens but _where_. In your example, the $55k
| person is paying less taxes up front than $$$ Mega-corp, but
| increased taxation on Mega-corp (and not $55k person) means
| Mega-corp now charges $55k person more for goods and
| services.
|
| So, your main point is worth considering, but it's missing a
| vital point: the current taxation system is opaque in where
| funds come from. An alternative simpler taxation system is
| more transparent on where funds come from - I don't consider
| that regressive.
|
| Let me put it crassly: if everyone paid 33% in taxes, the
| average voter would be more aware of the cost of tax-funded
| projects. Imagine what sort of voting that would lead to. I
| say "crassly" because in reality such a shift would
| definitely place a heavy burden on the poor in the near term.
| I honestly don't want that... but I also don't want to pull
| the wool over eyes.
| marcusverus wrote:
| Most flat tax schemes I've heard of don't require
| businesses to pay the tax, for exactly that reason--it just
| ends up being passed on to the consumer, anyway.
|
| The Fair Tax is an example:
| https://en.wikipedia.org/wiki/FairTax
| ivolimmen wrote:
| Like we have for years (Netherlands). We used to have an
| application you could download to fill your returns. It could be
| downloaded for Windows, Mac and Linux. Now it is just a website
| and it is very elaborate. Most people can go through the wizard
| and click OK; everything is pre-filled. Only if in some cases you
| require to fill in extra's. Like selling your house and buying a
| new one makes the returns trickier. In those cases people often
| opt for letting the tax returns be done by a professional (well
| at least: I do).
| kibwen wrote:
| Ah, but that wouldn't work here in the US because, of course,
| for one thing, what most people usually overlook is that, the
| first thing you have to remember is, it really is the case
| that,
| supernova87a wrote:
| Isn't one of the legitimate barriers to an easy tax system that
| we have such a patchwork of non-communicating state governments
| and tax policies that for many people a pre-filled form would be
| badly missing info, or worse, missing out on credits people are
| due? Although, maybe no worse than it is now. It feels like the
| states treasuries/tax collectors barely talk to the IRS
| (oversimplifying of course).
|
| That and there are so many non-automatically-reportable
| exceptions (income doesn't have to be logged and calculated
| consistently and sent to the IRS), loopholes, deductions, etc. in
| tax law. Although, again, most of the population could be
| satisfied / correctly done with a baseline product. At least
| brokerage capital gains started being reported automatically (and
| mandatory) although I notice there are tons of errors than can
| crop up, as well as exceptions that break the system.
|
| Not saying I like the situation Intuit keeps us in, and we should
| automate as much as possible, but aren't there deeper reasons
| fueling their existence? We should fix those problems as well --
| but I suppose that is asking Congress to pass or restrain
| themselves from mucking up the system every time they want to
| inject some favored loophole.
| TulliusCicero wrote:
| The answer then is to at least pre-fill the information the
| government _does_ know, because it was reported by banks /your
| employer/whoever else. Why do I have to enter in how much
| interest I made or stock sales or whatever when the relevant
| financial institution already reported this to the feds? The
| computer is less likely to screw it up than I am.
| bogomipz wrote:
| From the article:
|
| >"The Internal Revenue Service will spend $15 million studying a
| free, government-backed tax filing system under a provision in
| the sweeping climate and health-care law Congress passed this
| summer."
|
| Why does "studying a free filing system" require $15 million?
|
| >"Now lawmakers including Sens. Elizabeth Warren (D-Mass.) and
| Sherrod Brown (D-Ohio), who pushed for the IRS free-file study,
| say they hope the funding will encourage the agency to more
| vigorously pursue its own platform."
|
| This is the congress who had been cutting the IRS funding
| forever[1]. There's no way that the IRS can pursue its own
| platform without Congress loosening the purse strings.
|
| >"Sen. Ron Wyden (D-Ore.), chair of the chamber's Finance
| Committee, asked the IRS to conduct a taxpayer opinion survey on
| an e-file system and consult a vendor to begin to build a
| government-backed platform."
|
| I think this answers my above question of why "studying a free
| filing system" requires $15 million. I'm guessing the "vendor"
| here is McKinsey or one of the other big 4 consulting firms. They
| will hoover most of the $15 million with the results of the study
| being "if you pay us, McKinsey, a hundred million dollars we can
| definitely build this for you."
|
| [1] https://www.propublica.org/article/how-the-irs-was-gutted
| tomohawk wrote:
| Just repeal the 16th amendment - the income tax is too intrusive,
| and its too much of a temptation for politicians to use it for
| social engineering. There are other ways to tax that do not
| require the government to know everything about what everyone is
| doing.
| jcranmer wrote:
| > Just repeal the 16th amendment - the income tax is too
| intrusive
|
| Fun fact: the 16th Amendment does not give Congress the power
| to levy taxes on income. Congress already had that power.
|
| What the 16th Amendment does is directly overturn SCOTUS's
| Pollock decision, which ruled that a tax on income derived from
| rent was effectively a tax on property and therefore a direct
| tax, which the Constitution requires to be apportioned to the
| states based on population. Even if you repealed the 16th
| Amendment, it's doubtful that modern SCOTUS would uphold the
| precedent of Pollock anyways (already shortly after the passage
| of the 16th Amendment, SCOTUS effectively overruled Pollock on
| the grounds that income taxes were indirect taxes anyways).
| This makes the 16th Amendment arguably the single most useless
| amendment to the US constitution.
| uticus wrote:
| > its too much of a temptation for politicians to use it for
| social engineering
|
| Bullseye on the problem. This is the number one reason for the
| complexity. And the complexity is the number one reason for the
| massive resources required just to make the system work.
|
| However, the solution... repeal the 16th amendment? If my
| memory of high school history class serves, didn't trying
| alternatives lead to the 16th amendment?
|
| [edit] To provide some more focus: I'm not saying the
| _politicians_ are the problem, but the carrot-and-stick social
| engineering.
| coryfklein wrote:
| I can't tell you how relieved I am to hear that the overworked
| and underfunded Internal Revenue Service is going to "look into
| this". Maybe my grandchildren some day will have a more pleasant
| experience filing their taxes.
| sizzle wrote:
| how much is intuit pouring jnto lobbying against this win for
| American citizen
| [deleted]
| formvoltron wrote:
| which will cost 300M and not work.
| ketralnis wrote:
| Free is great but with 143 million taxpayers a nominal $10 fee
| could make such a system self-funding
| yosito wrote:
| Hey bro, heard you like tax, so we're taxing your tax so you
| can pay taxes while you pay taxes.
| mattanimation wrote:
| IRS will look into not charging you more to use a service to be
| robbed. Got it.
| ezekg wrote:
| Violently robbed, at that.
| sydbarrett74 wrote:
| thot_experiment wrote:
| There's no reason the government couldn't just tell me how much
| money they took each year and give me a chance to contest it if I
| thought it was wrong.
|
| One of my best friends lives in Tokyo and every time I have to
| think about taxes I get this little pang of jealousy at how sane
| and un-infested with rent seeking trashcans (intuit etc.) the
| Japanese system seems.
|
| If you need the government to behave against the best interest of
| the people in order for your industry to exist maybe your
| industry shouldn't exist.
| GartzenDeHaes wrote:
| Behind the scenes, I think you'll find that this is a legal and
| liability issue. US Title 26 makes you and your agent legally
| responsible. If the IRS calculates your taxes for you, then
| they are acting as your agent and the IRS can't act as your
| agent of course. There's also a CYA aspect, as the government
| managers involved don't want to be responsible for errors and
| omissions.
| lamontcg wrote:
| I don't know why I have to point this out, but the government
| is fully capable of passing a law to resolve that particular
| concern. And I strongly suspect it wouldn't work that way
| anyway, since the government would be giving you the
| information that it has and asking you or your agent to
| confirm or correct that information.
| andrewflnr wrote:
| It's always depressing when you propose a change in the
| rules and people counter-argue with a concern that's
| contingent on the current rules.
| divbzero wrote:
| Interestingly, this is what Congress legislated in 1998 only to
| be beaten back by lobbying from the tax preparation industry:
|
| _The Free File Alliance came to be because Congress originally
| mandated the IRS to do away with tax returns altogether in a
| law called the Internal Revenue Service Restructuring and
| Reform Act of 1998. After a major lobbying push by the tax
| preparation industry, the Free File Alliance was introduced as
| a way to let low-income Americans file their taxes for free
| without getting rid of tax returns. The Alliance drew
| institutional momentum away from the change to return-free
| filing, which likely would have rendered large segments of the
| tax prep industry totally useless._
|
| https://thehill.com/homenews/3607174-the-irs-could-be-on-the...
| manuelabeledo wrote:
| This is also one of the things I miss the most, bureaucracy
| wise, having moved to the US from Spain.
|
| Back in Spain, they just send you a draft that you sign off on,
| or update if needed. In my first three years in the US, I went
| to a tax specialist to get my taxes done because I couldn't
| figure out how to get them right.
| biztos wrote:
| In Germany (for employees) they just take their share and if
| you're ok with that you don't have to do anything at all.
|
| Unless you're a US citizen or permanent resident, in which
| case you still need to file in the USA, but that's not the
| Germans' fault.
| cjpearson wrote:
| My anecdotal experience in Germany is that it's well worth
| the hour or so to fill out a tax return with some common
| deductions. The downside of optional filing is that many
| people will lose money to laziness or ignorance.
| nightski wrote:
| I bet I've spent more time discussing taxes on HN than
| actually doing my taxes in the U.S. It really isn't that big
| of a thought, and I have a small business so it's even more
| complicated.
| manuelabeledo wrote:
| Point is, it could be massively better.
|
| I don't agree that things that one is used to, don't need
| to be improved upon. And the US is clearly falling behind
| the times here.
| tmpz22 wrote:
| I thought Japanese government services were famously difficult
| for foreigners to navigate? Is this assumption wrong or is it
| just very effective for Japanese Citizens only?
| bojo wrote:
| It's honestly a lot easier as a foreigner, your place of work
| takes care of your taxes for you.
|
| That said, I've had to file taxes outside of that scope
| before and it was fairly straightforward. They have people at
| the tax office to assist you.
| LordDragonfang wrote:
| >as a foreigner, your place of work takes care of your
| taxes for you.
|
| My understanding is that isn't just the case for
| foreigners, it's the case for everyone. Companies are
| expected to just take care of things like that for you, and
| in return you're expected to treat them with utmost
| loyalty. I imagine things have changed somewhat in the past
| decade, but this writeup is illuminating:
|
| https://www.kalzumeus.com/2014/11/07/doing-business-in-
| japan...
| calvinmorrison wrote:
| > If you need the government to behave against the best
| interest of the people in order for your industry to exist
| maybe your industry shouldn't exist.
|
| There was a "check cashing" store next to our DMV that solely
| existed to service people who visited the DMV. Our own
| government was unable to accept US tender.
|
| This exists all over the place. The amount of servicing and
| companies that exist basically because of the government is
| insane.
| cm42 wrote:
| See also: every* courthouse
| ortusdux wrote:
| IIRC, the US Coast Guard cannot provide gas to stranded boats
| that simply ran out of fuel because they were sued by
| companies that provide that service.
| nickff wrote:
| Do you have a reference or citation for this? I looked for
| the case, but couldn't turn anything up. It seems
| extraordinary, especially because the federal government
| would seemingly have sovereign immunity from such a
| lawsuit, unless it was somehow a taking.
| ortusdux wrote:
| It was told to me by a coast guard helicopter pilot that
| I grew up with. Not one prone to exaggeration. I've also
| heard from boaters that it is kind of general knowledge
| to say that you are having an emergency vs out of gas if
| find yourself stranded.
|
| Edit: Here is the best I can find. It sounds like it was
| a congressional mandate from 1983:
|
| https://www.latimes.com/archives/la-
| xpm-1985-02-22-mn-587-st...
| throwaway5959 wrote:
| That's basically the answer to all of these issues. Tax
| preparers bribed Congress to ban the IRS from doing it for
| the majority of Americans as well.
| TheRealPomax wrote:
| There seems to be some misunderstanding about what checks
| are, because this is absolutely not a matter of the
| government "not accepting legal tender". Checks are not
| issued by the government, nor are they backed by a guarantee
| of cash. They are issued by private companies, and are merely
| backed by a private company's _promise_ of cash.
|
| And sure: it feels ridiculous that checks aren't accepted,
| but the _reason_ they 're not accepted is _because_ they 're
| not legal tender. Nor are they even cash-equivalent. They're
| only cash-equivalent by the (sure, contractually regulated
| but still entirely the) grace of the private issuer, and only
| for as long as that private issuer remains in business.
| calvinmorrison wrote:
| Sorry, the DMV does not accept cash, only certified checks
| / money orders.
| TheRealPomax wrote:
| So not check cashing but cash-check'ing?
| calvinmorrison wrote:
| I've always heard them called 'check cashing' places.
| They essentially provide banking services for the
| unbanked populace. Pay your bills, get checks cashed, get
| checks made, etc.
| wrycoder wrote:
| My DMV in MA didn't accept cash.
| pfisch wrote:
| That would really only work if you owned no property or
| investments and had nothing but W2 income, and also no
| dependents.
|
| Taxes are complicated because in reality they are actually
| complicated for many tax payers.
| chrisseaton wrote:
| > Taxes are complicated because in reality they are actually
| complicated for many tax payers.
|
| I have property, investments, multiple incomes, including
| international stock compensation that involves three
| countries, dependents... and my UK tax return is trivial.
|
| How come it's possible in the UK but not the US?
| pfisch wrote:
| I bought a high efficiency furnace this year. That is
| eligible for a tax deduction. How could that ever work if I
| don't file my own taxes? The seller isn't sending that info
| to the IRS.
| Broken_Hippo wrote:
| You just fix it. Just because they do pretty much _all_
| of the return doesn 't mean that you can't fix errors or
| adjust information that needs it.
|
| And even when you do that, it'll _still_ be easier than
| the paperwork in the US.
| detaro wrote:
| They said their tax return was _trivial_ , not that they
| didn't file one.
| jedberg wrote:
| They would send you a bill, you'd say, "hey I bought a
| furnace", they would deduct from the bill and you'd pay
| the rest.
| Volundr wrote:
| Your barring certain foreign investments your investment
| income is reported to the IRS very similar to how your W2
| income is. Those 1099s aren't just sent to you, they are sent
| to the IRS as well.
|
| There could easily be a system for updating your dependents
| with the IRS that doesn't involve doing the whole thing
| yourself.
| pfisch wrote:
| Dependent isn't just children, and if you are separated or
| unmarried it may not even be your children that count as
| dependents. It doesn't even require you to be the legal
| guardian.
|
| https://www.irs.gov/help/ita/whom-may-i-claim-as-a-
| dependent
| jedberg wrote:
| But almost no one claims those kind of dependents. And
| furthermore, the government could just say, "last year
| you claimed these people as dependents, and we checked
| and they're all still alive, so we'll assume they still
| are".
| Volundr wrote:
| Or even just have it be a field on your W-4 to keep up to
| date.
| rpmisms wrote:
| Because the tax code is too complicated.
| RappingBoomer wrote:
| but no other nation on earth makes its citizens go through
| this annual horror show...and just as a coinky dink, turbotax
| gives generous donations to politicians...odd case...
| SoylentYellow wrote:
| It works just fine in Japan with all of those complications.
| The vast majority of people don't touch the tax return
| automatically filed by their employer.
| jfghi wrote:
| I think a large part of the population fits in the above
| bucket and the processes for handling the above issues could
| be simplified. Perhaps those looking to itemize could
| complicate their yearly tax calculations or hire a CPA, but
| the rest of the population would be well served by having an
| automated process (whose numbers are already in place as is)
| Rebelgecko wrote:
| Why are investments a problem? The IRS gets a copy of my
| capital gains at the end of the year. For probably 90% of
| people, the IRS has enough info to do their taxes for them
| (as evinced by all the times where the IRS tells someone they
| were $2 off or whatever on their calculations).
| pfisch wrote:
| Even if you are just a home owner that buys a high
| efficiency furnace the IRS doesn't have enough info to do
| your taxes properly.
| Broken_Hippo wrote:
| And in most countries, you'd just add that to the tax
| return information they send you. And if that furnace
| gets you discounts over years, you should only have to do
| that once - the next years, they'll have the information.
|
| Or alternatively: They can directly subsidize high
| efficiency furnaces, which would actually allow more
| people to have them than a tax credit will since it would
| lower the barrier to entry (price).
| jedberg wrote:
| Sure they do. They would send you a bill, you'd say, "hey
| I bought a furnace", they would deduct from the bill and
| you'd pay the rest.
| guerrilla wrote:
| Nope, it works fine here and in maby ither countries in
| Europe, and apparently Japan. The US is juat way behind the
| times because od lobbying amd corruption.
| bwanab wrote:
| That's not really true. The IRS knows exactly what your
| investment income is if it is invested through a reputable
| broker. They all have to inform the IRS of all your
| transactions, dividends and interest.
|
| Even for property, the vast majority of the property that
| people own is the house they live in and sales on home real
| estate are public information.
| runako wrote:
| You're missing huge segments of income and deductions that
| are opaque to the IRS. In other cases, the information the
| IRS needs to calculate your tax isn't available until
| everyone else files their taxes (cyclic dependency). Some
| examples:
|
| - Investors in a local restaurant may receive dividends
| which are not disclosed to the IRS until the restaurant
| files taxes.
|
| - Those dividends may reach a person via intermediaries.
| For example, a person receives her share of dividends from
| all the investments from an investment company in which she
| is an investor. That company may also have in turn invested
| into other investment companies.
|
| - A person inherits stock and migrates it to her brokerage
| account. Subsequently, she sells it. Neither the original
| brokerage nor her brokerage knows her cost basis and
| therefore can't know what portion of the proceeds are
| taxable.
|
| - Inheritances can get messy, in particular because in some
| cases the IRS needs to know the size of the estate where
| the inheritance originated in order to calculate the tax.
|
| - Taxes, tips, and direct crypto sales are all taxable
| events of which the IRS may have no data.
|
| - Rents: you don't tell the IRS how much rent you pay; the
| corollary is that the IRS doesn't know how much rent the
| landlord took in. And even if they did, to calculate the
| tax they also need to know the sum of expenses for the
| year. To calculate that, you may need to know the financing
| of the property.
|
| There are similarly many cases on the deductions side of
| the ledger where a naive approach will end up over-
| collecting from taxpayers (people would _love_ that).
|
| (Yes, some of these could change if we changed our tax
| code. But that's not something the IRS is able to do.)
| criddell wrote:
| I think the idea is the government notifies you that if
| you do nothing, this is your tax situation. You still
| would have the option to file if you are one of the few
| people that have the issues you list. The idea is to get
| a better system for most people, not a perfect system for
| all people.
| bwanab wrote:
| Exactly. A requirement for a perfect system would mean a
| better system for the vast majority would be impossible.
| jedberg wrote:
| How many people do you think are getting any of these
| types of income? The answer is almost none. Almost
| everyone in the country has nothing but W2 income and
| maybe a few things on a 1099 from a broker.
|
| (Tips are supposed to be in your W2, FYI)
| pfisch wrote:
| Basically every small business owner gets a schedule K
| jedberg wrote:
| Which the government already has a copy of and can add to
| your taxes automatically.
| sokoloff wrote:
| Reporting of basis (to the IRS) for publicly traded shares
| was required only starting for purchases in 2011 (2012 for
| dividend reinvestment plans).
|
| Sale prices of houses are public in some jurisdictions but
| not in others. Improvements are not reported to the IRS of
| course, some of which add to the basis.
|
| Schedule C would be entirely impossible for the IRS to
| calculate for you.
|
| Automated filing is not an impossible task for everyone,
| but it's far from perfectly automatible.
| jedberg wrote:
| Almost no taxpayers have that kind of income though. Most
| everyone just has W2 and maybe some 1098/1099s.
| sokoloff wrote:
| There were about 28 million Schedule C filings against
| about 148 million humans filing returns in 2019.
| jedberg wrote:
| Yes, and they could still file those Schedule Cs against
| their automatic tax bill. Schedule C is totally separate,
| and could even be filed totally separately just like a
| business return.
| sokoloff wrote:
| Schedule C _is not totally separate_ under current tax
| law.
|
| 1040-Schedule-C feeds into 1040-Schedule-1 (line 3),
| which feeds into 1040 (line 10).
| jedberg wrote:
| But they easily could be. You fill out a Schedule C and
| it changes one line on your 1040. If the government
| filled out your 1040 for you, you'd do your Schedule C
| and 1, and then fill that into the one line on your pre-
| filled 1040.
| 8note wrote:
| Who says the current law has to stay as it is? If you're
| looking to simplify, simplify
| russdill wrote:
| For purposes of this discussion, and most importantly for
| the tax payer for which this system imposes the most
| pointless hardship, absolutely, yes, let's get it done.
| Now.
|
| But. The tax code is needlessly and intentionally
| convoluted. For a large number of tax payers, you get all
| sorts of choices on how to file things, how to declare
| things, what years to declare what, etc, etc, etc. Many of
| these choices will be based on what you expect to occur
| next quarter, next year, etc. People in these situations
| can typically afford to pay an accountant several hundred
| or thousand dollars a year to help them make the optimal
| decisions.
| Broken_Hippo wrote:
| That's not true: Other countries pull it off without issue.
| Where I am, the tax agency has a calculator, and it includes
| most basic stuff. Your employer collects your tax rate from
| the tax agency (who lets you know that someone is getting
| your information and stuff).
|
| Taxes are complicated for the average person in the US
| because the US government makes it that way and so far, has
| been unwilling to act in your interest.
| LeifCarrotson wrote:
| The overwhelming majority of taxpayers claim the standard
| deduction - since 2017, it's something like 90%. Most people
| have a W2, and 1099-INTs which are far less than their W2
| income.
|
| Only a small percentage of stupidly rich people really need
| to consult with tax advisors to construct elaborate stories
| about their complicated and catastrophic investment losses
| which mean that in spite of ever-growing wealth, they
| actually have negligible taxable income. The rest of us are
| suckers for taking a W2 and have really simple taxes.
| nightski wrote:
| But if that is your situation it's actually really easy and
| free to file your taxes today. Meaning a couple clicks and
| done. I'm all for an IRS solution but let's not blow this
| out of proportion.
| mixmastamyk wrote:
| Not at all. There are limits that amount to poverty wages
| in CA. Not to mention squeezing an unwanted, insecure
| rent-seeking third party into your finances.
| lovehashbrowns wrote:
| Yes, thank you intuit for making the process of filing
| taxes so easy and free but only if you make less than 70k
| a year or whatever their threshold is! Just a couple of
| clicks is all it takes!!
|
| It's such BS that these companies cause this tax mess to
| begin with and then get free goodwill and advertising
| based on them making it "easier." It's so infuriating.
|
| https://www.washingtonpost.com/business/2022/05/04/turbot
| ax-...
| nightski wrote:
| https://www.freetaxusa.com/
| lovehashbrowns wrote:
| Yes, there are now also other companies that offer free
| tax filing. That's literally not the point, is it?
|
| Also who the hell is TaxHawk and why should they have my
| tax filing info lmao. The IRS already has everything. A
| simple letter, text message, or email from the government
| I pay taxes to is all it should take for me to get taxes
| complete. I review what they have, do nothing if it's
| correct, and either pay taxes or get a tax return.
| Anything beyond that is a complete and utter waste of
| time.
| colinmhayes wrote:
| Not free for state returns
| nightski wrote:
| Right but we were talking about an irs free file which
| would not make state returns free either.
| JohnFen wrote:
| > it's actually really easy and free to file your taxes
| today.
|
| Really? How?
| kahnclusions wrote:
| I live in the UK and we have a similar system here. I have a
| tax code assigned that describes my personal circumstances. My
| employer reports everything to the government. Taxes, refunds,
| etc, are all handled automatically through my paycheques. The
| only reason I would need to file a self assessment is if I had
| self employment income etc.
|
| It's such a relief of stress every year. I hate the way the US
| (and Canada) does taxes.
| dustymcp wrote:
| This is how it works where i live, they do the taxes and i can
| contest or add missing expenditure, its super easy if your
| employed you dont really do anything for filing its all done
| automatically.
| failrate wrote:
| The "reason" we do not have this is people like Grover
| Norquist.
| stcredzero wrote:
| _There 's no reason the government couldn't just tell me how
| much money they took each year and give me a chance to contest
| it if I thought it was wrong._
|
| Literally true! I've had to interact with IRS employees, and as
| far as I could tell, they basically had what amounted to what
| my tax return should be on some kind of computer screen right
| in front of them. This was back in 2015 or so!
| BitwiseFool wrote:
| >"There's no reason the government couldn't just tell me how
| much money they took each year and give me a chance to contest
| it if I thought it was wrong."
|
| Behind the scenes, the IRS already has a well informed idea of
| how much you owe, based on the information submitted to them by
| your employer and a few select third parties - such as your
| bank or broker. The challenge is that you personally need to
| report additional information for things like capital gains tax
| on asset sales, any credits/deductions you wish to claim, and
| changes in your living arrangements or life status.
|
| For the majority of people who file using 1040-EZ, you're
| basically just confirming what the IRS already knows from its
| own data collection along with some possible adjustments. It
| would be possible for the IRS to collect even more information,
| but that does seem rather intrusive and unwelcome to most
| American's sensibilities.
| chiefalchemist wrote:
| Yes. But if you make a mistake and don't report something the
| IRS already knows about rhen you lose, and there's a penalty
| on top of that.
|
| It shouldn't have to be a game. There shouldn't be fear and
| antagonism. The current system favors the IRS. It favors
| other third-parties. And it's devoid of any favor for the
| taxpayers.
| llbeansandrice wrote:
| 1040-EZ hasn't existed since 2017. It's just the 1040 which
| has multiple schedules.
| kevin_thibedeau wrote:
| The new 1040 is nearly identical to 1040EZ just split over
| two sheets.
| godelski wrote:
| Aren't capital gains already reported from your bank? If not,
| it should be trivial to have them since they send the exact
| same information to me. The same goes for loans.
|
| Honestly I wouldn't be surprised if the IRS could already
| have a 90+% success rate for 80+% of people. It seems like
| the real issues would be in the very rich who can take
| advantage of many loopholes or the average person when big
| life events happen (things like death, marriage, and birth,
| though most of this could be automatically reported as well
| but easier to fall through the gaps).
|
| Maybe I misunderstand, but it doesn't seem like the IRS needs
| any additional information than I have presumed it already
| has. This information is at least all known by the fed, so it
| doesn't seem like a data leakage. And I'm someone that highly
| cares about privacy.
|
| I suspect that the real pushback for return free filing is
| from 1) tax filers like Turbo Tax who would lose a lot of
| business and 2) the ultra wealthy as RTF would put pressure
| to simplify the tax code and reduce the number of loopholes.
| hello639 wrote:
| > Aren't capital gains already reported from your bank?
|
| Capital gains from real estate sales are not automatically
| reported.
|
| Public securities (stocks, ETFs, crypto, etc) are a small
| fraction of overall capital gains by $.
| godelski wrote:
| > Capital gains from real estate
|
| What percent of Americans buy and sell a property within
| a year? I bet it is pretty low.
|
| > stocks
|
| All the major players report this information.
|
| > ETFs, crypto
|
| The vast majority of people use exchanges like Coinbase
| and Binance. These already report.
|
| So I'm not sure what your point really is. That there are
| edge cases? No shit. No one is even arguing against that.
| The argument for return free filing is that the vast
| majority of people will benefit from the system. Even if
| there are mistakes it is easier to look over something
| and correct it than do everything from scratch. The
| people that won't majorly benefit from this likely
| already have more than enough wealth to pay someone to do
| their taxes already and honestly I'm not concerned about
| them.
|
| Don't let perfection get in the way of massive
| improvement.
| emaginniss wrote:
| You pay capital gains on any property sale where you earn
| income unless you reinvest the money in another property
| or use the one-time exemption. I don't know why you think
| the sale being within a year or not makes any difference.
| The major players know when you sell the stock and for
| how much, but they don't know the cost basis. The sale
| could be LIFO or FIFO and you might have transferred the
| stock into the brokerage without them ever knowing the
| purchase price. These are not edge cases.
| godelski wrote:
| Sorry, I looked at a bad source. But looks like so did
| you. Here's Investopedia:
|
| > You can sell your primary residence and be exempt from
| capital gains taxes on the first $250,000 if you are
| single and $500,000 if married filing jointly. (once
| every 2 years)
|
| > You can add your cost basis and costs of any
| improvements that you made to the home to the $250,000 if
| single or $500,000 if married filing jointly.
|
| So I'll change my question:
|
| What percentage of home owners are profiting >$250k
| (single)/ >$500k (married)? What percent of them do that
| more frequently than a 2 year period?
|
| I'm willing to bet that these numbers are still very low.
| That's the entire point. I'm sure there's nuance I've
| missed as I'm not an expert. But my entire point isn't
| about specifics, it is that your argument against this
| system is about edge cases. If you can prove that these
| aren't edge cases, I'll actually side with you. If not, I
| still see return free filing as an extremely beneficiary
| policy to the vast majority of Americans, and especially
| to those with the least income. I already know that 90%
| of households take the standard deduction, so you're
| going to have to make some substantial claims.
|
| https://www.investopedia.com/ask/answers/06/capitalgainho
| mes...
| [deleted]
| toomuchtodo wrote:
| It's straightforward to calculate real estate capital
| gains from reported information. Remember, real estate
| transactions (including sales prices) are public records.
|
| > The Tax Reform Act of 1986 required anyone responsible
| for closing a real estate transaction, which may include
| the escrow agent, title company, or attorney, to report a
| real estate sale or exchange to the IRS on Form 1099-S.
| In addition, they were required to furnish a statement to
| the seller of the gross proceeds of the sale. In 1998,
| with the passage of the Tax Payer Relief Act of 1997, an
| exception to this reporting requirement was allowed.
|
| > If the sale price of your residence is $250,000 or less
| ($500,000 or less for married sellers) and you have lived
| in the property, as your principal residence, for the
| last two out of the last five years, your closing agent
| will not be required to file Form 1099-S with the IRS.
| The gross proceeds of the sale need not be reported to
| the IRS if these conditions are met.
|
| > Be sure that your closing agent has your written
| confirmation that your sale is exempt from the IRS
| reporting rule. Most closing agents have a form, called a
| "Certification for No Information Reporting on the Sale
| or Exchange of a Principal Residence" which you will you
| be asked to sign at closing. The form will ask for your
| seller information, social security number, address, and
| certification that you have met the exemption
| requirements.
|
| https://sandygadow.com/will-my-escrow-agent-have-to-
| report-m...
| BitwiseFool wrote:
| Your bank will report interest via the 1099-INT, and they
| will do this if you make more than $10 per year. You will
| also get a form if you redeemed any government bonds. I'm
| not deeply familiar with AML/KYC, but transactions over
| $10,000 are reported to the government, but not necessarily
| to the IRS and definitely not as a taxable event.
|
| Let's say you sold your car and deposited the money in your
| account. The IRS won't have details about the sale and
| neither will your bank. They will know the amount, but it
| is incumbent on you to report information _if_ this sale
| represented a capital gain. In all likelihood it wasn 't,
| but the government doesn't have a way of knowing this. If
| you get audited, someone will probably ask where the money
| came from and it would be up to you to furnish receipts in
| order to prove it.
| godelski wrote:
| Honestly, I don't see a problem with this. Like every
| other country, they send you a bill. You either correct
| the mistake they have or pay a fine. Still easier and
| cheaper than paying TurboTax.
| baby wrote:
| There are much bigger problems currently. For example, if you
| receive RSUs and don't sell some manually at vesting, you
| might end up in debt by being forced to take loans to pay
| your taxes.
| tshaddox wrote:
| > The challenge is that you personally need to report
| additional information for things like capital gains tax on
| asset sales, any credits/deductions you wish to claim, and
| changes in your living arrangements or life status.
|
| One could argue that a basic principle of liberalism ought to
| be that if the government wants to tax you they should be
| responsible for calculating how much you owe according to the
| law. Or in other words, for every dollar the government
| doesn't demonstrate that you legally owe, you should not owe
| that dollar. Kinda like presumption of innocence, but for
| taxes.
| kyleee wrote:
| we really missed the boat not getting that in the
| constitution
| tshaddox wrote:
| I mean it kinda was in the United States one.
| ortusdux wrote:
| There have been several proposed bills that would create a
| pre-filled tax form system, but they always get quietly
| sidelined by tax industry lobbyists.
|
| I think a change in language would go a long way. The average
| American spends 13 hours and $200 per year to fill and file
| their taxes. This expense is itself a tax, albeit an indirect
| one. "This tax season, we want to save you money, and pre-
| filled tax forms will do just that." "The tax industry and
| their lobbyists fight tooth and nail to keep our tax code
| complex, and every year this costs you money. We want to fix
| that."
| tzs wrote:
| > There have been several proposed bills that would create
| a pre-filled tax form system, but they always get quietly
| sidelined by tax industry lobbyists.
|
| Not just industry lobbyists. Another big part is Grover
| Norquist's "Americans for Tax Reform" and similar groups.
| They have a lot of influence with about half of Congress.
|
| Here's a PowerPoint presentation [1] Norquist presented to
| the President's Advisory Panel on Federal Tax Reform in
| 2005 explaining their opposition to free filing.
|
| It's short so I'll paste the text from each slide here,
| with the slide titles marked with dashes, so people don't
| have to find a copy of PowerPoint (or LibreOffice or
| Keynote, which also can open it fine).
|
| ---- Implementing a "Return-Free" Tax Filing Scheme
|
| Presentation to the President's Advisory Panel on Federal
| Tax Reform
|
| Grover Norquist
|
| President
|
| Americans for Tax Reform
|
| May 17, 2005
|
| ---- The Current System
|
| Tax filing is citizen-based - taxpayers tell the government
| what they earned and owe
|
| ---- Under Return-Free
|
| Tax filing would be government-based - the burden would be
| on the taxpayer to challenge the government's findings --
| essentially an audit of every single American taxpayer
|
| ---- The Fox Would Guard the Henhouse
|
| The same agency that collects taxes would be the tax
| preparer - the motivation to maximize revenue would
| dominate both ends of the process
|
| ---- Return-Free is a Tax Increase
|
| The true goal is to increase revenue. The government knows
| few taxpayers will challenge its findings
|
| ---- Taxes Should be Visible
|
| Doing taxes keeps citizens aware of the tax burden imposed
| upon them by the government. A Return-Free scheme would
| allow the government to raise revenues invisibly
|
| ---- The California Example
|
| The State would not guarantee the accuracy of the returns
| it prepared - the taxpayer was removed from the process,
| but left with the responsibility
|
| The pilot program achieved 50% less uptake than planned
|
| Comments by CA officials tell us that the true aim was
| increased revenue
|
| [1] http://govinfo.library.unt.edu/taxreformpanel/meetings/
| docs/...
| bluGill wrote:
| I've done my taxes by hand - pencil and paper (not even a
| calculator), and it was faster than filling in all the
| forms for the online tax software. I still use the
| software, because the last time I did things my hand I
| didn't transfer line 17a of form 2345b to line 28c of form
| 9876d and when that was caught it was a big hassle to
| correct (even though the IRS had the right numbers I still
| had to fill out an amended return and then send new forms
| to the state - the state of course had the right numbers
| too if they could be bothered to double check)
| SoftTalker wrote:
| Yeah really taxes could be much easier if you only had to
| submit what they don't already have. E.g. various
| deductions, non-W2 income, etc. They could then prep the
| final return and make it available for you to review and
| approve.
|
| All my problems with taxes over the years have amounted
| to similar mistakes - forgetting to transfer one amount
| from one form to another, or transposing numbers, etc.
| ortusdux wrote:
| There is another good talking point: "You already pay the
| IRS to do your taxes each year. That is how we know if
| the forms you submit us are correct. You shouldn't have
| to pay twice!"
| houstonn wrote:
| I don't get it. Are lobbyists in control of congress?
| Aren't politicians the ones who pass bills? Or not pass
| bills in this case.
| xordon wrote:
| > Are lobbyists in control of congress?
|
| Effectively, Yes.
|
| > Who passes bills?
|
| Technically the elected officials, but the bills
| themselves are usually written by lobbyists.
|
| Pressure from campaign donors, either directly or through
| lobbyists, or through "party" channels influence votes.
| rdevsrex wrote:
| Yet another reason I wish the US were a real democracy.
| For all the good that checks and balances do, let's not
| forget that the founders were trying to entrench the
| power of their class.
| ortusdux wrote:
| The real issue is that the tax industry is a large
| employer. There are about 80k full time tax preparers in
| the US, and several times that are hired seasonally. H&R
| block alone hires about 80k for Jan->April. The lobbyists
| only have to go into senator's offices and say "We
| created 14,000 jobs in your district, and this bill puts
| those in jeopardy". Our tax payment system is, in part, a
| taxpayer funded private jobs creation program.
| amenghra wrote:
| Reminds me this joke:
|
| "Taught my kids about democracy tonight by letting them
| vote on which movie to rent and what pizza to takeaway.
|
| I then picked the movie and pizza cos I'm the one with
| the money."
| StanislavPetrov wrote:
| >Are lobbyists in control of congress?
|
| Yes, lobbyists and intelligence agencies.
| hospitalJail wrote:
| > but they always get quietly sidelined by tax industry
| lobbyists.
|
| Turbo tax has spent 44 million dollars on lobbying.
|
| The American Medical Association(Physicians) have spent 500
| million dollars on lobbying. (All of medical spent about 2
| billion)
|
| Its good that people are angry that lobbyists control the
| nation, but for some reason we give the biggest lobbyists a
| pass. I don't see the outrage against the top 20 lobbyists,
| I do (rightly) see it against turbotax.
| ceejayoz wrote:
| The medical industry is something like 20% of the
| economy. That's not the case for the tax prep industry.
| Their lobbying is outsized, and able to be more narrowly
| focused on the couple things they really care about.
| UncleMeat wrote:
| The medical industry is squarely in the crosshairs of
| "most broken and fucked up industry in the country"
| pretty much constantly. I agree that we often don't
| consider all sorts of other lobbying, but "our medical
| industry is broken because of corporations" is a pretty
| uncontroversial statement in the US.
| spoils19 wrote:
| > The medical industry is squarely in the crosshairs of
| "most broken and fucked up industry in the country"
| pretty much constantly.
|
| The problem is that you speak for others when they hold
| the opposing view - our medical industry is evidence of
| the free market working at its best, and providing care
| for dollars with no hidden or extraneous fees.
| teawrecks wrote:
| You just said the same thing with more words.
| LiquidSky wrote:
| >The challenge is that you personally need to report
| additional information for things like capital gains tax on
| asset sales, any credits/deductions you wish to claim, and
| changes in your living arrangements or life status.
|
| But that's exactly what the parent comment was saying: you'd
| get a notice from the IRS that says they think you owe $X
| based on their records. You have until the filing deadline to
| file any additional
| income/exemptions/deductions/challenges/etc.
|
| As you say, for the vast majority of people this would make
| taxes a million times easier. For people with more complex
| situations, they can then engage in the more complex process
| of additional filings.
| stcredzero wrote:
| _Behind the scenes, the IRS already has a well informed idea
| of how much you owe, based on the information submitted to
| them by your employer and a few select third parties - such
| as your bank or broker._
|
| I will corroborate, as I've posted elsewhere in this thread.
| I've had to interact with IRS employees, and they basically
| have all the information in their computer system. For simple
| returns, they could tell you the entire contents of it!
| [deleted]
| bombcar wrote:
| Here's how it should work! The IRS has a page, you can go
| look at it and say "eh ok" or you can click further and do
| whatever you think is important to update.
|
| And the tax companies can offer to do that "click further"
| for you, and you then would _see_ how much they saved you (if
| any at all). Heck, make it so the IRS always charges a "I
| dun wanna read anything" fee of $50 that you can get out of
| by clicking "uh no" like the presidential one. That would
| satisfy most people, heh.
|
| Complex scenarios can still be handled by hand if the
| taxpayer wants.
| MuffinFlavored wrote:
| > like capital gains tax on asset sales
|
| They know what you purchased your asset for + when and what +
| when you sold it for, don't they?
| TulliusCicero wrote:
| > The challenge is that you personally need to report
| additional information for things like capital gains tax on
| asset sales, any credits/deductions you wish to claim, and
| changes in your living arrangements or life status.
|
| Two things:
|
| 1. A lot of asset sales should be or are reported by
| financial institutions, so in the case of me selling stock
| through Schwab or whatever, it should still be handle-able by
| the IRS.
|
| 2. Okay yes, it's reasonable for me to put in my living
| status changes or tax deductions I want to claim, but they
| don't ask _just_ for that, they ask for all the other shit
| too, all the stuff they already know the answer to. Why?
| ryandrake wrote:
| > A lot of asset sales should be or are reported by
| financial institutions, so in the case of me selling stock
| through Schwab or whatever, it should still be handle-able
| by the IRS.
|
| Your financial institution doesn't necessarily know your
| capital gains. It reports stock sales to the IRS, but often
| doesn't report the cost basis because it doesn't know.
| Consider:
|
| You buy 50 shares of ABC on Jan 1 2020. Then you buy 50
| more shares on Jan 1 2022. Now you sell 50 shares of ABC on
| Jul 1 2022. Which bunch of shares did you sell? Was it a
| short term gain or a long term gain? Was it a loss? It
| depends. Neither your broker or IRS knows the answer, but
| you do.
|
| EDIT: The above information is evidently out of date by
| about 10 years. TIL
| jjav wrote:
| > Which bunch of shares did you sell? Was it a short term
| gain or a long term gain? Was it a loss? It depends.
| Neither your broker or IRS knows the answer, but you do.
|
| Your broker does know because you need to tell them which
| ones to sell when you sold.
|
| The IRS also knows because that's included in the cost
| basis reported to them by the broker. (This changed some
| number of years ago, brokers used to only report the
| income from the sale but not the cost.)
|
| https://www.spencerlawfirm.com/2011/01/new-cost-basis-
| report...
| ryandrake wrote:
| Interesting. I learned something today. Thanks.
| seanp2k2 wrote:
| ...and therefore there is even less reason for the IRS to
| not pre-fill forms or just have an exception-based filing
| system vs everyone has to file regardless of exceptions /
| amendments / challenges etc.
| spoils19 wrote:
| What about including the free market of tax helper
| systems and services? You'll be wiping out an entire
| industry - doesn't seem very conservative to me.
| mgerdts wrote:
| In recent years by law the brokerage company tracks the
| lots you buy and when you sell you can select which to
| sell. The gains are reported accordingly on the forms the
| brokerage company sends at the end of the year.
|
| Things get more complicated when you are trading the same
| security across different brokers because they can't
| detect wash sales. The IRS has the information to detect
| was sales.
| [deleted]
| toast0 wrote:
| I've only been trading stocks since 2005ish, but all the
| brokers I've dealt with have had ways to tell them which
| shares I was selling. And if I didn't pick them, they'd
| pick for me. Nowadays, they're required to track cost
| basis for regular shares. Even if you have shares where
| they won't report a cost basis, you're supposed to tell
| them which shares you're selling before the transaction
| settles.
|
| Employment compensation related shares get weird, but
| they will at least track the purchase date or the date it
| entered their system anyway.
| SilasX wrote:
| Still true for cryptocurrency, and still true that you
| have latitude over whether to do it as FIFO vs LIFO vs
| specific lots.
|
| Edit: To pre-empt some replies: yes, centralized
| exchanges will report sales but they won't always know
| your cost basis, and a lot of the trades will happen on-
| chain, which definitely isn't automatically reported.
|
| To be clear, I support the IRS doing as much as the
| filing as possible, and I agree these issues aren't
| dealbreakers, but please don't make the situation look
| different than it really is.
| [deleted]
| spullara wrote:
| 1. If the IRS handles it without reporting they assume that
| your sell LIFO for the worst possible capital gains
| treatment.
| LiquidSky wrote:
| In the theoretical new system, you could have an option
| to file additional elections or changes. The IRS would
| have a default that you could then vary if you chose.
| mywittyname wrote:
| Vanguard gives me an option on how to treat capital gains
| for tax purposes.
| sidlls wrote:
| The brokerages permit election of the method and can
| easily be made to report that along with the other
| details
| bluGill wrote:
| Even if the IRS doesn't know, for most people the difference
| between the right answer and the answer the IRS has despite
| missing some data isn't enough for either to worry about. My
| bank reports my stock trades, my company reports income. My
| state already collects mortgage information so it wouldn't be
| hard to send that on. Sure I could build a widget in my
| garage and not report taxes, but either I'm doing so little
| of this that it not worth the IRS's time, or I really need to
| become a real business and get an accountant to report this
| while dealing with the other complexities of finance.
| godelski wrote:
| This has always been my viewpoint. It doesn't have to be
| perfect, nothing is. Everyone already "cheats" on their
| taxes by not reporting things like gifts which never reach
| the limits anyways. Or servers who take cash tips and don't
| report. We don't care about these things because they are
| so low value and honestly might be better for the economy
| if ignored.
|
| And as far as I see it, everything the Fed needs to file my
| taxes is information that the Fed already has. I'm pretty
| sure this is an extremely common circumstance.
|
| I also don't understand why states don't push for return
| free filing. They can demonstrate it working without the
| need for the Fed to take action, which in turn would put
| pressure on the Fed.
| cyanydeez wrote:
| Republicans want you to equate the difficulty with paying tax
| as the tax itself
| asciimike wrote:
| Japan also has Furusato Nozei where (TL;DR) you can choose
| which province your taxes go to. In exchange, they send you
| local goods (crab, beef, etc.). This website shows some of the
| items available: https://www.furusato-tax.jp/
| justsomehnguy wrote:
| I don't even need the produce/goods, I just wanna know what
| part of my taxes goes directly to the place where I live.
| SoylentYellow wrote:
| Or even send your taxes to a smaller town you want to help
| out.
| movedx wrote:
| It's great in Australia too, if you needed to feel even worse
| at all.
|
| I usually get a tax refund every year, automatically, in the
| thousands :)
| yourabstraction wrote:
| It just occurred to me, there may be a reason they don't tell
| you that I hadn't considered before. If they tell you exactly
| what income they do know about, then they're implicitly
| providing information about your income they don't know about.
| This might make people with harder to trace income less likely
| to pay taxes on it, as they have some upfront assurance that
| they won't get in trouble. In some ways it could be seen
| analogous to a common rule of negotiating, which is to get the
| other party to say a number first. This allows the IRS to
| prevent lowballing the tax number, and if the person comes in
| with a low number, they can still "negotiate" it up.
|
| I don't know, just a theory. I still think the whole
| complicated process is stupid and they should just give you a
| number at the end of the year.
| xwolfi wrote:
| I paid taxes in France and Hong Kong. The French taxes are
| taken at source from your salary and you touch them up. In
| Hong Kong, it's a simple form, and they trust you.
|
| France is only 70M people and HK makes a tax profit every
| year with 8M people, sure. We re not the strong and beautiful
| United States, but if us shithole countries can tell people
| an estimate they can touch up, the US can as well Im sure.
|
| I thought before that the US was some sort of capital
| friendly country until I made a franco american friend who
| had to pay taxes there and Hong Kong. He had a guy hired and
| it seemed a complete nightmare. He worked as a low level
| programmer there for 3 years 15 years ago and nothing else.
| Still needs an accountant to do his taxes :s
| grouchomarx wrote:
| >We re not the strong and beautiful United States, but if
| us shithole countries can tell people an estimate they can
| touch up, the US can as well Im sure.
|
| you may have HN confused for reddit, you'll find very
| little american patriotism here
| jdeibele wrote:
| I think overall the IRS not providing the information is
| driven more by tax preparer lobbyists and anti-tax crusaders
| (like Grover Norquist). The tax preparers want the revenue
| and the crusaders want people to be irritated by the process.
|
| I did have basically the same thought as you, that not
| showing you the info means you're tempted to hide it.
| However, even if somebody is late reporting the info to the
| IRS, you're still liable. And the opportunity to hide income
| is gradually being reduced: eBay is sending 1099s [0] if you
| sell enough there, so is Amazon [1] and even Facebook
| Marketplace [2] for sales through them (as opposed to meeting
| in person and using cash).
|
| If people use Venmo or Zelle, that's trackable. Maybe the IRS
| isn't using it today but some day.
|
| [0] https://www.ebay.com/help/selling/fees-credits-
| invoices/ebay... [1] https://sellercentral.amazon.com/help/hu
| b/reference/external... [2] https://www.facebook.com/business
| /help/970063599855691?id=54...
| clark-kent wrote:
| The reason IRS can't do that is because of lobbying by
| companies like Intuit.
|
| cc https://www.propublica.org/article/congress-is-about-to-
| ban-...
|
| https://www.propublica.org/article/turbotax-deliberately-hid...
|
| Also see
| https://www.reddit.com/r/DecodeInvesting/comments/tcm21m/int...
| [deleted]
| dopidopHN wrote:
| Same in France. When I was filling there everything was pre-
| filled ( online ) with the information they had already anyway.
|
| I was able to confirm. And sign. Done in 20 to 30 min max
| [deleted]
| just_boost_it wrote:
| You're probably better off filing every year. In countries
| where you just get told what your taxes are, many people don't
| really even know how to get deductions made, let alone know
| what deductions apply to them. Also, I don't think you need to
| use intuit or anything like that, I think you can fill out the
| forms yourself if you really want to avoid that kind of thing.
| scarface74 wrote:
| 90% of people just take the standard deduction.
|
| https://www.taxpolicycenter.org/briefing-book/what-
| standard-...
| 0x457 wrote:
| > There's no reason the government couldn't just tell me how
| much money they took each year and give me a chance to contest
| it if I thought it was wrong.
|
| That's not how it works, though. You're telling the government
| how much you own and how much you paid. They do have a good
| estimate, and often that estimate is probably correct. However,
| there are cases when that estimate isn't correct.
| forrestthewoods wrote:
| Government: You owe us money. It's called taxes.
|
| Me: How much do I owe?
|
| Gov't: You have to figure that out.
|
| Me: I just pay what I want?
|
| Gov't: Oh, no we know exactly how much you owe. But you have
| to guess that number too.
|
| Me: What if I get it wrong?
|
| Gov't: You go to prison
| bergenty wrote:
| I think the difference is they don't know until they have
| tax auditors on the ground at your location tallying it all
| up.
| alistairSH wrote:
| For the majority of Americans, they know... Most
| Americans don't have passive income streams or investment
| income. Most Americans, for a given year, don't have a
| change in living scenario (marriage, kids, etc). The
| majority of tax filers take the standard deduction.
| sgc wrote:
| Not always. I used taxAct last year to file, as I always
| do. I paid what I was told I owe by the software. I just
| received a tax refund in the mail. Just a check with a
| memo reading "tax refund", no explanation.
|
| Further, that would be true anywhere, since no system is
| immune to tax fraud or improper communication.
| SoftTalker wrote:
| Nobody goes to prison over tax errors unless it's
| deliberate fraud.
| forrestthewoods wrote:
| Oh you sweet summer child. How I wish that were true.
|
| People hate the police but for some reason think ladder
| climbing IRS agents are fair and rational. They aren't.
| They're bloodthirsty thugs who will make your life a
| living hell.
|
| If you don't believe that to be true then consider
| yourself very, very fortunate.
| colinmhayes wrote:
| and how many bloodthirsty IRS agents have you had the
| pleasure of dealing with?
| forrestthewoods wrote:
| More than zero
| jedberg wrote:
| If you don't file your tax return, the government will
| calculate it for you, send you a bill and a document showing
| how they got there, as well as a list of all the forms they
| have, and then you either agree with them and pay, or contest
| it by filing your return.
|
| If all your income is from a job or investments that have a
| 1099 and you only take the standard deduction, the government
| already knows exactly what you owe. The only thing they don't
| know is business income/loss and donations.
|
| For most taxpayers the government could calculate your tax
| bill without any involvement from you.
| guerrilla wrote:
| > That's not how it works, though.
|
| Yeah, they're saying that it should work thatvway though,
| like it already does in Japan, Sweden and many other
| countriea
| Broken_Hippo wrote:
| _However, there are cases when that estimate isn 't correct._
|
| Which isn't actually an issue. I moved from the US to Norway
| some years ago. Once a year, the government sends a letter
| (to a secure digital mailbox) and has me go online to check
| my tax return. If I do nothing, they'll just send me any
| refund I'm owed (or expect my payment by the due date). If
| there is an error of any sort or I need to do something to
| it, I have that option.
|
| Many if not most people don't need to do anything, which
| saves money since there are less tax returns for humans to
| deal with. I'm guessing there are more resources available
| for other types collection efforts.
| Thlom wrote:
| Banks are obligated to report the holdings you own, brokers
| are obligated to report both what you own and any
| gains/losses you have endured over the year, land and home
| ownership is also reported, many deductibles are reported
| (f.ex. daycare is a deductible and that is automatically
| reported). Basically most things are reported automatically
| and if there's anything else, like a long commute (which
| for some unknown reason is deductible), there is a simple
| form on the web site you can fill.
| iopq wrote:
| But things like sales of crypto, overaseas earnings,
| business expenses, etc are not reported automatically
|
| Although I agree that the IRS can make a guess, I'd
| rather just change it to a system without so many damn
| details
| godelski wrote:
| > crypto
|
| Most people trade through brokers like Coinbase, which
| does report
|
| > overseas earnings
|
| I don't think this applies to the VAST majority people
|
| > business expenses
|
| Also doesn't apply to the vast majority of people.
| toomuchtodo wrote:
| Details aren't going away because tax policy is used to
| incentivize or disincentivize activities. Mandate
| reporting for what you can, provide an exception process
| when that isn't feasible. A majority of citizens can have
| their taxes done for them by the IRS, so do so.
| Broken_Hippo wrote:
| This is a non-issue. Of course the government won't know
| everything for everyone. That is the reason you get the
| chance to make changes to your return. And even then,
| it'll still be a little easier than doing the same return
| in the US.
|
| Even with a system of "not so many details", a few things
| are simply going to slip through the cracks but this
| isn't going to affect most people.
| UncleMeat wrote:
| Sure. The IRS obviously isn't doing this for everybody.
| But what percentage of the population do you think has
| crypto gains, overseas earnings, or business expenses
| each year?
|
| I pay something like $120 to TurboTax annually to file
| federal taxes and taxes for two states. I've got a W2
| from my job, dividends and gains/losses from equity sales
| from my brokerage, 1099-Rs for my IRA and 401k, a 5498
| for my HSA, and a bunch of deductions for charitable
| giving, which I perform through my DAF. Every single one
| of these forms is submitted to the government with
| complete information needed to compute my tax burden,
| except for the cost basis of my RSUs which is against
| some idiotic law to report to the IRS. Fix that, and the
| IRS can send me a bill. What percentage of the population
| do you think has more complex taxes than me?
| godelski wrote:
| > However, there are cases when that estimate isn't correct.
|
| So I have a few important questions then:
|
| - How large is the error?
|
| - Can errors be solved by saying "confirm and if we find out
| you lied you'll pay a fine"?
|
| - Is the error homogeneous or worse for certain
| groups/classes?
|
| - Is the error less than the cost and loss of productivity
| that Americans face in filing taxes?
|
| - If it is non-homogeneous, then can we do return free filing
| for the majority of the population?
|
| - Why can other countries successfully perform this but we
| can't?
| PaulDavisThe1st wrote:
| They've almost got a working system already. Free File Fillable
| Forms (alliteration intended?) has improved each year since it
| has existed. It has the downside that it _looks_ like the paper
| forms, which is likely to be offputting to some. If they just
| finished it so that it (a) does 100% of the math for you (b)
| transfers 100% of the values between forms for you, it would be a
| system that could be used by anyone.
|
| That's not to say that a totally different UI approach (e.g. as
| used by Turbo Tax) would not be even better, but they absolutely
| do not need to "start from scratch"
| kodah wrote:
| Free file fillable forms is run by Intuit and, iirc, is client
| side only.
| [deleted]
| PaulDavisThe1st wrote:
| I don't know what you mean by "client side only" in this
| context.
| kodah wrote:
| That it only operates in the browser. I don't think they
| store tax-related PII.
| vlark wrote:
| Free File Fillable Forms is owned by On-Line Taxes, Inc. of
| St. Joseph, Missouri, not Intuit.
|
| https://freefilefillableforms.com/home/privacy_security.php
| https://www.olt.com/main/home/leadership.asp
| kodah wrote:
| Interesting. Internally we called it Quad F and I did some
| work on it. Looks like it changed hands at some point. Vox
| references our work here: https://www.vox.com/policy-and-
| politics/22596072/irs-turbota...
|
| > The timing is auspicious for such an endeavor. As you may
| know, if you make $72,000 or less, you're eligible for a
| free return through the IRS Free File program, including
| software provided by Intuit, the company that operates
| TurboTax. If you make more, you're eligible for Free File
| Fillable Forms, an Intuit product.
|
| If you open the actual forms (not the homepage) the asset
| links went through an Intuit CDN. I'm not sure if this is
| still the case.
|
| Even more oddly, the Vox article is from April 2022, so if
| it was sold or transferred it was recently.
| meatmanek wrote:
| I used FFFF for a few years, and it always felt like it
| was trying to _exactly_ meet a set of requirements --
| functional enough to legally fulfill a contract, but just
| frustrating enough to use that most people would go use a
| paid product instead.
|
| e.g. it would do all the math that was defined on a given
| form for you, but wouldn't fill out any worksheets in the
| instructions. IIRC it also wouldn't automatically fill in
| the "Enter $X if filing single, $Y if married, ..."
| fields. Most annoyingly, it disallowed copy/paste, which
| seems like something they would've had to have broken on
| purpose.
|
| Wayback machine seems to be broken for the FFFF homepage,
| but the earliest result for the privacy_security.php page
| is from February, and it already mentions On-Line Taxes:
| https://web.archive.org/web/20220211143256/https://freefi
| lef...
|
| But yeah it definitely used to be owned by Intuit. This
| 2020 Wayback Machine result shows it being owned by
| Intuit: https://web.archive.org/web/20200418025728/https:
| //www.freef...
|
| Maybe the new owners can fix its bad attitude.
| PaulDavisThe1st wrote:
| As I mentioned, every year that I've used it (I think 5
| at this point), it has gotten a little bit better. More
| form-to-form transfers, less manual arithmetic within
| forms.
| jrib wrote:
| I've used it routinely for many years now. I also used it
| for VA which had similar free fillable forms. It seemed
| like an exact copy UI-wise but on a different domain.
|
| However, this past year VA dropped free fillable forms
| due to lack of funding. Had to go back to mailing forms
| :/
| molsongolden wrote:
| One of the hurdles here is that the IRS has increasingly
| deputized tax preparers as their first line of enforcement via
| preparer penalties [1].
|
| Another is that a free filing system with pre-populated returns
| shifts the information asymmetry involved in tax filing to be
| fully in the taxpayer's favor. Many people have an "I need to
| report everything because I don't know what the IRS knows"
| mindset. If the IRS populates a taxpayer's return with all the
| info they have, there's no incentive to report anything not
| listed.
|
| [1] https://www.irs.gov/payments/tax-preparer-penalties
| jedberg wrote:
| You know you can log in and see what the IRS knows, right? They
| make that available to you in their portal. They post it after
| the tax deadline though, but you can go back and see what they
| knew about you in previous years (the forms they got, not what
| you filed).
| bombcar wrote:
| You can know it for the current year, too, file for an
| extension and way overpay estimated tax (you can't be
| penalized if you overpaid).
|
| Wait until after file date but before extension date, and
| request all the transcripts.
| jedberg wrote:
| Yep that's exactly what my accountant does. We file an
| extension with a big payment and then wait for the
| transcripts. The only thing I have to give him is business
| expenses, donations, and few other deductions that aren't
| in the transcripts.
| bombcar wrote:
| This is the true life hack, heh. I learned something new
| today.
| molsongolden wrote:
| Yeah! Most info is available via transcript requests[1] but I
| don't believe most taxpayers know about this or bother
| checking what's in there.
|
| [1] https://www.irs.gov/individuals/get-transcript
| [deleted]
| curious_cat_163 wrote:
| > there's no incentive to report anything not listed.
|
| Maybe. That also implies that the entire population wants to
| cheat the government. I don't think that is necessarily true.
| [deleted]
| TehCorwiz wrote:
| I find it difficult to believe that most of Europe would
| continue to use their pre-filled tax forms if claims that it
| incentivized under-reporting were even remotely true.
| RhysU wrote:
| We pay taxes wrong. A silly example shows this to be true.
|
| Suppose there's a planetary government and a solar government.
| Hear me out.
|
| Filing a local, state, federal, planetary, and solar return each
| year is stupid. The solar government shouldn't process trillions
| of returns.
|
| We should file local. Local should file state. State should file
| federal. Federal should file planetary. Planetary should file
| solar.
|
| Now take away planetary and solar. Clearly the way to traverse a
| tree is one level at a time.
| baby wrote:
| That makes sense to me, states are basically tiny countries.
| You should pay taxes to the body that has your best interest,
| and that body is probably your city. Who has the city's best
| interest at heart? The state. And so on.
| jrib wrote:
| Ha, I can just imagine what happens when the planetary
| government finds an error in an individuals taxes:
|
| Planetary: Uh, federal, please correct this issue.
|
| Federal: Uh, state, please correct...
|
| ...
| gwbas1c wrote:
| The single most frustrating thing about Turbo Tax is the data
| entry: I'm not an expert, and chances are I'll get something
| wrong.
|
| Now, the IRS has all the information to provide a pre-filled-out
| tax return. They even do it internally to check that I filed my
| taxes correctly! Can they legally provide it to me... NO! When I
| did have to deal with errors, I only knew because the IRS sent me
| a bill. (Someone sent an incorrect W2 to the IRS.) I never had
| the opportunity to correct the error before I submitted my taxes.
|
| It would be so much easier if TurboTax could hook into an API
| that downloaded my tax return and then I could check it for
| errors. I'm sure they'll figure out some kind of upsell that
| makes it "worth it" for me to pay them $100 as opposed to using
| the IRS's version.
| imchillyb wrote:
| If the system were setup with...
|
| -NO DEDUCTIONS WHATSOEVER!!! -Flat single digit percentage of
| gross wage.
|
| There would be no need for the entire Tax Preparation industry.
|
| Our government hasn't worked for: We The People in decades, they
| could have implemented this free-filing system at any time, and
| yet they have not.
|
| Our government doesn't work for us. They're not going to make
| paying or figuring out what's owed to them any easier for us. Why
| would they?
|
| If the feds make preparation and filing easy for us, we'll all
| get to see just how far the big red-white-and-blue dick is shoved
| up our collective asses.
|
| They sure wouldn't want that, now, would they?
| klyrs wrote:
| The passive phrase "will look into" fills me with dread. Old
| Seattleites will remember voting for a light rail system, only to
| watch friends of politicians get hired to "consult" on the
| project and piss away the entire budget in the consultation
| phase. Just do it!
| divbzero wrote:
| I wondered about this too, how they're budgeting $15 million to
| "look into" an e-filing system. With the right team of project,
| product, design, and engineering talent, couldn't $15 million
| go a long ways towards building a working MVP, at least for
| simpler tax returns? But I'm sure that's just wishful thinking
| in my naive developer mind...
| ryanSrich wrote:
| You could fix the tax system in a few easy steps:
|
| - Eliminate capital gains tax. Taxing capital gains is
| essentially blind theft, and there's a strong moral foundation to
| stop doing it. I believe the US would have greater economic
| prosperity by eliminating a capital gains tax.
|
| - Just tell people what they owe/what they are owed. You're the
| IRS, there's no reason why I should be telling YOU how much I
| made when you already know the answer. If I think you're wrong, I
| can prove that.
|
| - Stop auditing people who are making less than $5m/year in
| income. The amount of revenue recovered from smaller earners is
| negligible and resources that now go to the IRS to staff
| thousands of agents could be used a hell of a lot better.
| fphhotchips wrote:
| > Eliminate capital gains tax.
|
| That's a _terrible_ idea. Capital gains is basically the only
| way to tax the uber and intergenerationally wealthy. If
| anything, capital gains tax should be at the same level as
| income tax, so that there 's less economic incentive to game
| the system.
| ryanSrich wrote:
| > Capital gains is basically the only way to tax the uber and
| intergenerationally wealthy
|
| That's just simply not true. There are thousands of ways to
| tax the ultra wealthy. We just don't use any of them. Capital
| gains tax is a horrendous idea that mostly punishes the
| middle class for doing well in the stock market. The uber
| wealthy are feeling none of that pain. Find a different
| solution.
| fundad wrote:
| Dark Brandon simply can't be stopped.
| ahoy wrote:
| "will look into" is code for will not do.
| susiecambria wrote:
| As someone who worked on policies directed at the low-income
| population, all I can say is, it's about time! The time and
| energy we put into promoting the District of Columbia's EITC
| campaign, helping recruit volunteers to prepare taxes for free,
| etc. could have been much better spent.
|
| I know there are challenges, mostly confronting lobbyists as the
| articles mentions. But we can put a man on the moon. . .
| hdjdjdbdkesb wrote:
| bradgranath wrote:
| How 'bout they focus on fixing the one they already have
| (freefilefillableforms)?
| jsmith45 wrote:
| That one is actually third party, originally Intuit, now `On-
| LineTaxes, Inc`.
|
| The system that IRS was charged with creating would basically
| amount to this, and it might be that they simply buy the system
| and make it an offical IRS product. They already had sufficent
| control over FFFF to force Intuit to divest after Intuit exited
| the free file alliance.
|
| I unlike many people who seem to be hoping for basically ISR
| Turbotax or nicer, I really cannot see the IRS offing a more
| guided walkthough style system instead, since that is far more
| complicated than maintaining basically digital versions of the
| paper forms. In some areas TurboTax and the others get into
| more or less the business of offering tax advice, which may
| even be incorrect.
|
| Those businesses can afford to reimburse you if their wizards
| result in incorrect totals due to a misunderstanding. The IRS
| on the other hand would need to make sure that the wizards
| never accidentally misclassify anything, even for incredibly
| rare esoteric cases. This could be done by possibly asking many
| extra seemingly irreleavnt questions to rule out all these edge
| cases, or to dumb the whole system down making it closer to
| just electronic versions of the forms. The result the IRS would
| pick is pretty obvious, go with the simpler almost-identical to
| the paper forms options.
| methodical wrote:
| "look into" == probably not going to happen
| standardUser wrote:
| This seems like a marginal improvement at best. If your taxes are
| at all complicated, this likely won't be sufficient and you'll
| still be paying professionals. If your taxes are fairly simple,
| you can already file for free without too much effort. I suppose
| there is an in-between group who may benefit from saving the
| $50-$200 for more advanced online self-filing. I've been that
| person many years in the past, but I could easily afford those
| fees.
|
| Better to have invested that $15 million in radical ways to
| simplify this entire insane(ly stupid) process.
| dandigangi wrote:
| Slightly hard to believe almost because of Turbo Tax and others
| lobbying so hard to keep their business making hand over foot in
| cash.
| hospitalJail wrote:
| My household spends 2 weekends per year on taxes. We own a few
| companies and would otherwise be spending time on those
| companies(or maybe our families).
|
| A streamlined tax system is worth 4 days per year. I imagine that
| in the future, it will take more time as our businesses grow.
| [deleted]
| Rackedup wrote:
| Free automatic filling system? yeah right... they are wanting
| people to forget credits and loopholes.
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