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IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

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Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#291

Post by creato »

briandear wrote: post #157
nightski wrote: post #139

Earlier quoted context omitted.

Yes the government always pays interest on money it owes you.

Not true. They don’t give you interest on your payroll withholdings. If you overpaid taxes by $5000, you get exactly $5000 back as refund, despite them having that money for a part of the year.

They do pay interest that accumulates some time after the filing deadline.

This is probably just a practical matter, because accounting for interest during the tax year would be complex/impossible because you would need to know when the various amounts of withholding exceeded the amount owed. I'm not even sure there is a single consistent way of doing this.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#292

Post by nightski »

mikeyouse wrote: post #244
kmonsen wrote: post #217

Earlier quoted context omitted.

Flat taxes would not help at all, because the government still needs to know all your data. After that it is just computations which computers are pretty good at.

This is the essence of the idiotic premise of the current administration that they simplified taxes enough to fit on a post card... The number of brackets isn't the source of tax complexity, it's all of the other shit. That's why that 'postcard' can be accompanied with dozens of supplemental forms. Predictably they killed the 'postcard' after one year: https://www.businessinsider.com/the-republican-tax-reform-po...

I thought that argument was because they doubled the standard deduction, making it much less attractive to itemize and hence, simpler. What is idiotic about that? For most middle to lower class families it reduced their tax burden and made things simpler. There were a few exceptions, primarily upper middle class families in high cost of living areas, but those were exceptional situations.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#293

Post by ceejayoz »

rstupek wrote: post #272
philwelch wrote: post #181

Earlier quoted context omitted.

If you get a tax return at all, you've essentially given the federal government an interest-free loan all year.

And most people think of that money they get back as a bonus! Like it was never their money in the first place but a gift from the government

For people who aren't good at budgeting/saving, it can be a decent way of putting away money for a large purchase or two every year. It's a lot easier to raid a savings/retirement account than to get your IRS refund six months early.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#294

Post by jxramos »

9000 wrote: post #288
jxramos wrote: post #231

Earlier quoted context omitted.

The regression application here seems flawed, that assumes a fixed percentage is applied to a fixed amount, where that amount is invariant to income. That is not the case with a flat tax where a fixed percentage is applied to a variable amount. The flatness of the flat tax is on the percentage, the amount (income) is the variable portion that will be more or less based on the individual. The percents however will be…

My understanding is that while yes, in some sense a flat tax is neither progressive nor regressive, that's not really what people are talking about when they say a flat tax is regressive. Instead, the issue is that the poorer you are, the larger percent of your income is spent on essentials. If I go from spending $200/month on groceries and then I get an enormous 300% raise at work, I'm not going to start spending $8…

Yes, I'm starting to awaken to the fact that at this point we're no longer talking about income but disposable income. The points about what you're calling essentials. I'm trying to think about this mathematically, this is what I'm feeling out so far...

Premises

    X = income
    c > 0 (income difference)
    p = tax rate
    e = some expense

    ==> X+c > X   (income inequality)
    ==> (1-p)(X+c) > (1-p)X   (income after taxes)
    ==> 1/[(1-p)(X+c)]  e/[(1-p)(X+c)]
Like with many things people mean different things by the same terms. I'm thinking more along the lines of the second investopedia article which makes the point of This type of tax has no correlation with an individual's earnings or income level.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#295

Post by nightski »

alistairSH wrote: post #280
wool_gather wrote: post #116

Earlier quoted context omitted.

There's also a political lobby (see: Grover Norquist) for the idea that filing taxes must never be made easier, because that will make them more palatable. Combined with their axiom that taxes are inherently bad, the result is an argument that tax filing should actually be as painful as possible. (The surprising strength of this lobby is one possible reason that the "file your taxes on a postcard" idea died a few yea…

Yeah, I don't buy Norquist's theory. Making taxes easier doesn't make them any more palatable. Probably the opposite because people would have a better understanding of how much they're paying. Right now, a lot of people mindlessly fill in their needlessly complex forms, and pray they get a refund or don't owe more than $20 or so (because that's all they have in their wallet).

Worst case is you take the standard deduction. After being doubled in Trump's tax bill, it's often the right choice too.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#296

Post by jxramos »

reaperducer wrote: post #253
arcticbull wrote: post #235

Earlier quoted context omitted.

Literally all of that information is already being reported to the IRS by the relevant companies on forms 1098, 1099-whatever, W-2, W-4 and whatever other schedules apply. The IRS defines the rules, they built an engine to take all that into account to ensure you're not lying on your taxes. They just have to literally run it and send you the printout for verification with a remittance stub. The rest is regulatory cap…

Literally all of that information is already being reported to the IRS by the relevant companies on forms 1098, 1099-whatever, W-2, W-4 and whatever other schedules apply. But not instantly. And not all of it in time for April 15th. Sometimes those details don't make it to the IRS for years. We don't yet live in a world of instantaneous information transfer about every American citizen to the government. Some people…

Not always accurately either for those who have been unlucky enough to have received a corrected W2 or whatever said form is. https://www.irs.gov/forms-pubs/about-form-w-2-c

We have to remember too that the government itself is dealing in approximations and assumptions of its own. People make mistakes including those in government and corporations.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#297

Post by jandrese »

phonon wrote: post #238
jandrese wrote: post #138

Earlier quoted context omitted.

As an average Joe it seems like it can be pretty much impossible to figure out the rules in any number of corner cases. For example. I'm considering installing Solar Panels on my house. The entirety of the official IRS guidance (in the manuals) is this: "Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home located in the United States. No c…

You can in fact request a private letter ruling from the IRS. They are not obligated to respond to it, but typically do. E.g. For §25D https://www.irs.gov/pub/irs-wd/201809003.pdf https://www.irs.gov/pub/irs-wd/1130003.pdf You also apparently did not review https://www.irs.gov/pub/irs-drop/n-13-70.pdf (Which even has a contact phone number for the author; call it! Worse that can happen is they point you somewhere els…

How did you find these documents? I spent a considerable amount of time on the IRS website and never found anything even mentioning them.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#298

Post by nightski »

SilasX wrote: post #232
nightski wrote: post #133

Earlier quoted context omitted.

You don't go to jail for filing a wrong number accidentally. Only if you are intentionally lying/hiding income. I know people who didn't pay tax FOR THEIR BUSINESS for several years and they settled the debt for much less than they owed and definitely did not go to jail. This is just misinformation.

If that's true, then what's the point of paying business taxes? When the IRS finds out, you just pay less than you would otherwise, and much later.

Having a tax lien on your business is not fun. Neither is going through the settlement process. You also are not guaranteed a settlement and could end up owing the full amount plus interest. At best they let you pay it over time. At worst they take your property and liquidate it. But jail time is unlikely unless you had malicious intent.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#299

Post by reaperducer »

arcticbull wrote: post #277
reaperducer wrote: post #253

Earlier quoted context omitted.

Literally all of that information is already being reported to the IRS by the relevant companies on forms 1098, 1099-whatever, W-2, W-4 and whatever other schedules apply. But not instantly. And not all of it in time for April 15th. Sometimes those details don't make it to the IRS for years. We don't yet live in a world of instantaneous information transfer about every American citizen to the government. Some people…

> But not instantly. And not all of it in time for April 15th. Sometimes those details don't make it to the IRS for years. And yet it has to get there by tax time so I’m having trouble believing it takes some tax forms literally years to make it to DC. Especially when you go to jail if they don’t. > We don't yet live in a world of instantaneous information transfer about every American citizen to the government. Buuu…

And yet it has to get there by tax time so I’m having trouble believing it takes some tax forms literally years to make it to DC.

It sounds like you've never needed to file a revised tax form for a previous year. I have, and millions of other people do it each year.

Especially when you go to jail if they don’t.

The IRS doesn't show up on your doorstep on April 16th if you don't file. There's a process. A long, involved process. Even if you pay nothing, it takes months before they start forcibly taking money from you. If you file for an extension or two, it's even longer than that.

Why would information arriving quarterly (bi-weekly even) instead of annually be a bad thing when that information is legally bound to arrive at its destination anyways?

Because the vast majority of America's accountants are one or two person shops with neither the time nor the technology to make this happen. In spite of the rhetoric you see on the internet, the government (via the politicians) doesn't like to make things hard on small businesses unless it really has to.

The only thing you're arguing is that the government shouldn't run their program a few months before you submit the documents, then send it to you for review, instead of afterwards and sending it to a tax judge.

I argue nothing. I merely state facts.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#300

Post by phonon »

jandrese wrote: post #297
phonon wrote: post #238

Earlier quoted context omitted.

You can in fact request a private letter ruling from the IRS. They are not obligated to respond to it, but typically do. E.g. For §25D https://www.irs.gov/pub/irs-wd/201809003.pdf https://www.irs.gov/pub/irs-wd/1130003.pdf You also apparently did not review https://www.irs.gov/pub/irs-drop/n-13-70.pdf (Which even has a contact phone number for the author; call it! Worse that can happen is they point you somewhere els…

How did you find these documents? I spent a considerable amount of time on the IRS website and never found anything even mentioning them.

I updated my answer above. I googled the tax code section. Pretty much everything you need will appear in the first page of results, or linked to/referenced from those results. CPA's know what to look for, so it's a bit easier for them.

There are also specialized search engines. E.g. search for 25D at http://www.legalbitstream.com/irs_materials.asp?pl=i1

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