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IRS tests free e-filing system that could compete with tax prep giants

washingtonpost.com

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Re: IRS tests free e-filing system that could compete with tax prep giants

#51

Post by _yb2s »

ShadowBanThis01 wrote: post #5

It is WAY past time for this. It's absurd that we have to regurgitate tax information that has already been reported to the government. But it's even more absurd that the government gives us no way to do so electronically. And then there's the disgusting shell game that IS the entire U.S. tax system, which is the root of the whole problem. But... didn't Congress pass some corrupt legislation years ago that made it il…

The weird thing is the IRS already knows my taxes better than I do… a few times I’ve made mistakes inputting forms or forgot to put something in, and I will always get a letter from them about it. They’ve already done my taxes so they should just send me a bill and not waste my time, possibly with the option to submit extra details they are missing like deductions… but that should be an option for people that need it. There is no reason for a w2 wage earner taking the standard deduction to need to file taxes.

Re: IRS tests free e-filing system that could compete with tax prep giants

#52

Post by mattlondon »

brocklobsta wrote: post #15

What I don't understand about these programs is the added income clause. In California the state provides a free tool to file state income taxes (CalFile), but you can't use it if you make over $230,000 a year. Does it really make sense? It's similar with the federal free file program I believe. You would think they would want to encourage high income citizens to use their tool so they can control the deductions/cred…

In the UK you don't have to file at if your income is under £100,000 (assuming you are employed by a company that does PAYE (pay as you earn) - i.e. tax is deducted automatically from your payslip - and you don't have any other sources of income which is probably 99% of people) - after 100k you have to file electronically (although someone can do this on your behalf - I don't think postal filing is possible any more).

For what it is worth, the UK online filing is actually pretty good these days. Modern UI, and the process is tailored via a few "wizard" type questions initially so you are only shown the bits you need to fill. It can get a bit confusing at times though just due to the tax laws themselves and the terminology etc, but the system for filing itself is pretty good.

Thanks to onyone on here (and I bet you are on here!) who is working on the gov.uk stuff - it is generally pretty good.

Re: IRS tests free e-filing system that could compete with tax prep giants

#53

Post by jjcm »

throwaway85858 wrote: post #32

Some notes about the official system in Germany called "Elster" 1. Sign in via chip card or certificate based authentication for which the activation codes come in the post. 2. All forms are neatly laid out and guide you through the process of filing them, the quality of the frontend is really top notch, they even have a dark mode. 3. All insurances (health, life etc.) and wage statements have already been submitted…

Australia is very similar to this, with the exception of activation codes in the post. Australia is pretty digital-first for their services, so you just sign in with your government ID and navigate to your taxes.

Everything is pre-filled. If you have no additional deductions to add in, taxes take around 5 minutes total to file. They have a fairly robust banking system as well so any additional tax you have to pay takes around 60s to send through any bank's mobile app.

Re: IRS tests free e-filing system that could compete with tax prep giants

#54

Post by clintonb »

themagician wrote: post #45

Does the IRS actually know what everyone owes? I know it's true for W-2 employees, but what about everyone else? I've always had this feeling that you could ask the IRS what they believe any given SSN/EIN owes and they'd be able to tell you (not that they would, but that it's already calculated somewhere). I don't know if this actually true though. I know almost all W-2 information is sent electronically. They know a…

They know when you don't pay enough, so they have to know what you owe. All of the forms we receive (e.g., W-2, 1099) are transmitted to the IRS. They can use them to determine if a tax payer underpaid.

I know this firsthand because a broker transmitted proceeds without transmitting a cost basis, resulting in a scary letter from the IRS a few months after I filed.

The problem, as I understand it, is that the IRS' technology is very dated, so processing is quite slow, hence the months-long wait between filing and a CP2000 letter.

Re: IRS tests free e-filing system that could compete with tax prep giants

#55

Post by gamblor956 »

ShadowBanThis01 wrote: post #5

It is WAY past time for this. It's absurd that we have to regurgitate tax information that has already been reported to the government. But it's even more absurd that the government gives us no way to do so electronically. And then there's the disgusting shell game that IS the entire U.S. tax system, which is the root of the whole problem. But... didn't Congress pass some corrupt legislation years ago that made it il…

And then there's the disgusting shell game that IS the entire U.S. tax system, which is the root of the whole problem.

Everyone thinks that they can come up with a much better tax system, and they always start with something super simple that meets their tax needs. But a simple system that meets one person's tax needs is usually not so simple, fair, or efficient for other people. And when you take all their needs into account when you redesign the system...you end up with something pretty close to what we have right now.

For example, try designing a tax system that is both fair and efficient with respect to agricultural income and tech income (this is a fairly common assignment in university tax programs). It won't be simple. And that doesn't even get into how to reconcile the tax treatment of business income with the tax treatment of individuals, or the many ways they earn and spend income, or the complexities of other types of businesses (like manufacturing, retailing, resource extraction, in-person services, etc.).

Re: IRS tests free e-filing system that could compete with tax prep giants

#56

Post by macinjosh »

The fact that we have to report anything about our personal finances to the Federal Government is a violation of the 5th Amendment. The fact that they've forced employers to be their snitches is even more gruesome. Isn't it a sure sign of fascism when corporations and government work hand in glove?

Re: IRS tests free e-filing system that could compete with tax prep giants

#57

Post by brocklobsta »

mountainofdeath wrote: post #41
AlexandrB wrote: post #26

Earlier quoted context omitted.

American legislators seem to loooove "means testing" every government-provided service. Maybe it's a misguided version of that?

It's probably more-so that above a certain income threshold, your tax return becomes exponentially more complex. Free-file is useful when all you have is 1-2 above-board wage earning jobs, maybe with a 1099 contract job where the employer is nice nice enough to pre-fill the form out for you. Once you start dealing with non-trivial amounts of dividends, interest, securities, partnerships, real-estate, you really do ne…

I get that, but why use income as a proxy for complex tax items? A W2 that takes home 400k using standard deduction for example is easier than someone self employed with several deductions that makes 100k.

Re: IRS tests free e-filing system that could compete with tax prep giants

#58

Post by mixmastamyk »

linuxftw wrote: post #43

The IRS has no incentive to make sure you get all the deductions you're allowed. They don't have incentives to make sure the software works well under load and at scale. Whatever they put out will likely be half-baked, and the software will degrade rapidly because the tax laws change each year. I suspect, that given the currently complexity of the tax system itself (rather than the filing, which seems to be pretty st…

Defeatism. Every other civilized country (and US states) manage to do it, and IRS has always been helpful and knowledgeable if you ask them. They've been using electronic systems for several decades already.

Oh, and USDS is involved, so shouldn't be a contractor shitshow.

Re: IRS tests free e-filing system that could compete with tax prep giants

#59

Post by RandallBrown »

_yb2s wrote: post #51
ShadowBanThis01 wrote: post #5

It is WAY past time for this. It's absurd that we have to regurgitate tax information that has already been reported to the government. But it's even more absurd that the government gives us no way to do so electronically. And then there's the disgusting shell game that IS the entire U.S. tax system, which is the root of the whole problem. But... didn't Congress pass some corrupt legislation years ago that made it il…

The weird thing is the IRS already knows my taxes better than I do… a few times I’ve made mistakes inputting forms or forgot to put something in, and I will always get a letter from them about it. They’ve already done my taxes so they should just send me a bill and not waste my time, possibly with the option to submit extra details they are missing like deductions… but that should be an option for people that need it…

How would you know if you're going to take the standard deduction without doing your taxes? I'm fairly certain the federal government doesn't know about all my deductions.

Re: IRS tests free e-filing system that could compete with tax prep giants

#60

Post by runako »

mountainofdeath wrote: post #41
AlexandrB wrote: post #26

Earlier quoted context omitted.

American legislators seem to loooove "means testing" every government-provided service. Maybe it's a misguided version of that?

It's probably more-so that above a certain income threshold, your tax return becomes exponentially more complex. Free-file is useful when all you have is 1-2 above-board wage earning jobs, maybe with a 1099 contract job where the employer is nice nice enough to pre-fill the form out for you. Once you start dealing with non-trivial amounts of dividends, interest, securities, partnerships, real-estate, you really do ne…

> above a certain income threshold, your tax return becomes exponentially more complex

For some people. A person working a single job as a programmer earning $300k in straight W-2 income (no RSUs, etc.) does not have more complex taxes than a person earning $100k from a combination of their podcast + a few rental properties. There's no logic to means-testing this kind of service, where there would be for feature-testing (i.e. "Does all your income come from your job?").

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