IRS tests free e-filing system that could compete with tax prep giants • Hacker News Board

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

#321

Post by andrewla » Mon, May 15, 2023, 9:49 PM UTC

BugsJustFindMe wrote: post #277

andrewla wrote: post #237

The steelman case for opposing "auto-filing" or having the IRS provide tax preparation is that the intention of requiring everyone to file is that all citizens should be directly aware of the amount of taxes being assessed and the complexity of the tax code itself, with the objective of making people oppose legislative increases in the complexity of the tax code, and to make tax increases more intrusive so that legis…

> The steelman case for opposing "auto-filing" or having the IRS provide tax preparation is that the intention of requiring everyone to file is that all citizens should be directly aware of the amount of taxes being assessed and the complexity of the tax code itself That's a very weak case when they could just send me a letter telling me how much they took and why, which would accomplish the same thing but better and…

The unnecessary labor and expense is the point in this model. The argument is that taxes are bad and people should be a strong check on the government that is attempting to tax them. The more explicit and painful the process is (the theory goes) the more people will support limitations on taxes, rather than allowing them to expand unchecked.

The theory makes sense, and the ends are laudable, but it doesn't work. Other ways of doing taxes do not even attempt to provide the benefit of this sort of built-in check on government excess, If you're willing to forgo that (or acknowledge that making people feel pain is not an effective policy tool in this case) then auto-filing solutions like the one in the article make a lot more sense.

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

#322

Post by [deleted] » Mon, May 15, 2023, 9:50 PM UTC

johnny99k wrote: post #81

RandallBrown wrote: post #59

Earlier quoted context omitted.

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.

This is why making it this easy is a win for the government. 99% of the people are lazy and will just let them do it, basically giving them free money.

[deleted]

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

#323

Post by [deleted] » Mon, May 15, 2023, 9:52 PM UTC

kristopolous wrote: post #88

jandrese wrote: post #40

Earlier quoted context omitted.

One of the things to watch out for is so many free options that are only usable if you taxes are already trivial. Strangely enough that IRS search tool claims there are 0 options for me, even though FreeTax works just fine.

Ignore the "free" claim. Instead compare the normal price. Turbotax normal price if you're making north of 200k is what? like $150? They're going to do a deceitful hustle to try to get you to pay it like some seedy online scammer. The other players in the industry price their competing products at $15-$20. They're upfront and there's no hidden costs. Intuit is an extreme outlier and charges an outlandish premium to f…

[deleted]

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

#324

Post by andrewla » Mon, May 15, 2023, 9:54 PM UTC

chimeracoder wrote: post #299

BugsJustFindMe wrote: post #277

Earlier quoted context omitted.

> The steelman case for opposing "auto-filing" or having the IRS provide tax preparation is that the intention of requiring everyone to file is that all citizens should be directly aware of the amount of taxes being assessed and the complexity of the tax code itself That's a very weak case when they could just send me a letter telling me how much they took and why, which would accomplish the same thing but better and…

> That's a very weak case when they could just send me a letter telling me how much they took and why, which would accomplish the same thing but better and without saddling me with a bunch of unnecessary labor and/or expense. Furthermore, the amount of money that people pay is not very strongly correlated with the time or effort (or frustration) involved in filing the taxes. In fact, there's often (though not always)…

I don't feel like this is the opposite. The feeling that you are overpaying taxes because of all the boxes you have to leave blank is part of the same theory. Every time you're asked "are you using any of your land for agricultural purposes" or stuff like that, you think "why is there an exclusion for that? Can I buy a chicken and qualify? This is stupid, we should get rid of that deduction and make this faster for everyone", except that nobody acts on that last thought, and every year they bring in new exemptions and credits and deductions that apply so narrowly that all they do is add complexity without benefit for the vast majority of tax payers.

Nonetheless, seeking a legislative cure for this is something that people are just not interested in doing, making most of this moot.

The only remaining argument is that maybe legislatures HAVE been limiting the complexity and rates of taxation out of caution for the backlash, and if you get rid of it, then they'll go hog-wild and before you know it you find more and more of your earnings disappearing into taxes.

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

#325

Post by tylerhou » Mon, May 15, 2023, 9:55 PM UTC

hibikir wrote: post #106

jrochkind1 wrote: post #85

Earlier quoted context omitted.

> The vast majority of people take the standard deduction Unless they are a homeowner, probably. Part of the issue is that the US tax code is a lot more complex than most countries. (And the homeowner-targetted deductions are kind of insane and bad policy too). Still, I don't disagree with the basic premise. They probably know enough to know if itemizing your homeowner-related things would be better for you, and do i…

Unless you are a homeowner at an expensive metro. It used to be basically every homeowner, but the changes in 2018 led to a massive reduction of people itemizing. The standard deduction went up a whole lot, and along with it, the deduction for state and local taxes was capped to a relatively low number. So if you owe, say, $200K in your mortgage, chances are that you are going to need non-trivial bonus itemization to…

Also, the SALT cap is not indexed to inflation, but the standard deduction is, so as time passes it’s likely that fewer and fewer people will itemize.

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

#326

Post by recursive » Mon, May 15, 2023, 9:56 PM UTC

RandallBrown wrote: post #59

_yb2s wrote: post #51

Earlier quoted context omitted.

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.

By deciding to do it. Whether it's economically rational is another question. I've never calculated my deductions. I assume it's ok. But it's a guess, as I've never checked.

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

#327

Post by akira2501 » Mon, May 15, 2023, 10:10 PM UTC

runako wrote: post #281

akira2501 wrote: post #241

Earlier quoted context omitted.

> why should we invest resources in expanding our free services when taxpayers don't use what we already make available? It's not a service. It's an obligation. You want my money? Why do I have to find a "service" to get you to take it? If you've never used one of those services, you should. Some of them have gotten better only very recently, some still look like fly-by-night scam operations that are trying to filch…

> If you've never used one of those services, you should Complex tax situations, likely will be using third-party advisors from here out regardless of what the IRS provides for wage earners.

That's honestly great for you and your family, but it also probably means your notions on the impediments to welcome uptake of free filing solutions for people outside of this class are out of touch with the actual problems experienced.

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

#328

Post by KyeRussell » Mon, May 15, 2023, 10:12 PM UTC

ac29 wrote: post #293

PopAlongKid wrote: post #246

Earlier quoted context omitted.

Correction: "If you think you owe less or more due to details we don't have, feel free to file the old way"

And that's probably the main reason it isnt done. The IRS assumes nearly no one would report extra taxable income if they came out and said all of the things they already knew (and by implication, dont know).

Here we go. American exceptionalism again. No surprise here. It isn’t done because your government is stupid and corrupt. Look at the myriad other examples of this happening in other countries.

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

#329

Post by jcfariadias » Mon, May 15, 2023, 10:15 PM UTC

aksss wrote: post #204

jcfariadias wrote: post #50

Earlier quoted context omitted.

In Portugal, every transaction should, by law, be sent to the tax authority. Every employer should also report what paid to their employees and also retain in source part of the income Everything is then setup centraly by tax authority which enables the process of submiting tax reports being automatic for most or either, if you have a more complex tax situation, taking you a couple hours tops to self-fill and submit.…

> every transaction should, by law, be [reported to the gov.] Conceptually, and in principle, this freaks a lot of Americans out. But the burden of not doing it is exceeding the alternative, I think. While it may be progressive to automate tax filing, having the government know everything about your financial transactions without proper cause is not considered very progressive (I guess it depends on what you are tryi…

It's the only (that I know of) way to avoid tax evasion and paralel economy.

There are incentives (tax deductions) that are granted to citizens who ask for invoices with their fiscal details

It is indeed progressive because it unburdens citizens from a massive yearly headache when submiting taxes. It's progressive because it avoids physical printing of receipts, thus reducing waste and paper consumption. It is progressive because less tax evasion means more taxes to apply in free healthcare and social security.

Having people not dying because they can't afford insurance, or being restful that the state will cover up part of their expenses if they can't work (for eg: if they have a flu and can't work for a week) seems pretty progressive to me and a good tradeoff for leting the government know about a few purchases you make.

Also, if you want go paperless, your bank also knows about all your financial transactions and I don't see people caring too much about it as they care with government...

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

#330

Post by BugsJustFindMe » Mon, May 15, 2023, 10:27 PM UTC

andrewla wrote: post #321

BugsJustFindMe wrote: post #277

Earlier quoted context omitted.

> The steelman case for opposing "auto-filing" or having the IRS provide tax preparation is that the intention of requiring everyone to file is that all citizens should be directly aware of the amount of taxes being assessed and the complexity of the tax code itself That's a very weak case when they could just send me a letter telling me how much they took and why, which would accomplish the same thing but better and…

The unnecessary labor and expense is the point in this model. The argument is that taxes are bad and people should be a strong check on the government that is attempting to tax them. The more explicit and painful the process is (the theory goes) the more people will support limitations on taxes, rather than allowing them to expand unchecked. The theory makes sense, and the ends are laudable, but it doesn't work. Othe…

> The theory makes sense

Regardless of how one feels about arguments against taxation, that theory for how to achieve it does not make sense. It is belligerent sleight of hand from people who want to preserve the status quo of a sheltered income funnel for the tax preparation economy at the extremely inefficient labor expense of everyone else.

Here's the problem...

You're literally creating something entirely unrelated (paperwork) for people to get mad about instead of getting mad about the thing that your argument claims they should be mad about (taxes). This is what we call in layman's terms a smoke screen.

The only reason for not just sending an itemized receipt is to hide from people where their tax dollars go and to bury them in arduous paperwork so that they have less energy to focus on the actual issue of spending allocation.

If your argument is earnestly and honestly that taxes are bad and people should attempt to limit government imposing new taxes, it does not matter one whit how painful the paperwork process is, because the paperwork process is not what you claim you seek to limit.

If your argument is earnestly and honestly that taxes are bad and people should attempt to limit government imposing new taxes, JUST SEND AN ITEMIZED RECEIPT so that people can see the waste.

If you earnestly and honestly think that taxes burden people more than they help, by not just sending an itemized receipt all you've done is hide that burden behind an obfuscated wall of secrecy and toil, which goes completely against what your argument claims it wants.