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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

#511

Post by dartharva »

RajT88 wrote: post #445
rocketbop wrote: post #424

> A direct-to-IRS e-file system is wholly redundant and is nothing more than a solution in search of a problem," said Rick Heineman, a spokesman for Intuit, the company behind TurboTax. "That solution will unnecessarily cost taxpayers billions of dollars and especially harm the most vulnerable Americans." Extraordinary that he could say that sentence with what I assume was a straight face.

On some counts, he is not wrong. It will cost taxpayers billions of dollars. Those billions of dollars will be well spent, and may be a net 0 cost for taxpayers after the savings on eFiling. This is a revocation of the license to print money by the tax prep industry.

"Billions of dollars"??

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

#512

Post by DigiDigiorno »

whiplash451 wrote: post #496
RajT88 wrote: post #445

Earlier quoted context omitted.

On some counts, he is not wrong. It will cost taxpayers billions of dollars. Those billions of dollars will be well spent, and may be a net 0 cost for taxpayers after the savings on eFiling. This is a revocation of the license to print money by the tax prep industry.

Billions of dollars is a massive overestimate. It will indeed cost dozens of millions, but billions? Come on. We're not building the F-35 here.

Look up the cost of the healthcare.gov website project*

People complain about government contractor costs for a reason

*Last I checked it was north of a billion in 2014 dollars

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

#513

Post by a_humean »

ajmurmann wrote: post #493
bradfa wrote: post #486

If the federal government really wanted to save money on tax collection, improve the accuracy of tax collection, and drive the tax preparation industry out of business which would save every person and company significant money, then the federal government would just simplify the tax code. Any high school graduate should be smart enough to file their own taxes. That this is not true today is simply insane. For tax in…

The income bracket stuff is so crazy. It's just another way to redistribute wealth, but that's not palatable to the US public so it takes weird forms like this. It would be much more practical to abandon these piecemeal, market-distorting interventions and instead just do some smallish UBI. The money saved on overhead alone would probably be enormous.

Take a moment to look outside of your borders. In the UK we have a mostly progressive income tax system with various tax brackets, tax free allowances up to 12k GBP, claw backs of said allowance over incomes of a certain amount, national insurance taxation, student loan repayments, etc...

The majority of UK citizens file no paperwork with HMRC (equivalent to the IRS) and never have a reason to contact HMRC.

The majority of UK citizens only interaction with HMRC is when they get a summary letter in the post at most once a year telling them that everything is fine or they over/underpaid through the automated systems. In the latter casen they either are given the money owed or told that they will have to repay what is due through what is effectively an interest free loan over the course of the next 1-2 years (can be negotiated).

The reason why this is possible is because employers report salaries to HMRC and its a deduction in their monthly payslips.

You might say its not possible to do that in the US, but ask yourself how does the IRS actually know that you have misreported/underpaid? Its because they already know exactly how much you owe because the same information has already been reported to them by the banks and your employers.

There is literately no point in tax filing for the majority of US citizen that work as an employee employer except to enable the parasitic tax filing industry to exist.

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

#514

Post by seunosewa »

morning-coffee wrote: post #500
RajT88 wrote: post #445

Earlier quoted context omitted.

On some counts, he is not wrong. It will cost taxpayers billions of dollars. Those billions of dollars will be well spent, and may be a net 0 cost for taxpayers after the savings on eFiling. This is a revocation of the license to print money by the tax prep industry.

One way for it not to cost tax payers billions of dollars to drastically simplify the tax code while they are at it. A big part of the cost is directly attributable to the complexity of the rules to be followed to figure out how much to pay based on your circumstances. Throw all that nonsense out and all that should be left is a relatively simple "You made X, so you owe X * rate"

The complexity of the tax code is a result of negotiations between various political and commercial interests and lawmakers at the federal and state level. Simplifying it means changing a whole lot of laws touching taxation, which is practically impossible when the people negatively impacted by each change will be lobbying hard against. It's hard enough to get a single bill through congress. If they somehow achieved the impossible feat of changing all bills that touch taxation, the code will start accumulating complexity again starting from the next day.

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

#515

Post by codeulike »

In the UK the equivalent to IRS is called HMRC.

People who are just in normal employment dont need to submit their taxes because it Pay As You Earn (PAYE) and so its all obvious. But if you are self employed or get paid dividends or made a capital gain or sundry other exceptions then you have to submit a tax return.

HMRC provide a web app for you to submit your tax return should you need to. Its a pretty good app. Its long and complicated because thats how taxes are, but its pretty good.

There's also an API where 3rd parties can develop their own software for submitting your taxes. I guess you have to get some sort of approval to use it, but its there.

There are a few doubly-exceptional cases that are not covered by the default HMRC web app. E.g. if youre in a partnership (a sortof type of ad-hoc company) and need to do a special sort of return. A bunch of other edge cases too. For those you go and search out a third party software supplier from an approved list. Or fill in a paper form.

TDLR: something sane is possible

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

#516

Post by ajmurmann »

amelius wrote: post #439
opzz wrote: post #425

They should open source this. I would actually contribute to making this usable.

Makes you wonder why there wasn't an open source tool for this to begin with. Why did nobody feel the urge to make this?

Source-available might be more practical in this case. Low-quality PRs and issue reports can be a massive drain on a project. A IRS tax-payer tool is about the most likely project I could think of to attract massive amounts of that.

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

#517

Post by [deleted] »

jcadam wrote: post #428

On the upside, if the tax-preparation industry is destroyed or severely diminished, it would make it easier to reform/simplify the tax code at a later date should a future government be so inclined. On the downside... no way would I use a tax preparation system provided by the IRS. It's bound to be a UX nightmare, like all government software, there's an obvious conflict of interest (the IRS has no reason to help fin…

[deleted]

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

#518

Post by bradfa »

jjice wrote: post #497
bradfa wrote: post #486

If the federal government really wanted to save money on tax collection, improve the accuracy of tax collection, and drive the tax preparation industry out of business which would save every person and company significant money, then the federal government would just simplify the tax code. Any high school graduate should be smart enough to file their own taxes. That this is not true today is simply insane. For tax in…

I agree in concept for sure, but just simplifying our complex tax code is probably near impossible at this point unfortunately. Even for certain things like you mention with electric vehicle incentives, I don't believe you'd be able to pass saving on at purchase time because I believe for those (or maybe I'm think of solar or another green tax break), you need to own it for a period of time and savings come only with…

For electric cars, I don't believe there's an ownership period required. But for example of the right way to do it, in New York if you buy an electric car then at the time of purchase the state will pay $500 to $2000 to reduce the price of the car for you based on the all-electric range, with no requirement about income levels and nothing to file on your personal income taxes.

https://www.nyserda.ny.gov/All-Programs/Drive-Clean-Rebate-F...

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

#519

Post by ploxiln »

amelius wrote: post #439
opzz wrote: post #425

They should open source this. I would actually contribute to making this usable.

Makes you wonder why there wasn't an open source tool for this to begin with. Why did nobody feel the urge to make this?

https://opentaxsolver.sourceforge.net/

It's just a bit too much grunt work to make something that lots of people really want to use. Tax codes change very year, there are 50 states in the US with different tax codes, it's a lot of work to review contributions (are you a tax lawyer familiar with all 50 states ...)

Lots of successful open source projects are started by one person, who spends a few years making something very useful for themselves, and sharing it, then slowly growing the contributor pool. But this kind of project is a lot more work than just doing your own taxes! And nobody wants to use it as-is 2 years later, it needs more maintenance work every year to be baseline useful, a lot more than it takes to just do your own taxes.

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

#520

Post by DANmode »

bcraven wrote: post #479

The (fantastic) Reply All podcast episode #144, "Dark Pattern" covers tax returns.[0] In summary, the US government made a deal with private industry that as long as that industry offered a free tier of tax returns, the government would never create its own tax filing system. I wonder what has changed! [0] https://gimletmedia.com/shows/reply-all/6nhgol

The free tier has never been universally recognized (for most, you can only file half of what you need to file for free), and users still pile into places like H&R Block yearly.

People are less interested in important financial processes happening without their input.

Public sentiment may have shifted far enough by now that the "duty" from that deal could now be considered derelict.

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