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IRS to begin trial of its own free tax-filing system

nytimes.com

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Re: IRS to begin trial of its own free tax-filing system

#61

Post by nerdponx »

jacobyoder wrote: post #21
GreedClarifies wrote: post #16

Earlier quoted context omitted.

So in its initial form it is indeed a complete waste of tax payers money. Shocking.

Absolutist takes like this never achieve much. Yes, it could be better. But an mvp-type launch that does some things well, without trying to achieve everything on day one, would definitely not be a "complete waste". If successful, it's laying the base for the next iterations of functionality. For a lot of folks, they have one or two W2 forms to enter, and that's it. It's really not that hard. If even a million or so…

Let's also remember the context of this project. It's not just an overly-cautious MVP rollout. This project is something that has tremendous resistance against it, for stupid reasons, but the resistance exists nonetheless. Much like ACA benefits, people will only realize it's actually a good idea after they've gotten used to it. Starting small, with a minimal project that is most likely to succeed, is the best way to ensure that the project can continue at larger scale in the future.

Re: IRS to begin trial of its own free tax-filing system

#62

Post by BHSPitMonkey »

HarryHirsch wrote: post #20
nerdponx wrote: post #7

Earlier quoted context omitted.

Not only will they, but Trump's Secretary of Treasury will order the IRS to cancel the program as soon as he's elected.

Why? Trump is a populist. "Get your taxes done with me for free instead of HR Block charging you a couple hundreds" is a low-hanging fruit.

He _uses_ populism, but not on issues intended to benefit the common people. He will push policy to help the filing industry, pocket some kickbacks in the form of contracts to his hotels/resorts from those companies and their lobbyists, and then tell the people that this is great news for them (a claim his base will not question).

Re: IRS to begin trial of its own free tax-filing system

#63

Post by freedomben »

ttyprintk wrote: post #38

For reference, Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming are participating.

For those who don't know, of those 12 states, only 4 actually have income taxes. The other 8 do not.

This whole system stinks. The overly complicated tax code, the sleazy corporations making tons of money on it, the entrenched politicians and bureacrats who make a living on it, etc.

Re: IRS to begin trial of its own free tax-filing system

#64

Post by toomuchtodo »

bmoxb wrote: post #52
MenhirMike wrote: post #34

Earlier quoted context omitted.

Which is really the main issue. Offering a more accessible free version to file taxes is great, but the real problem is the need to file taxes at all for a lot of people. The IRS already knows the relevant info: Your employer sends W-2 information, your bank and broker are sending the various 1099 forms for interest, dividends, stock sale gains/losses, etc. Same for your spouse and kids/dependents. Don't even need to…

That is how it works in many (most?) countries already - the US is an outlier in requiring every citizen to handle their own taxes.

A lot of US GDP is Rube Goldberg machines to skim off the economy. Intuit, Visa/Mastercard, private health insurance industry, etc. Lots of pushback to be expected as government fixes this (FedNow for payments, IRS improvements for taxes, healthcare reform, and so on). Onward.

Re: IRS to begin trial of its own free tax-filing system

#65

Post by lokar »

HarryHirsch wrote: post #20
nerdponx wrote: post #7

Earlier quoted context omitted.

Not only will they, but Trump's Secretary of Treasury will order the IRS to cancel the program as soon as he's elected.

Why? Trump is a populist. "Get your taxes done with me for free instead of HR Block charging you a couple hundreds" is a low-hanging fruit.

He is not a populist, he is an apolitical demagogue.

Re: IRS to begin trial of its own free tax-filing system

#66

Post by usaar333 »

MenhirMike wrote: post #34
crazydoggers wrote: post #13

Earlier quoted context omitted.

This is why we still have the income tax system that we do. It’s a $14 billion a year industry. I’ve talked to people who work the lobbying system very hard. There’s lots of wining and dining to make sure no one messes with the complexity of the system. We need more people who are immune to lobbying in government positions. We’ll see how this goes.. depending on the next election cycle this will either get quashed qu…

Which is really the main issue. Offering a more accessible free version to file taxes is great, but the real problem is the need to file taxes at all for a lot of people. The IRS already knows the relevant info: Your employer sends W-2 information, your bank and broker are sending the various 1099 forms for interest, dividends, stock sale gains/losses, etc. Same for your spouse and kids/dependents. Don't even need to…

> Unless you're dealing with foreign income, are a business, or do a lot of contract work for cash, I don't see much reason why the IRS can't just handle all the taxes automatically - apart from the fact that some company wants to charge me $150 a year to file my taxes and making sure that my tax situation (which would fit on a beer coaster otherwise) is as complicated as possible.

I imagine there are heavy software development costs, on par with what it might take to build Turbotax itself.

For instance, someone is going to have to figure out wash sales. Right now your broker does it, but you can wash sale across accounts, which requires you (or more reasonably tax software) to both detect this and track the adjusted basis in perpetuity. More complex events, like straddles, further exist, and even consumer-grade tax software won't handle it correctly.

Even implementing the tax code correctly for regular income is difficult. Examples of calculating Net investment income tax correctly due to ambiguous tax code changes (https://www.bogleheads.org/forum/viewtopic.php?f=2&t=271074&...)

Re: IRS to begin trial of its own free tax-filing system

#67

Post by graemep »

bmoxb wrote: post #52
MenhirMike wrote: post #34

Earlier quoted context omitted.

Which is really the main issue. Offering a more accessible free version to file taxes is great, but the real problem is the need to file taxes at all for a lot of people. The IRS already knows the relevant info: Your employer sends W-2 information, your bank and broker are sending the various 1099 forms for interest, dividends, stock sale gains/losses, etc. Same for your spouse and kids/dependents. Don't even need to…

That is how it works in many (most?) countries already - the US is an outlier in requiring every citizen to handle their own taxes.

It is how it works for most people in both the countries (on different continents ) I have worked in. Only people with high incomes or investment income or who are self employed or similar need to file their own taxes.

There are also cheap systems even for business returns - mine cost £12 for the company and I will use the free HMRC system for my personal return. It might be easier to use more sophisticated software, especially if your finances are complex.

Re: IRS to begin trial of its own free tax-filing system

#68

Post by hackernewds »

freedomben wrote: post #63
ttyprintk wrote: post #38

For reference, Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming are participating.

For those who don't know, of those 12 states, only 4 actually have income taxes. The other 8 do not. This whole system stinks. The overly complicated tax code, the sleazy corporations making tons of money on it, the entrenched politicians and bureacrats who make a living on it, etc.

We can still appreciate progress. And this is progress.

Although if the IRS is gonna audit when I under pay, they technically already know how much I owe. Why not just tell me? Reckon it's since people also over pay, and there's no refunds for doing that.

Re: IRS to begin trial of its own free tax-filing system

#70

Post by hackernewds »

nerdponx wrote: post #53
arbuge wrote: post #50

I have a hard time understanding why the IRS doesn't at least have a basic web portal for individuals and businesses to do simple things like update addresses, send secure correspondence, check on the status of correspondence, file forms electronically, etc. A lot of paper forms and letters, human resources and time could be saved with such a system, even if it doesn't actually provide for any tax computations itself…

The answer is a combination of industry lobbying (see elsewhere in this thread) and partisan politics that result in deliberately under-funding the IRS (for a general notion, see https://en.wikipedia.org/wiki/Starve_the_beast , and for more directly relevant events see https://www.propublica.org/article/how-the-irs-was-gutted )

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