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Congress Is About to Ban the US Government from Offering Free Online Tax Filing

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Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#661

Post by kelnos »

basseq wrote: post #605
conanbatt wrote: post #595

Earlier quoted context omitted.

This is not done because the IRS doesn't have the power to enforce its tax system, and if it reported the information it had to the people, the people could know they can slip away with not paying anything that wasnt properly reported. First, a transparent system of the IRS would lower revenue. Second, the deductibles system is very complex for the IRS to pre-calculate it, so they are unable to do it.

You didn't cover the most important—and political—reason: it would delay refunds . 2019 deadlines for 1099-INT/DIV (i.e., the forms you get from your bank or brokerage) are April 1st. The IRS filing window opened January 29, with 90% of tax returns processed within 21 days. Since the IRS can't reliably pre-populate a tax return without all the required information, it would delay filing (and refunds) by 8 weeks. As t…

> In short, if you file return before the IRS has all the information to validate that return is indeed correct, they'll usually shrug and accept it. By the time they get all the information they need, you've cashed out your refund debit card and are long gone.

This doesn't really pass the smell test for me. The IRS has, what, 7 years(?) to audit your tax return. They can and will do so, and will send you a bill, with penalties and interest included. (Source: this has happened to me, around a mistake I made with self-employment tax the first year I had non-W2 income.)

Not sure how you'd be "long gone", either, unless you're not a US citizen and have since moved out of the US.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#662

Post by Retric »

vonmoltke wrote: post #569
Retric wrote: post #79

Earlier quoted context omitted.

First, adding a host of third party’s increases the risk of data breaches for minimal benifit. Anyway, the government needs to collect and verify all information anyway. So, the sum total of TurboTaxes value is creating screens to collect information. If they can do a better job than the government then let them charge for it. But, by banning the free option they are saying they don’t actually create value.

> Anyway, the government needs to collect and verify all information anyway. Eventually. Not necessarily by the time you file, and not necessarily on every return. Remember, the IRS only audits a small fraction of returns for accuracy. Auditing every return would be a much bigger job than they currently do. I'm not saying they shouldn't , but it isn't as trivial as a lot of people here seem to think.

The IRS does basic verification on all returns. An audit is a more extensive check, but when somone makes a math error on a paper return they will end up getting a bill.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#663

Post by kelnos »

_archon_ wrote: post #546
RayVR wrote: post #529

Earlier quoted context omitted.

The second argument is about raising all relevant barriers to submitting your tax return. If I were in this camp I’d be pushing for everyone to have zero withholding and carry cash to a tax filing center. Ideally, there would be very few tax filing centers so you would need to travel far and wait in line. My bet is that within the first year of this taxes would be massively reduced. Also, very few people would actual…

I don't understand what anyone would gain from this. Citizens would be more cash-rich throughout the year, then cash-poor when tax time came. Over the years, people would learn to squirrel away similar amounts to what they're withholding now. Withholdings exist now as a forced savings plan for the poor and a free loan system for the .gov for the upper class. > My bet is that within the first year of this taxes would…

> Withholdings exist now as a forced savings plan

A pretty lame forced savings plan that nets you zero interest. I'd rather park the money I expect to need to pay in taxes in at least a high-yield savings account and get a couple percent rather than let the gov't have it.

But this ignores the fact that the US income tax system is actually a pay-as-you-go system, not a "you owe your taxes every April" system. You'll note that if you fill out a W-4 form such that your employer doesn't do much or any withholding, you'll find you owe late-payment penalties come April.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#664

Post by kelnos »

magduf wrote: post #621
ljf wrote: post #468

Earlier quoted context omitted.

Which taxes (if any) would you prefer?

Well, one thing that would simplify things and reduce the number of taxpayers that have to deal with filing returns is to simply exempt people who make less than a certain threshold, perhaps $40k. People making so little money are already struggling, so why do they need to pay taxes, and worse, spend time and money filing tax returns for that?

That's already effectively the case, though the numbers are different. If you're married and make under $24k per year, you don't pay tax. (And other credits that low-income people often are eligible for can increase that number.) It is annoying because you still have to file, and if an employer withheld anything, you have to wait until April to get it back.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#665

Post by [deleted] »

magduf wrote: post #621
ljf wrote: post #468

Earlier quoted context omitted.

Which taxes (if any) would you prefer?

Well, one thing that would simplify things and reduce the number of taxpayers that have to deal with filing returns is to simply exempt people who make less than a certain threshold, perhaps $40k. People making so little money are already struggling, so why do they need to pay taxes, and worse, spend time and money filing tax returns for that?

[deleted]

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#666

Post by basseq »

kelnos wrote: post #661
basseq wrote: post #605

Earlier quoted context omitted.

You didn't cover the most important—and political—reason: it would delay refunds . 2019 deadlines for 1099-INT/DIV (i.e., the forms you get from your bank or brokerage) are April 1st. The IRS filing window opened January 29, with 90% of tax returns processed within 21 days. Since the IRS can't reliably pre-populate a tax return without all the required information, it would delay filing (and refunds) by 8 weeks. As t…

> In short, if you file return before the IRS has all the information to validate that return is indeed correct, they'll usually shrug and accept it. By the time they get all the information they need, you've cashed out your refund debit card and are long gone. This doesn't really pass the smell test for me. The IRS has, what, 7 years(?) to audit your tax return. They can and will do so, and will send you a bill, wit…

That's correct, albeit more nuanced than I was getting.

My point is that they'll "shrug", accept your return, and issue you a refund. Yes, they may come back later and say, "Actually..."

When I say, "you're long gone", I'm referring specifically to taxpayer identification fraud, where you'd file a (fraudulent) return on behalf of someone else (often a dead person or someone from Puerto Rico[1]), receive their refund in the form of a debit card, and "disappear".

In any case, it's way easier to avoid paying someone in the first place than try and claw it back later.

[1] https://www.irs.gov/taxtopics/tc901

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#667

Post by msl »

conanbatt wrote: post #600
indigochill wrote: post #555

Earlier quoted context omitted.

The anti-tax group wants to make paying taxes as painful and inconvenient as possible based on the assumption that if taxes suck, more people will be more actively in favor of reducing taxes (as opposed to, you know, making the process not suck). It's not about reducing liability at all right now, it's about making more people anti-tax.

I haven't heard an anti-tax argument in this topic, but this is a main argument between economists and statists. Economists will always say that the tax should be explicit, and it should be placed for the people that ultimately pay for it. But pro-taxes people, mainly the government, want higher revenues first, which means putting a tax wherever you can, and that is about what is politically feasible, not about what…

> Other countries, like europe, hide the VAT taxes, so it looks like you are not paying taxes at all.

That is not true at all. In all European countries that I can think of you get to see the whole price, including VAT so that, you know, you can actually tell how much the product is going to cost you. The composition of that price is then shown, often in smaller font. This is true of price stickers, receipts and invoices.

I do not find it the least bit misleading, and would be rather annoyed if a cashier told me to pay more money than the price sticker indicates.

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#668

Post by basseq »

kelnos wrote: post #661
basseq wrote: post #605

Earlier quoted context omitted.

You didn't cover the most important—and political—reason: it would delay refunds . 2019 deadlines for 1099-INT/DIV (i.e., the forms you get from your bank or brokerage) are April 1st. The IRS filing window opened January 29, with 90% of tax returns processed within 21 days. Since the IRS can't reliably pre-populate a tax return without all the required information, it would delay filing (and refunds) by 8 weeks. As t…

> In short, if you file return before the IRS has all the information to validate that return is indeed correct, they'll usually shrug and accept it. By the time they get all the information they need, you've cashed out your refund debit card and are long gone. This doesn't really pass the smell test for me. The IRS has, what, 7 years(?) to audit your tax return. They can and will do so, and will send you a bill, wit…

Other note that I like to make just because it's interesting: actual audits by the IRS are very rare. They send a good number of collection letter every year, and the collection rate on those letter is very, very good. But those collection letters are categorically not audits, and more "friendly reminders". (Such that any letter on IRS letterhead could be considered friendly!)

Re: Congress Is About to Ban the US Government from Offering Free Online Tax Filing

#669

Post by chadlavi »

VSerge wrote: post #566
ecopoesis wrote: post #527

Earlier quoted context omitted.

The point is to enrich Intuit and other tax preparers that lobbied for this.

These anti-tax activists seem to be playing the role of Useful Idiots for the much more substantial reason 1, bearing in mind that the very existence of such companies making tax filing easier does indeed destroy point 2 entirely (in addition to the what OP pointed out which also takes away any credit this idea might have had). From a european perspective, having tax returns that are not pre-filled, and having a tax…

> Why would the state not want its services to replenish its coffers in the fastest most efficient way possible?

The humans who make up the state are more keen to replenish their own personal coffers in the fastest, most efficient way possible -- good old fashioned graft. No one with significant power personally benefits from an efficient IRS with a pleasant user experience.

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