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

https://www.propublica.org/article/congress-is-about-to-ban-the-government-from-offering-free-online-tax-filing-thank-turbotax

by el_duderino • 7 years ago

1034 696 7 years ago

propublica.org

danso3• 7 years ago

Related past HN threads:

https://news.ycombinator.com/item?id=19392673

https://news.ycombinator.com/item?id=13853150

Brendinooo• 7 years ago

Headline is a bit misleading: The IRS does not currently offer free online tax filing, and bipartisan Congressional leaders are seeking to codify this status quo.

danso3• 7 years ago

Here's the summary of Sec 1102, as linked to from the Ways & Means Committee's homepage:

https://waysandmeans.house.gov/media-center/press-releases/w...

Sec. 1102. IRS Free File Program. The IRS currently works with electronic tax preparation services to provide free tax preparation software and electronically fillable forms. This program is known as the IRS Free File program. Generally, there is no fee for taxpayers using the Free File program provided they meet certain income thresholds. This provision codifies the existing Free File program and requires the IRS to continue to work with private stakeholders to maintain, improve, and expand the program. The provision also requires Free File program members to continue to provide basic fillable forms to all taxpayers. This provision is estimated to have no revenue impact over the 10-year budget window.

KingMachiavelli• 7 years ago

There's an income requirements and, at least in practice, you cannot be file 1099-MISCs which means you cannot be 'self employed' which is becoming more and more common (insert buzzphrase here) independent of actual income.

Unfortunately, the people most effected by this bill are likely too busy working to afford the time to contact their representatives.

komali25• 7 years ago

I am very confused - last night I filed my taxes in an hour flat on freefillableforms or whatever that terribly named piece of software is. I thought this was a service provided by the IRS?

danso3• 7 years ago

I think freefillableforms.com -- maintained by the Free File Alliance -- is an example of what the article complains about:

The Free File Alliance, a private industry group, says 70% of American taxpayers are eligible to file for free. Those taxpayers, who must make less than $66,000, have access to free tax software provided by the companies. But just 3% of eligible U.S. taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches.

I've never used it so I wouldn't know if it's chockful of upsell adverts. It's certainly very hard (I couldn't do it, at least not in the past 5 minutes) to find a reference to the Free File Alliance on freefillableforms.com. But this is what is buried on IRS.gov:

https://www.irs.gov/e-file-providers/about-the-free-file-all...

Free File offers a multi-year agreement between IRS and the Free File Alliance to provide free service(s) to more taxpayers. Previously, free offerings were not consistently available and were subject to modification or discontinuation from year-to-year. With Free File, taxpayers have easy access to IRS.gov, which offers a list of all free offerings on a single web page. Under our agreement, Free File Alliance companies offer both free preparation and free e-filing services. There is no cost to qualifying taxpayers.
Note: We do not endorse any individual Free File Alliance company. While the IRS manages the content of the Free File pages accessible on IRS.gov, it does not retain any taxpayer information entered on the Free File site.

tudelo• 7 years ago

I used CreditKarma and it took 10-15 minutes... afaik they didn't charge a fee either. This is the second year I have used them. I would prefer a Government solution if it was good, but there are plenty of very low cost/free alternatives out there already so oh well.

cascom7• 7 years ago

What propublica left out:

To be clear the Intuit’s of the world are not acting altruistically, however they’ve created an odd alliance with anti-tax advocates who 1. Think that any government provided system will favor the government over tax-payers and make it easier to sneak in stealth tax changes and 2. The anti-tax lobby cynically (and correctly) understands that in order to keep taxes unpopular, making them painful is useful.

komali25• 7 years ago

sneak in stealth tax changes

I don't think we exist in a world where this is possible.

javagram2• 7 years ago

I don't think we exist in a world where this is possible.

The majority of people are pretty ignorant. Look at all the news articles from early in 2019 talking about the size of tax refunds, and people thinking they didn’t get a tax cut because their refund this year was smaller than the one they got last year. In reality, almost everyone got a tax cut (>90% of taxpayers) but that doesn’t necessarily mean a larger refund.

Theoretically, filling out the tax forms would help people understand their tax liability. In practice I think a lot of people just tune out numbers beyond the size of their refund.

cascom7• 7 years ago

Poor phrasing on my part - I’m not implying they would insert new taxes on the sly, but rather that in areas where tax payers have some discretion, the government software would default to the least favorable treatment for the tax payer, the effect being a higher net tax...

tvanantwerp• 7 years ago

I can imagine it happening. The US tax code is so complicated that most tax payers don't really understand it. Heck, most tax payers don't understand how marginal tax rates work or why having a large refund isn't actually a good thing. I can absolutely believe that a majority of people would accept a negative change to the tax code due to an inability to understand it, choosing to just accept whatever they're being told to make it all go away until next year.

floatrock• 7 years ago

I don't buy this.

"Use us and we will help you avoid the government's stealth tax" would be a marketing field day for intuit and h&r block PR.

mikestew2• 7 years ago

2. The anti-tax lobby cynically (and correctly) understands that in order to keep taxes unpopular, making them painful is useful.

If that's an example of their swift thinking, I'll be sure to vote against anyone that carries even a whiff of their ilk. Because if such a candidate could not see a distinction between taxes and the process of paying them, we're probably not going to get along intellectually, let alone politically.

cascom7• 7 years ago

I think that rules out all mainstream politicians

xbryanx• 7 years ago

This is pure anecdote, but...

A NOAA employee told me about the time their boss caught holy hell from a Senator because the NWS had the gall to update a particular weather product they offered by adding color to the map. Evidently someone had a business essentially downloading the free NOAA data and improving it by coloring the maps and selling that as a product. When NOAA made it free, they called their Senator in anger. And said Senator slapped NOAA's wrist.

Seems like the same school of thought in a much bigger market.

nemo44x2• 7 years ago

Michael Lewis wrote about the NOAA and this exact type of thing in his last book. In essence the NOAA spends lots of tax payer money to collect weather data but can’t do much with it other than give it away exclusively to a handful of entities that can repackage and sell it.

The eventual dystopian end state could be where the NOAA can’t alert people to tornados and only those subscribing to a weather service would be alerted to get to safety.

wbl• 7 years ago

Have you seen weather.gov? They do provide free products.

moftz2• 7 years ago

You can get an emergency radio capable of receiving VHF NOAA weather alerts. There is typically at least one of the frequencies within range where ever you are. You can subscribe to weather alerts through RSS on their site as well.

https://alerts.weather.gov/

You can even pass lat/long points to the forecast page and it will pull up the closest weather station, even points in the ocean work.

https://forecast.weather.gov/MapClick.php?lat=43.4802&lon=-1...

kwindla• 7 years ago

Yes! The Michael Lewis book is called _The Fifth Risk_, and it's an amazing read. It's a series of contrasting stories: earnest government workers who have dedicated their careers to protecting all of us from threats like nuclear proliferation, on the one hand, and on the other politicians and narrowly interested lobbyists who view government as either a threat to their self-interest or an opportunity to tilt the economic playing field.

https://www.amazon.com/Fifth-Risk-Michael-Lewis/dp/132400264...

From the NPR review of the book:

Take Trump's choice to head National Oceanic and Atmospheric Administration, the Commerce Department agency that, among other responsibilities, oversees the National Weather Service. For that critical position, Trump has chosen Barry Myers, who is CEO of the private forecasting service AccuWeather. As Lewis points out, AccuWeather repackages the weather service's own data and sells it to private concerns for a profit. Myers at one time argued that "the government should get out of the forecasting business." In other words, you want to know if it's going to rain tomorrow? Or which way that hurricane is tracking? Well, buy our app, or subscribe to our forecasts. Myers has yet to be confirmed.

https://www.npr.org/2018/10/02/652563904/the-fifth-risk-pain...

kevin_b_er2• 7 years ago

Yes. Accuweather has long lobbied to prevent the services the people pay for from providing them with information.

In 2017, the current administration named the lobbyist and co-owner of Accuweather, who's fought the NWS as the head of the NOAA, the parent organization of the NWS: https://www.bloomberg.com/news/features/2018-06-14/trump-s-p...

The fox watches the henhouse when it comes to your weather. Your taxes will pay for Accuweather's profit at your expense.

dosy5• 7 years ago

this is stupid. shouldn't free market competition include government services?

kristopolous• 7 years ago

Free market dogma is a scam: an intellectual framework invented to rationalize a position.

There's a long history of people doing these things such as with monarchist theory or eugenics for colonialism and slavery. People have theories and frameworks to justify misogyny, child abuse and being harsh to homeless people.

In this case it's an ability to do whatever you want to make money without any oversight, laws, restrictions, or limitations. Being against unethical things such as sweatshops, lying to consumers, or vulture capitalism is itself unethical because it "interferes with the market" oh dear!

It's a symmetrical theoretical framework with beautiful equations to rationalize an otherwise indefensible power structure and insulate reprehensible criminal behavior as essentially the Unquestionable Divine Will.

When anyone justifies things through purity or perfection arguments they're likely pulling a fast one on you. In fact it's this fast one. This exact technique.

mlindner• 7 years ago

You can't have a free market competition of government services. It's not free market competition when its companies competing over _providing_ a service mandated by law. That can never happen. Just as private prisons can't be free market (providing a service mandated by government law) you can't provide tax services in a free market environment because it's required by law.

aaaaaar• 7 years ago

By what power vested in the senator can they slap NOAA's wrist?

Is it just the importance and influence by being a senator? Or is there some direct control? Or via a threat to cut funding?

purple-again• 7 years ago

This is deeply frustrating. I can not tell you how many people I see paying $200-300 for some random "tax preparer" set up in a corner mall or the front of a WalMart simply because they do not understand there are a number of free resources that would prepare their 1040EZ for them at their income/complexity level.

These same people get back a $1500 "return" so they think they are getting a good deal. Its pure greed and theft from some of the most needy members of our society. Absolute shame on everyone involved in this process.

zrail• 7 years ago

1040EZ no longer exists. It went away with the 1040 redesign this year.

nemo44x2• 7 years ago

Apparently the $150 is worth it to these people over using their agency to google how they could file for free.

perfmode• 7 years ago

We can’t assume rational agents.

anilakar2• 7 years ago

In a libertarian society, a government using tax money to provide services counts as nation state sanctioned violence, but a private company doing the same for profit is called entrepreneurship.

EDIT: Keep it coming! Every downvote proves I'm right.

nybble41• 7 years ago

What exactly were you trying to say? I mean, you're not wrong. Taxes are nation-state sanctioned violence, and private companies providing services in exchange for voluntary payments is correctly referred to as entrepreneurship. These are qualitatively different situations; one involves force and the other does not.

The debate is not about the services. They may not be needed by everyone, or in the exact form the government provides, but there would still be at least some demand for them in the market if they weren't provided by the government. The question is whether these services are funded voluntarily or by force, by those who want them or by others who just happen to have the necessary resources.

dmwallin• 7 years ago

Where's the teeth in getting companies to offer a decent Free File option if you removed the threat that got them to create said programs in the first place?

javagram2• 7 years ago

The Free File Alliance, a private industry group, says 70% of American taxpayers are eligible to file for free. Those taxpayers, who must make less than $66,000, have access to free tax software provided by the companies. But just 3% of eligible U.S. taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches.

During the years I was eligible for this program, I used TurboTax for free through it and it worked fine. It was a basic version that didn’t support complex transactions such as capital gains but for most people making under 66k it would have worked fine.

Very interesting to see only 3% use it. It would probably work well for a lot more of those 70%.

The paper forms are also easy enough to do manually, but can’t be e-filed and so the refund comes slower.

deckar01• 7 years ago

This statistic is misleading. Throughout the filing process consumers are bombarded with opportunities to upgrade to a paid tier. They make paying more the default option and demote the controls to continue using the free version to have secondary or cancel-like styling. I had to constantly back out and go back to the free version, because I accidentally opted into a paid tier.

Another reason might be that "automatically" filling in your details from uploaded / linked documents is often a paid feature. I uploaded a doc it asked for, it showed me the info, then when I opted for the free tier it cleared the data and made me type it in myself.

asdff2• 7 years ago

Turbotax is a pioneer of dark patterns. Enter anything beyond a w2 and it wants $70.

r_klancer• 7 years ago

Not quite true! I was planning to complain that Free File Fillable Forms, the only way to e-file for free regardless of income, had been taken away a couple years ago.

However, I noticed that it's back for the 2018 tax year. https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...

It's very basic -- it's literally just a way to fill out and submit the paper forms electronically (though it does the "add lines 35 and 36"-type arithmetic for you.) But it's an option for you procrastinators who earned more than $66K last year.

Relatedly, Massachusetts used to run a free online "TurboTax" program for all. To file your taxes you went to a government website and answered the questions. Unfortunately, that program was canceled a year ago when they upgraded systems, and now the only way to e-file is via a paid preparer.

alkonaut• 7 years ago

I just filed my taxes in 10 seconds using the tax authority's smartphone app. It had pre-filled all my deductions such as interest using info reported from my employer and banks.

Apart from bribes from those who make tax software (which should be pretty easy to expose) I can't understand why congress wouldn't want to make paying taxes simple and efficient?

keeganjw• 7 years ago

Tax prep lobbyist make a lot of campaign contributions and somehow that bribery is 100% legal. Also, there is not a small number of Republicans who think taxes should be hard and confusing to make people hate taxes. They think it would them pass they're super low-tax/no-tax agenda.

jermaustin1• 7 years ago

There is a podcast episode of "Planet Money" that goes into the history of this [1]. Pretty much it goes: If taxes were easy, people would hate them less, and not fight to abolish them - Grover Norquist.

1: https://www.npr.org/sections/money/2017/03/22/521132960/epis...

fsloth2• 7 years ago

Oh man, I've had government provided automatic filings for ages now (Finland). US is really odd how it emphasizes the benefit of the middleman over the benefit of the individual citizen (it seems). Or have I completely misunderstood what's going on here?

tarabanga• 7 years ago

More like, corporate interest > citizen interest

Symmetry• 7 years ago

Corporate pressure is important but the fact that people in the tax preparation industry form a decently sized and committed voting block is even more important.

random42_• 7 years ago

You are correct. US Congress (most of the time) legislate in favor of whoever pays more.

linuxftw6• 7 years ago

(in the US) I would trust the government provided tax-return software to provide the smallest refund possible. It will also take $50 billion and 3-4 years to develop, and it will be down from April 1st to May 7th due to overload on the system. Your confirmation emails won't come through, and the database will be hacked and all records leaked within the first 18 months of operation.

maxwell• 7 years ago

https://designsystem.digital.gov/

https://federalist.18f.gov/

https://www.opensecrets.org/orgs/lobby.php?id=D000026667

Broken_Hippo• 7 years ago

Then you can go ahead and use the option to check them for things they forgot. You can also probably use an option to file yourself, which might be the case if you have complicated taxes. The great majority of Americans, however, are pretty poor and qualify for few tax breaks that cannot be done automatically. All they need to do to encourage the automatic filing would be to consistently prove to be accurate.

The database will be hacked and all records leaked within the fist 18 months of operation

You know, the same information they need for most people's taxes is already in the IRS database.

I'd also like to say that I've had automatic filing for my Norwegian taxes since moving here to Norway, and always have to file American taxes manually. The emails get sent to a secure email system which you can check. Letters get lost and stolen as well, by the way. The system doesn't have to go down either - I don't even have to interact. I just get the email telling me I can check taxes, but it is not required that I do. (Safer to do so in case of owing). They tell me I'll get my money in a 3-month timeframe. It goes to the same place paychecks go to, though I imagine if anyone gets checks they take longer, as do the people that manually file.

I'm also pretty sure that the reason it would be expensive is that the government isn't exactly known to keep the IRS fairly current and the government isn't really set up to handle the digital age well. But then again, the records are already there. They already plan on getting refunds. And easier filing means more people do tax returns... and it catches more people that owe. Oh, and you won't need as many people working at the call centers because fewer people will need to actually calculate their taxes. I'm gonna guess it would be a net benefit and profit within a very short amount of time.

The main people that do badly with this sort of system are the tax filing companies along with, I'm guessing, some accountants.

kej• 7 years ago

We used to have a telefile option where you spent ten minutes on the phone punching in numbers off your W-2 forms and then you wrote down a confirmation number. It only worked if you had a really simple tax situation, but it was so easy. I assume it was killed by the same lobbyists.

otikik5• 7 years ago

Then vote a better government.

EGreg• 7 years ago

Yes, the US really values the middleman. There is something to be said for it, since middlemen can compete and innovate. In computer science, this is called indirection — it provides more flexibility and without it, you have one-size-fits-all solutions. In the real world, you have for example Uber/Amazon/Apple /Google/Facebook squeezing providers, due to their monopoly powers.

What happens in the real world is that the doctors aggregate (AMA, ADA) and then the patients aggregate (insurance companies) but it never quite gets to a complete single buyer/payer on both sides without government action.

There is also the argument for how many jobs will be lost in X industry if we replace it with a more efficient solution. Here is a recent video of a famous paleoconservative debating it with a famous neoconservative in the US: https://m.youtube.com/watch?v=YFMcq0Vzsb4

Usually the solution is social democracy - letting the private markets operate but having the government run a single payer system for the basic level of service so sellers compete and buyer’s don’t, and everyone is entitled to the basic level.

Single payer can achieve far lower prices, as can eliminating IP protection. But after a while this may have a deleterious effect on R&D (unless you eliminate the IP protection).

SkyBelow2• 7 years ago

US is really odd how it emphasizes the benefit of the middleman over the benefit of the individual citizen (it seems).

I wonder what extent this is decided by how we vote. As long as voters pick the politician who prioritizes the middle man and gets their campaign contribution is selected over the politician who prioritizes the public but whose opponent gets the middleman's campaign contribution we will continue to see this behavior. The moral of the story is to look at the voters' actions and not their words. They select candidates based on oftentimes harmful criteria.

SilasX7• 7 years ago

Is the public really to blame for this? Is there an actual broad constituency that doesn't want this, or at least who trusts an interest group to represent them and who doesn't want this?

magduf5• 7 years ago

As I always like to say, we are getting the government we deserve.

knubie• 7 years ago

The question I have is whether a government provided automatic filing would actually be cheaper (or more effective) than say, Turbotax.

I see a couple of ways in which it might not be as favorable:

1. It costs more than $100 per tax payer per year to implement (about the cost of Turbotax). However the flat $100 or so that most people pay to Turbotax can be seen as a kind of regressive tax.

2. It is less effective at finding the biggest possible return.

gambler3• 7 years ago

The question I have is whether a government provided automatic filing would actually be cheaper (or more effective) than say, Turbotax.

The question is valid, but the numbers do not add up. TT asks ~$50 for federal return. If everyone in US used the service, the cost would amount to over 16 billion dollars. That is more than the entire IRS budget[1] right now.

[1] https://www.irs.gov/statistics/irs-budget-and-workforce

Retric2• 7 years ago

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.

trophycase• 7 years ago

Turbotax jacked their prices up quite a bit this year as well.

Zeebrommer2• 7 years ago

But TurboTax has many other incentives besides making tax filings more efficient, including reselling user data, targeted ads for their own products, they might even have reasons to nudge you towards certain options and dark-pattern others.

skeletal88• 7 years ago

Doesn't the government already need to calculate what everyone has to pay so it knows when someone hasn't paid enough? The IRS probably already has the same systems being developed and maintained to keep track of everyones taxes, the system would need an user friendly public interface, but it wouldn't have to be developed from scratch.

The idea that some business gets to ban the government from offering a service and some people argue that it's good for eveyone is totally absurd to me.. from a country where I log in to our version of the IRS, where my salary information is pre-filled, I only need to add stuff if I had some other income.. and the system is totally free to use for everyone, and most people just spend about 5 minutes once a year to declare their taxes.

poilcn• 7 years ago

For ages, it's for how long exactly? 10-50 years of more or less "success" history is nothing. It doesn't prove it's save and works in a long run. Also consider scaling. 5.5 mln in Finland, 22 American states have more than that.

tonyedgecombe• 7 years ago

We can file ours online in the UK, it's easy to use and pretty reliable (now).

zimpenfish• 7 years ago

Also, AFAIK, most people don't even need to file because HMRC handles the simple situations automatically (I've never had to do a return, for example.)

atoav• 7 years ago

I live in Germany, which is said to have one of the most complicated tax systems known to man. If I had one (realistic) wish for a German government, it would be to do it like Finland.

Sadly there is a whole branch of people working on this, without any interest to make it easier..

kwhitefoot• 7 years ago

Norway is very simple too. Most people can just do nothing at all. The way it works is that the tax authority creates a proposed tax record and notifies you by SMS or email or both or even by letter if you ask for it. If you agree that it is correct you don't need to do anything at all, otherwise you log in to the web site and adjust whatever needs adjusting in a bunch of simple forms.

The tax authorities also have a duty to calculate the taxes in the way that benefits you most.

germanier• 7 years ago

Just a few weeks ago, I logged into Elster, opened the pre-filled tax return (Belegabruf) and sent it. Instead, I could have filled the short and simple Vereinfachte Steuererklärung by hand which covers all common cases.

Most workers don't need to do anything to get their overpaid tax back thanks to the Lohnsteuerjahresausgleich.

They need to work on their marketing though.

reallydontask• 7 years ago

Is this similar to PAYE or do you actually have to submit a tax return but it's pre-filled for you?

In the UK, most people don't have to submit a tax return at all. Not sure the actual cost of this, but the convenience is unparalleled.

renholder3• 7 years ago

Is this similar to PAYE or do you actually have to submit a tax return but it's pre-filled for you?

As long as your PAYE is like Ireland's (ROI) PAYE, then the American's system is far-removed from it.

Even though their tax revenue office gets the reports from businesses for how much they were paid and how much taxes they paid, the Americans still need to fill out a tax form - every year - to repeat the same information (it's an added benefit for the prison system, in that mistakes on tax forms can equate to jail time). They get a form from their employer (which their tax office also has), that contains all of this information.

In the UK, most people don't have to submit a tax return at all. Not sure the actual cost of this, but the convenience is unparalleled.

Aye, it's the same in Ireland (ROI). You can just call-up or email Revenue and they check if you've overpaid, by how much, and they just send you the money. No forms. No bullshit. No threats of jail time. It's pretty deadly[0].

You want nothing to do with the Yanks' tax system, trust me.

[0] https://www.whygo.com/ireland/irish-slang-deadly.html

baud147258• 7 years ago

I would love automatic filing in France. The process isn't that complicated, as long as it's just a single income. I dread the day where I'll sell my shares or qualify for a tax-return, because it's not going to be fun.

jimbokun• 7 years ago

In the US, legislation always goes to the highest bidder.

Keep that in mind when reading stories about the US government, and it all makes a lot more sense.

_bxg1• 7 years ago

It's because historically our society has treated businesses, their leaders, and the free market as churches, priests, and God, respectively. They've brought us much wealth and power, but putting restraints on them or getting in their way at all are cardinal sins in American politics. Politicians can take bribes and then package the resulting deregulation with euphemisms like "small government" and "supporting the free market". The most brilliant part is how they serve huge corporations, but then sell their actions as supporting all (read: small, too) businesses, even when they don't.

blancheneige2• 7 years ago

seems like the antithesis of small government to have it explicitly bar itself from providing free services helping its citizens pay for said government. the latter should be as seamless as possible given that failure to comply results in adverse government intervention.

redwall_hp• 7 years ago

Small indie companies, like Blizzard.

andrewla• 7 years ago

Out of curiosity, do you have insight on how this evolved? Did the government go from requiring paper to offering an electronic equivalent?

In the US, the IRS supported an e-file system that basically allowed electronic versions of forms to be submitted, but it was arcane enough that a cottage industry developed to assist users in prepping documents for e-file.

How does Finland support tax preparation services; what sort of facilities do they offer for people filing on behalf of others?

Even if the US went to an IRS-pre-filled return, there would still be room for third-party tax software that improved on the user experience, so I think if the IRS supported direct filing of taxes it would also be good to preserve the ability for software or designated parties to submit information on the taxpayer's behalf.

fsloth2• 7 years ago

"Out of curiosity, do you have insight on how this evolved? Did the government go from requiring paper to offering an electronic equivalent?"

The taxation has been pretty automated for a long time.

As a regular taxpayer nowadays I just get a paper form that describes the precalculated taxes, and if they are fine, I don't have to return anything. There are some pre-deducted things, and if I have anything add to that, I'll then just either fill in the paper form or the electronic equivalent.

So yes, there was a basic "semi automated" scheme that has been steadily improving and now the tax authority has just added a web based interface for feeding data into it.

About filling the taxes on behalf of someone else -

There really is no need for tax preparation services unless you are business entity (in which case you likely already have your own accountant doing it) or the wealth is considerable enough to merit actual tax planning. Otherwise the tax code is so straightforward and simple that anyone can do it. If there are some questions, you can always contact the tax services and they will usually offer helpful and professional advice on how to proceed.

So there is no market for that kind of thing in the large. The "defaults" provided by government help in this regard as well.

I kinda understand the adverserial positioning of "people vs. the government" in the US - it just sounds to an outsider the main reason not to make things easier is because that would eradicate business from turbo tax. Kinda like the government mandated you need to own a useless dead parrot, that you can only buy from Parrot Co, that needs to be kept in the refridgerator in an exact position mandated by the law.

AnssiH• 7 years ago

Out of curiosity, do you have insight on how this evolved? Did the government go from requiring paper to offering an electronic equivalent?

The "tax return suggestion" was introduced in 1996. So it predates all electronic filing.

Filling tax returns via a web service became available in 2008.

The first (non-web) electronic tax filings were made in 1997, but those were for corporate returns. Not sure when it became available for income tax returns (that use case is rare here).

Source: Finnish Tax Administration https://www.vero.fi/contentassets/09b6f07e61dd490ab0caabba8e... (Finnish PDF)

How does Finland support tax preparation services; what sort of facilities do they offer for people filing on behalf of others?

Electronic tax filing using files is available: https://www.ilmoitin.fi/webtamo/sivut/Esittelysivu?kieli=en

You can use an online service to authorize another person to file your taxes: https://www.vero.fi/en/About-us/contact-us/efil/authorisatio...

The other person can then file using paper, file, or web.

kaveh_h2• 7 years ago

We’ve had great digital government services In Sweden for years. I did my taxes yesterday in 3 minutes from my laptop, digitally signed and submitted.

kaveh_h2• 7 years ago

In Sweden too it’s super easy.

otikik5• 7 years ago

the benefit of the middleman over the benefit of the individual citizen

I think you put it just right. Health and Education are the two areas this is bought up, but the taxes are a good example.

Zeebrommer2• 7 years ago

Same in the Netherlands. These types of backwards laws make America look bad.

tathougies14• 7 years ago

On the other hands, Americans are much less likely to commit tax fraud than other countries, so perhaps the netherlands should encourage more people to report their sheltered assets?

https://www.theatlantic.com/magazine/archive/2019/04/why-ame...

tyfon• 7 years ago

Same thing here in Norway. We get the tax return forms pre-filled and if we want to make changes it can be done on a government web page easily. Capital gains, most deductions and assets/loans are also registered automatically.

If you have no changes then you don't need to do anything at all.

xtracto• 7 years ago

This makes me laugh a lot, even down here in Mexico have automated, electronic, government provided tax filings.

My tax filing is as easy as: Login, verify, click a button.

0xfeba• 7 years ago

What's preventing a OSS solution to this? What I can think of off the top of my head:

* Lack of e-file permission

* Lack of any kind of legal recourse or audit protection for the user

* Constantly changing tax system

After a casual search on GitHub I see a few calculator projects but nothing serious.

I'd be down to help make a free competitor to Intuit. I see no reason to use a non-static site unless it's to keep previous years data, but that's iffy and sounds like it requires a whole other legal consideration.

castlecrasher2• 7 years ago

I think the biggest reasons are 1) the vast amount of subject matter expertise required, especially with each state having its own rules, and 2) pretty much any risk at all of having an incorrect return because of buggy prep software is enough to deter most people from using it.

chadash2• 7 years ago

The problem is that the system requires constant maintenance every time some tax law changes in any state, and great maintenance is something that only the most well funded OSS projects get. And you need participation from lawyers and accountants, not just software developers.

As the article notes, there are already free solutions for people with basic income situations (W-2, some bank interest, no stock sales) making under $66k. Personally, I don't mind paying $100 to turbotax for the peace of mind of knowing that at the very least, they have a staff of tax experts looking over the details of their filing process.

Now, if the IRS came along with an official app that showed me what information they already had and I just needed to make some small adjustments from there (assuming my tax situation isn't complicated), then yeah, I'd use that. And it's a bit crazy that we don't have that. But unlike many countries, we are taxed at both the federal and state levels, which makes the process much more complicated. And to complicate things further, the two interact: I can deduct some of my state taxes from my federal taxes (though less than before). And don't even get me started with the complications of a move from state to state.

EDIT: thinking about this a bit more. What really annoys me about the current system isn't necessarily that I pay to file my taxes. It's that it's so easy to miss things. Maybe i have a bank account that earned $12 in interest and I earned $20 from money that I put into lendingclub.com two years ago. It's annoying that the government has this information, but on the other hand, it's very easy for me to not see (or forget about) the email/snail-mail that I got about this income and then forget to declare it on my taxes. Yes, I know that the IRS isn't sending me to jail for forgetting to pay $5 in taxes, but in general, the process would be much less stressful if I had some kind of centralized reminder of all the income I made.

hobs2• 7 years ago

I mind, because turbotax actively lobbies to make the tax system more complex, and to put us in this situation.

Pretty much all the major tax preparers do this, and they are pretty scummy.

pnutjam2• 7 years ago

Let the irs handle federal and let the states worry about their own.

gpapilion• 7 years ago

Those are the first three. If you want to offer state income taxes, that means you’ll need to also implement those rules. There are also a ton of legal restrictions on handling data, that if done wrong send you to jail.

mikeyouse• 7 years ago

Even worse -- Since State and Local income taxes are (partially) deductible on your Federal taxes -- you need to implement those rules no matter if you plan on filing State and Local returns.

edit

Actually now that I think about it, since the standard deduction is increased, you could catch the majority of simple returns by just assuming the standard deduction and including a few disclaimers about the option to itemize.

JamesBarney• 7 years ago

One of the biggest benefit of government provided returns is they already have a bunch of information on you so it can come pre-filled. And for a lot of people all they need to do is sign and send back.

alexkavon• 7 years ago

Also interested.

I see a lot of criticism of the idea, but there's more than one way to skin a cat.

kodis• 7 years ago

I think that the work-around for this problem is an online tax filing service like that offered by Credit Karma, which like their credit score reporting service is supported by ad revenue rather than by charging a fee for the service.

delfinom• 7 years ago

So basically congress is passing a tax to file taxes? ;)

anilakar2• 7 years ago

This is totally backwards. Here the local gov't is encouraging people to use their electronic services so that they don't have to deal with endless stacks of paper forms.

aloukissas• 7 years ago

I could not think that this would be a bipartisan bill. At least Credit Karma is still around, offering free tax filings (no affiliation, just a super-happy user).

minikites2• 7 years ago

We can thank Grover Norquist and many other conservatives who want to make tax filing as unpleasant as possible so the very concept of paying taxes is vilified and the idea of government services are poisoned by association.

dalbasal• 7 years ago

This is one of the more explicit examples where complexity is stealth-deliberately is promoted.

Tyler Cowen (and in his own way, david graeber) made a point that really stuck with me. Badly paraphrased:

The introduction of PCs & software to the office, has not increased office worker productivity at all. It's very hard to define or measure white collar productivity, but to the extent that it can be measured... it hasn't improved. From another angle, university administrations, tax collectors, accountants, legal departments, international customs agencies, etc. have as many or more people and don't seem to be producing a whole lot more.

To paraphrase Graeber's more beligerent take on it: Getting more efficient at paperwork just produces more & more complicated paperwork.

ddlatham2• 7 years ago

NPR's Planet Money just re-ran an episode[1] related to this. In 2005, California ran a pilot program where they sent simple, pre-filled tax forms[2] to a sample of the population. 98% of people liked them and would use them again. In 2006 it would have become standard for California, but failed in the legislature by a single vote. Opposition was from two factions: lobbying by Intuit, and Grover Norquist claiming that it violated a pledge for no new taxes. Fascinating stuff.

Later, California's Franchise Tax Board, went ahead and made it an option anyway, but hardly anyone knew about it. It was since been superseded by California's free online option: CalFile[3]. Of course, it's not that helpful if you have to go through the whole federal process anyway. But it serves as an example that it could work fine here in the states like the rest of the world if Congress would be willing to go for it instead of bowing to Intuit and Grover Norquist.

1. https://www.npr.org/templates/transcript/transcript.php?stor...

2. https://en.wikipedia.org/wiki/ReadyReturn

3. https://www.ftb.ca.gov/online/calfile/index.asp

onlyrealcuzzo2• 7 years ago

I will say, vote with your dollars. If you don't like Intuit's lobbying, please don't feed the beast and use their services.

TheHypnotist• 7 years ago

What are suitable alternatives? Aren't they the best in class, regardless of how shitty that class is?

hrktb• 7 years ago

I might be getting old, but more and more I see “vote with your XXXXX” to be the litmus test for situations there is no decent solution left anymore.

It’s not even an advice in the end, just a reminder the customer lost the battle, and the only alternative is to leave the field with what’s left on their posession to go roam the desert.

trickstra• 7 years ago

Those lobbyists will find ways how to force you into using their services. Not necessarily by eliminating all the different competing companies, but possibly through splitting the rewards through some kind of association, commission, self-regulator etc. If somebody is lobbying against you, fight them, don't just wave your hand, or you might lose your chance to "vote with your dollar" soon

JulianMorrison• 7 years ago

Vote with your votes. And with direct action and protest. Your dollars are small and easily ignored. Political organizing works when it's political, because it forces change rather than pitting the minnows against the shark one on one.

hannasanarion• 7 years ago

Conservatives always love when people say "vote with your dollars", because that means the people with more dollars get more votes.

throwaway284721• 7 years ago

Why not pirate it.

latexr• 7 years ago

The problem with voting with your dollars is that people with more dollars get more votes.

That’s how we got to this situation in the first place.

dstroot• 7 years ago

Umm... where do I start? ALL the tax prep companies lobby against free electronic filing. So if I want to vote with my wallet I have to go back to paper forms. Paper forms may be outlawed at some point in the future. Can you solve that issue?

We either need campaign finance reform or we need to accept our government is bought and paid for by big oil, coal, the NRA, the car manufacturers, etc.

sorry for the rant

everdev• 7 years ago

I'm self employed and had to explain to my kids why taxes in the US were so complicated and took hours to do over the weekend.

There must be powerful forces at work because Republicans have touted a flat tax or a return the size of a postcard for decades but when they controlled all three branches of government couldn't get anywhere near enough votes to pass it.

It's truly an abysmal system and I hope my kids don't have to do a giant math problem every year when they're adults.

InvisibleUp• 7 years ago

They did, technically. The Form 1040 this year is only half a page. However, many people need to attach at least one schedule, which is just the rest of the form broken up into multiple pages. It's less of a dramatic change and more of a weird format shuffling.

toast05• 7 years ago

The republicans haven't bragged about it, but I'm guessing limiting SALT deductions to way below the standard deduction will drastically reduce the number of filers itemizing deductions. That leaves you with form 1040 which is roughly half a page front and back, not much bigger than a postcard. Certainly, if you have capital gains or other things, you'll need extra schedules, and maybe you need to send w-2s, so it's not necessarily their ideal, but it's actually a large change.

maimeowmeow2• 7 years ago

If you have a mortgage, and paid state youd easily be over 2x the standard deductions

ascagnel_2• 7 years ago

A flat tax will never happen: people want the tax code to have a bunch of deductions and rebates, and codifying those will always result in complexity.

tzs• 7 years ago

There must be powerful forces at work because Republicans have touted a flat tax or a return the size of a postcard for decades but when they controlled all three branches of government couldn't get anywhere near enough votes to pass it

They don't actually try to pass a flat tax because it is not feasible to actually do a flat tax in a country like they US with such a wide range of incomes. Even with a low rate, there will be people poor enough that paying the tax is a major hardship. So every even remotely serious "flat" tax proposal has some cutoff and only applies to income above that cutoff.

But then it is not actually a flat tax. It is a progressive tax with two brackets. Once you get there, it is really hard to come up with a convincing argument that two brackets is better than more brackets.

If the calculation wouldn't mystify most taxpayers, what would probably be the most sound theoretically would be a continuous bracket structure.

The other reason they don't do it is that the flatness of the rate structure has pretty much nothing whatsoever to do with the complexity of a tax return. If you changed the rate structure from a progressive rate with several brackets to an actual flat rate, or a more realistic two bracket progressive system, that would shave about 1/4 of a page off the several thousand pages of the tax code and tax regulations.

The complexity of it is all in figuring out which income is taxable. Once you've got all the income classified into the various relevant tax categories, the actual calculations where you use the rate structure is trivial.

shalmanese2• 7 years ago

Every flat tax proposal comes with a Negative Income Tax portion to counter regressitivity. People misunderstand what flat tax proposals are all about.

With a tiered tax system, individuals need to be the ones who pay taxes because people who combine income from multiple sources need to pay differing amounts of taxes. With a flat tax system, all income is treated exactly the same so governments can switch to collecting income taxes from corporations. Corporations basically report the amount they spend on payroll every year and pay some percentage of that as a tax to the government. Then the government takes some portion of that money and remits it back to individuals as a negative income tax (essentially a UBI).

Flat tax changes the way money flows, instead of company -> individual -> government, it goes company -> government -> individual. It's both easier to tax corporations than individuals and easier to give money to citizens than take money from citizens. These two powerful benefits alone are meant to make up for the severe rigidity and lack of flexibility that flat tax systems intrinsically have. It's an open question whether these two things are enough to make up for all the flat tax flaws but I don't think there's an obvious right or wrong answer that we've discovered yet.

teekert• 7 years ago

I feel sorry for people living in the US, how can they call this a democracy anymore? Demos means people. You are ruled by companies at this point.

justtopost3• 7 years ago

Don't feel sorry, we are fine. Still the most free people on earth.

ohlookabird• 7 years ago

Clearly, it can vary a lot what people consider free. And therefore, this statement isn't true in general. The US does indeed have a lot of things I would consider freedoms, yes. But in Germany, for instance, I feel it is a great freedom to not have to worry about most healthcare issues, regardless of their income. A freedom (in my perspective) I wouldn't have in the US. There are other issues that fall into that category as well (free to not really have to worry about school shootings, free to not have to worry about people (including kids) to find a gun in the fields, free to not have to worry about insurance of people when having an accident, etc.).

petschge3• 7 years ago

You are not, you just have constant propaganda to that effect and you believe it because most of you never leave your country. And that is not just me personal opinion. Going over a (incomplete) sample of freedom indices listed on https://en.wikipedia.org/wiki/List_of_freedom_indices we have:

Rank 6 on the Economic Freedom index https://www.fraserinstitute.org/economic-freedom/map?geozone...

Rank 17 on the Human Freedom index https://www.fraserinstitute.org/sites/default/files/human-fr...

Rank 45 on the Press Freedom Index https://en.wikipedia.org/wiki/Press_Freedom_Index

Rank 10 on the World Index of Moral Freedom http://www.fundalib.org/wp-content/uploads/2018/07/World-Ind...

Rank 53 in the Freedom of the World index https://freedomhouse.org/report/freedom-world-2018-table-cou...

Rank 12 in the Index of Economic Freedom https://www.heritage.org/index/ranking/

That is not a bad score overall, but is a far cry from an unchallenged "we are the most free".

mercutio2• 7 years ago

Good thing they don’t call it a democracy!

It’s a republic. There’s a meaningful difference.

marcosdumay• 7 years ago

"Public" also means people, it's just from another language.

One name is about the act of governing and the other is about the property of the governing body.

anoncake4• 7 years ago

If the most positive thing to say about the US political system is that it does not feature a monarch...

HillaryBriss2• 7 years ago

One rather insidious thing about H&R Block's online tax filing website is that, once the hapless user has chosen to have a real human "tax pro" review their tax return (for an additional fee), the user cannot un-choose it! The website does not offer you that choice.

Even worse, when the user calls the H&R Block help number, a computerized voice does offer the user the option to downgrade, but notes that it will have to delete all of the data the user entered!!!

Talk about sleazy.

yeahitslikethat4• 7 years ago

Is not sleazy. They have two systems but no export from one to the other and why should they? It's free.

You build it for free.

HillaryBriss2• 7 years ago

No. It really is sleazy. I'm talking about a situation where the user is paying for the H&R service. This is a paying customer, not a free user.

This user then adds a tax pro review service but decides later that they do not want that add-on service. But now the user cannot remove that added-on service on the H&R website. The user calls in to an automated phone line which tells the user that, in order to downgrade, the system must clear out all of their data.

justtopost3• 7 years ago

The number of people propsing a 3rd party take my data and advertise to me for the privlidge of paying money to the state need to rethink their position. No 3rd party sould even be useful, much less needed to satisfy your state and federal debts.

Arubis• 7 years ago

It's a little bizarre to me that the very act of paying an independent CPA to run through my taxes feels like a deliberate anti-regulatory capture decision, but there it is.

yeahitslikethat4• 7 years ago

Imagine if the power company made YOU figure out how much you owed them every month.

yeahitslikethat4• 7 years ago

I just fill out my taxes the best i can and submit it and if the irs corrects it I send them more or cash the check.

It's not hard and no accountant had ever dabbed me more than they cost.

If you can code you can fill out a form. Every year I day in going to automate it but it's easier to just fill out the forms.

I'm looking forward to an audit for the free tax advice.

Be legit. Stop worrying. Keep living.

unethical_ban• 7 years ago

The government developing software to better interact directly with its agencies should be a mission of 18F and the individual agencies. Our Congress is thinking of doing the opposite.

Companies have no natural right to continue making money without competition from the government.

EDIT: Where does this ban the IRS from creating their own portal? It requires the IRS to continue the Free File Program, but does that explicitly bar the IRS from its own system?

hundt3• 7 years ago

As the article makes clear, this is not a unilateral ban on competing with tax prep software companies, but rather a deal (pre-existing but now codified into law) in which the companies agree to provide free tax prep software to low-income taxpayers and in exchange the federal government agrees not to create a competing product.

To me this sounds like a great deal for taxpayers. In exchange for not spending tons of taxpayer money on a project which may or may not turn out well, makers of existing high-quality products agree to voluntarily give free access to it to the majority of taxpayers.

The bill additionally codifies funding for the VITA program which provides free in-person preparation services for low-income taxpayers.

I think this is about as good as the situation can get without actually simplifying our tax code.

whoopdedo• 7 years ago

But is it really free? Or are you just paying in a different way?

https://www.washingtonpost.com/technology/2019/03/07/when-ta...

hundt3• 7 years ago

That article is referring to a different breed of free service.

toddh• 7 years ago

Non-story. IRS has never offered Free File. Their current program is in conjunction with for-profit providers

alexmingoia• 7 years ago

Taxes are complicated to file because taxes are complicated. I’m surprised the source of tax woes is left out of this discussion, and the obvious solution (a simple tax system).

The solution to excessive, complicated rules is less, simpler rules.

crazygringo• 7 years ago

I'm confused because I can't tell what this actually refers to. It says:

Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system.

But the IRS already has one. I used it yesterday to fill out and e-file my taxes. It's "Free File Fillable Forms" (freefilefillableforms.com) that is basically an online replica of the tax forms, some fields get automatically calculated, but you have to manually calculate the actual level of tax you owe, and it's submitted electronically.

And all income levels can use it, unlike the free tier of commerical tax prep programs which are limited to below a certain income level.

I use it out of principle -- it's harder to use, closer to filling out tax forms by hand (unlike the "wizard"-type interfaces of commercial tax prep software), but I don't want to support the commercial solutions exactly because of lobbying like this.

So I can't tell what this bill aims to do specifically. Is it trying to get rid of Free File Fillable Forms, or is it preventing the IRS from building something better?

EDIT: Free File Fillable Forms is apparently a private organization that the IRS website links to. In my years of using it, I'd always assumed it was provided by the government. Wikipedia clarifies:

"Another component of Free File is Free File Fillable Forms, which is available to all taxpayers, including taxpayers whose incomes are greater than $66,000. It is an alternative to Free File Software, although both are free. Free File Fillable Forms is operated by a private organization, the Free File Alliance and not the IRS. Though IRS links to it, they do not endorse it or any product... There are no income restrictions for using Free File Fillable Forms... It provides free electronic filing. Free File Fillable Forms is managed by the Free File Alliance." [1]

I'm still unclear, however, if there's pressure to get rid of this option that is free for everyone. I sure hope not.

[1] https://en.wikipedia.org/wiki/Free_File#Free_File_Fillable_F...

misingnoglic• 7 years ago

Our country is literally being held hostage by corporations, this is incredible.

MR4D6• 7 years ago

You know, I get the uproar about this, but I'd like to put one thought into your heads before you respond:

Imagine, as complicated as tax forms are, and as obtuse as the IRS instructions are compared to TurboTax.

Now imagine the government puts up a website for you to file your taxes.

Do you really want to use that? Do you think it will be as easy to use? Do you think you'll have a nice wizard to walk you through it? Will it be faster than TurboTax?

Now, a year or two after their site has come out, and TurboTax has seen a huge drop in revenue (they don't know it, but it's only temporary), they decide to shut it down because they can't compete with both free and "government guaranteed" even if the site sucks.

Will you be happy then?

Seriously - I get the frustration of the current situation, but if you've ever done it on paper and have anything other than the 1040EZ form, this should give you pause.

pwncake• 7 years ago

Then why crush the option? Let the market determine it. If Intuit's product is so much better then it will win.

MR4D6• 7 years ago

Because the free-priced government option will drive out the non-free commercial providers. Even if this only lasted a few years, it would put some of them out of business.

In other words, for the same reason we have laws against unfair competition.

dragonwriter4• 7 years ago

Seriously - I get the frustration of the current situation, but if you've ever done it on paper and have anything other than the 1040EZ form, this should give you pause.

Imagine if back when we had paper forms H&R Bloch had managed to lobby Congress to prohibit the IRS from providing free forms and mail in processing directly to taxpayers, and instead required them to work with private vendors to provide proprietary forms and postal tax filing solutions? Would this really be better? How does “with a computer” change this?

And, yes, I've done 1040 and 1040A filing by paper in the past

MR4D6• 7 years ago

That's not apples-to-apples.

To make that fair, they would have to lobby against E-File.

MR4D6• 7 years ago

So, while doing some more research (trying to get my job done, too, but...HN calls..) I found this:

If you make under $66,000 a year, filing your taxes online is probably free.

Every year only about three million people — of the nearly 100 million eligible — take advantage of the private partnership the Internal Revenue Service has set up with tax giants such as Intuit Inc and H&R Block Inc. to provide free tax preparation online, according to Tim Hugo, director of the Free File Alliance, which is made up of major tax preparers that manage the Free File program.

SOURCE: https://www.marketwatch.com/story/how-to-file-your-taxes-for...

avinium• 7 years ago

For what it's worth, we've been able to file individual income tax returns in Australia for as long as I can remember (15+ years). For the vast majority of taxpayers (i.e. salaried workers), it's completely painless and MUCH better than the paper-based alternative.

I can actually make this comparison, because corporate tax returns still require paper forms.

Now I know the US tax system is much more complex, so take this with a grain of salt. But "free and government provided" doesn't necessarily mean "bad".

And if it were successful enough to drive TurboTax out of business, that would be a massive indicator of popularity and a net win.

I find it utterly absurd that the USA is beholden to this kind of regulatory capture. Forcibly preventing the government from delivering better services to protect an entrenched player? That's an absolute perversion of capitalism - I'd actually say it's reminiscent of communism more than anything.

mehrdadn• 7 years ago

Does anyone know why Senator Wyden is behind this? It's surprising for me to see.

MR4D6• 7 years ago

While doing some research (trying to get my job done, too, but HN calls...) I found this:

If you make under $66,000 a year, filing your taxes online is probably free.

SOURCE: https://www.marketwatch.com/story/how-to-file-your-taxes-for...

techdragon• 7 years ago

This is one of the best examples of the perverse incentives that lobbying from some industries can turn into. Regardless of the arguments, government not competing with business, etc.. this is stupid. It requires a twisted viewpoint to think that making it hard to file taxes is a good thing.

anitil2• 7 years ago

Something seems a bit off here - the article points to $6.6 million in lobbying and a direct contribution of $16,000.

The ROI on those costs must be stupendous! Say 100 Million people file taxes in the US, it doesn't take long to hit 10x or 100x returns.

Am I missing something? (I'm not from the US)

Amezarak• 7 years ago

Aside from the free file program, which is a partnership with private companies, the IRS does offer a bare bones free fillable forms tax filing application.

For most filers with W2 income, there’s nothing to it and they could easily do that. It’s fairly simple and you just need to read the directions and do maybe a half dozen additions and subtractions.

Where the real return has come in is the millions, if not billions, of dollars that the industry has spent convincing consumers that taxes are super hard and complicated and open to tons of interpretation, that their tax filing experts know this ONE WEIRD TRICK to get you thousands back, and if you screw up even once the IRS is going to come after you hard and put a lien on your house and put you in jail. The reality is not like that at all - if you do screw up they are happy to help and it’s actually pretty simple for most people. But this has engendered an incredibly deep mistrust of the IRS - most people would still taking their taxes to one of these firms or their local accountant because they’d be convinced they could get more back.

I’m not saying the system couldn’t be even better for these filers, but it does require the federal government and the IRS to start collecting data they they don’t right now, and the actual gain is pretty minimal in real terms - taxes for most filers is already incredibly easy and free. And the you’ve only solved half the problem - what about state taxes?

anitil2• 7 years ago

Ah yes I forgot the US has a separate state tax system. In Aus the federal government distributes taxes to the states (which of course is highly controversial amongst the state governments but the average person couldn't care less)

You can also claim back the cost of filing here I believe, so if you need to use a third party they are essentially paid by the government. Maybe that's why they make it so easy here?

maxxxxx4• 7 years ago

At least bipartisanship is not dead :-). The name also has a nice Orwellian touch "Taxpayer First Act".

airstrike• 7 years ago

This IMHO is the biggest issue the U.S. faces today, simply due to the fact that so many secondary issues stem from how conflicted lawmaking is in this country.

I don't know if it's the same way elsewhere. Maybe it is, and it just isn't as widely reported. But the fact remains that we know this to be an issue and we're not campaigning enough to solve it.

The only other issue that I feel is as pervasive is the end of the Fairness Doctrine and the spiral into chaos that ensued.

sonnyblarney• 7 years ago

One might argue if this is related to scale.

'Everywhere else' is usually < 30M people which is a totally different ballgame.

Can you imagine an EU level healthcare mandate? It'd be out of control impossible, and yet it works well enough a 'the state level'.

It'd be nice to see some really forward thinking states lead the way and forge a path, if a few caught on and there were material examples of 'how it could be done' then maybe there'd be hope.

pcnix• 7 years ago

Well, India's trying, maybe take a look there?

Nikbul• 7 years ago

If you follow down the original on ProPublica and find comments there, you will see that there was no such provision. And the one that actually referencing IRS is says that IRS should continue to cooperate with private sector to make free tax filing and must maintain free portal. I would like to see actual provision to which this website referencing, otherwise it is click bait.

rosstex• 7 years ago

http://disq.us/p/21153z5

j16sdiz3• 7 years ago

It's in the referenced contracts.

That statute states IRS should continue the program (67 Fed. Reg. 67247), "including any subsequent agreements and governing rules established pursuant thereto."

In 67 Fed. Reg. 67247: "During the term of this Agreement, the IRS will not compete with the Consortium in providing free, on-line tax return preparation and filing services to taxpayers."

tootie2• 7 years ago

Yeah, and unless the IRS has imminent plans to implement free tax filing this new clause has no real effect. It's not a constitutional amendment, if the IRS wants to offer this service in 5 years they'll probably need a huge multi-year appropriation and this clause to be revoked. Adding it in to this bill costs nothing and probably made the GOP reps willing to sign on.

acdha• 7 years ago

When a highly-respected group of reporters like ProPublica run a story, it’s reasonable to assume they’ve done more research than the average commenter. In this case:

https://www.congress.gov/bill/116th-congress/house-bill/1957...

The Secretary of the Treasury, or the Secretary’s delegate, shall continue to operate the IRS Free File Program as established by the Internal Revenue Service and published in the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), including any subsequent agreements and governing rules established pursuant thereto.

https://www.govinfo.gov/app/details/FR-2002-11-04/02-27909/s...

during its term, the IRS will not compete with the private sector by providing free on-line tax preparation and filing services to taxpayers

valleyjo• 7 years ago

Every time I pay for TurboTax I hate them even more for lobbying for this type of legislation.

technofiend• 7 years ago

Have you considered any alternatives? I use taxcut but have used sites in the past like taxbrain.

chrisseaton3• 7 years ago

Can you pay an accountant to do your taxes instead? I do that in the UK and they cost less than the prices I see online for US tax software. I just give him a pile of pay slips and receipts and he does whatever he needs to do to fill things in.

tathougies14• 7 years ago

For the vast majority of people, filing your taxes by hand is so easy, I'm not sure why more people do not do it. It also has the side benefit of making the government pay more to collect your taxes.

The IRS is also extremely wonderful to deal with, and is happy to answer your questions. I've had questions about procedures before (even made a mistake), and you just call (or they call you) and you fix them.

TallGuyShort• 7 years ago

+1 to getting an accountant. TurboTax is great if you just have regular income and common deductions. I've never felt satisfied with TurboTax any time I've had a question about anything. Every year I pay an accountant twice what I paid TurboTax, I spend less time going through the process (I literally save a folder of documents and dump it on her desk) and get far more. At the beginning of the year she does my return, hands me a stack of 4 ready-to-mail envelopes with all my estimated tax vouchers filled out, reviews my withholdings mid-year with me, and works with my investment guy to make sure they're both giving me good recommendations. I have so much less mental load to deal with - I love it.

l4yao• 7 years ago

The copy on their product pages is also incredibly deceptive. Buying "Intuit TurboTax Deluxe 2018, Federal with State + Efile" means only the Federal Efile is included, and additional charges are involved with a state E-file. People should be filing complaints with the FTC

GalacticDomin8r• 7 years ago

Credit Karma's "free" tax return service has been a surprising lack of unpleasantness. Other than having to a bit of manual copy/paste for certain income, it's a breeze for my relatively uncomplex return.

I'm not exactly certain what they are getting by providing this info except advertising for more CC and loans. One of which I used and reduced my auto loan rate(this was also to get it out of Wells Fargo's books).

radium3d• 7 years ago

I'm not affiliated but I've been using freetaxusa.com for several years now and their system does everything I need, including contract based income, capital gains, etc in the free version. State tax costs < $7 ($15 now, must have been an early file deal) if you are feeling lazy.

chrisseaton3• 7 years ago

The Ways and Means chair, Neal, received $16,000 in contributions from the two companies in the last two election cycles, according to the ProPublica report.

When companies make contributions like this, why don't politicians just take the money and then do whatever they want anyway? The companies have no recourse to complain or get the money back do they? How does this work?

gruez• 7 years ago

The companies have no recourse to complain or get the money back do they? How does this work?

They'll back your opponent in the primaries/elections, and run smear campaigns on you.

internet_user2• 7 years ago

a sinecure is always nice?

ahoy• 7 years ago

House Representatives have 2 year terms. If you'd like to hold onto that job for longer than 2 years, you have to campaign again, which means raising money again. Do you think TurboTax is going to keep investing in a congressperson who isn't doing what they want?

samstave• 7 years ago

This is why congress should be a conscripted service.

With a limit of two terms.... should only be able to vote to keep a certain person in office, but all persons in office should be selected just like jury duty.

Want to know how fucking retarded the world is. Do this. but at least it will diminish corruption from the likes of Pelosy and others who spend DECADES in their positions...

branweb• 7 years ago

yeah but what happens when they're up for re-election and they need money again? Maybe corporate donors back a rival who they know will "play ball".

PhantomGremlin5• 7 years ago

How does this work?

The definition of an honest politician is one who stays bought.

Nobody in politics receives a single "campaign contribution" aka "bribe". Instead, it's an ongoing revenue stream.

Lobbyists frequently lobby on behalf of a number of companies, on a number of issues. The lobbyists know which politicians can be trusted. The politicians know which lobbyists can be trusted.

That does seem somewhat cynical, and the whole business does seem a bit seedy if not sordid. But what is the alternative? Our republic seems bad, but it functions better than most other countries out there.

PhantomGremlin5• 7 years ago

I think this is a great idea. The risk of the IRS totally screwing up is just too high. And having an outside contractor do it is potentially even worse.

E.g. the State of Oregon contracted with Oracle to create a health insurance marketplace. $200 million dollars later there was nothing but lawsuits. https://en.wikipedia.org/wiki/Cover_Oregon

Let that sink in. Two hundred million dollars and they couldn't get a fucking website working. Two hundred million dollars!

Anyone who has played with TurboTax or H&R Block software knows that the software is at least pretty good. There are plenty of nuances in the tax laws, and the software at least attempts to cover those. Sure, a good tax accountant probably can do a lot better, but for 98% of people the software is good enough.

Does anyone seriously believe that the IRS would do better? Why waste taxpayer money to find out?

maxxxxx4• 7 years ago

The IRS would basically tell you what they already know. You still could file a return if you chose to do so. You could also buy TurboTax if you wanted to.

I can’t see any downside to the taxpayer, only upside. E

zdragnar4• 7 years ago

The downside, allegedly, is that the IRS may not operate in good faith and take all of the appropriate deductions, etc. If the tax code were vastly simplified, I think all of the objections go away.

mykowebhn2• 7 years ago

Yes, but if the US tax code weren't so darn complicated wouldn't that reduce the chances of the IRS totally screwing up?

I just finished my taxes and filing taxes in the US is such a stshow. But where do we start? We want to simplify filing, but that might depend on simplifying the tax code, which might be orders of magnitude more difficult. Sigh!

PhantomGremlin5• 7 years ago

that might depend on simplifying the tax code, which might be orders of magnitude more difficult

Actually, it would be trivial to simplify the tax code. It couldn't be done overnight, it might take a long weekend. All you have to do is come up with a very simple tax scheme with no complexities and no loopholes. Why couldn't a simple tax system be contained in a 10 page law?

At first make it optional for anyone to switch to the new scheme. After a few years, start a 20 year phaseout of the old system. Tell the holdouts that, first year of phaseout, they must pay 5% of the tax required by the new system and continue to pay 95% of the amount calculated by the old rules. After 10 years it becomes 50%/50%. After 20 years the old system is gone completely. Holdouts can switch completely to new system at any time, but once you switch you can never go back to the old system.

erichurkman• 7 years ago

The IRS already does your taxes based on the information they already have. Ever had the IRS helpfully "correct" your filed taxes and send you more money or send you a bill?

You can dispute it, but in the multiple times it has happened to me, they were right, and refunded or charged me sometimes modest sometimes small amounts.

They could've just done that and saved me the $$ spent on Intuit (do it yourself) or accountant services.

rootusrootus3• 7 years ago

Yup, once every so often we get a letter from the IRS about a discrepancy. Every time, they are correct.

PhantomGremlin5• 7 years ago

in the multiple times it has happened to me, they were right, and refunded or charged me sometimes modest sometimes small amounts

The one time it happened to me was much more opaque. Basically, some years after filing, the IRS said something like "you owe us an extra $5". Without much explanation as to why.

Okay, easy thing is to pay $5. But what if it was $500? Still not cost effective to pay an accountant to help you understand why. And what if it's $5,000? Is it worth battling a Kafkaesque bureaucracy for that? What if it's $50,000?

The current system sucks but it sure is better than having the starting point for taxes being the government tell you exactly how much you owe them and you having to battle them to prove otherwise.

lacey• 7 years ago

This sort of argument comes up all the time, claiming governments somehow screw everything up but private industry has some sort of amazing track record at producing value.

There’s a continuous stream of evidence to the contrary, particularly if you’ve ever worked for large companies and seen the kind of wasted resources that go toward pet projects and other high value items that fail miserably.

The difference of course is that one costs tax payers whereas the other costs shareholders, and in one case (government and tax payers) there is some hope of oversight and accountability. If shareholders actually knew about this sort of waste I am not sure they would ultimately care because they may chalk it up to the cost of doing business.

pdonis• 7 years ago

There’s a continuous stream of evidence to the contrary, particularly if you’ve ever worked for large companies and seen the kind of wasted resources that go toward pet projects and other high value items that fail miserably.

There's also a continuous stream of evidence not to the contrary, particularly if you've ever worked for the government and seen the kind of wasted resources that go toward pet projects and other high value items that fail miserably.

The difference of course is that one costs taxpayers whereas the other costs shareholders, and in one case (government and tax payers) the only feedback mechanism is votes every couple of years, which don't really make any difference because incumbent reelection rates are in the high 90s even though Congress's approval ratings often drop into single digits. Whereas shareholders (or their proxies, mutual funds) can simply sell a company's stock if it looks like the company is wasting resources; stocks get traded every day.

peteretep4• 7 years ago

Does anyone seriously believe that the IRS would do better?

It’s interesting to see the same arguments resurface as they do for healthcare.

Most non-Americans here live in countries where salaried employees have almost zero contact with the country’s ex agency. No returns, no filing, it all just magically happens behind the scenes.

So it’s kinda weird to hear Americans say “that’s impossible! How can you trust government?!”.

The worst thing about American exceptionalism is that it blinkers Americans from things that are not only done better by some other countries, but also the things that literally every other rich country in the world manages.

zdragnar4• 7 years ago

To be fair, American exceptionalism has little to do with the glories of our IRS.

Our tax code is also absurdly complicated- https://www.businessinsider.com/2014-how-many-pages-in-the-u... as an example. As I've said elsewhere, some of the most significant opposition to the IRS pre-filing taxes is trusting that it operates in good faith - or at least competently - and appropriate applies all deductions that a person is eligible for. Simplifying the tax code would go a long, long way to alleviating most people's concerns, I think.

beachy• 7 years ago

American tax is significantly more complex than other countries - I would guess more than any other country - due to challenges such as county + state + federal taxes and interactions between them.

Source: worked on a payroll system that had to be heavily rearchitected when we tried to deploy it in the US.

zdragnar4• 7 years ago

I don't think the IRS or government hires worse people than, say, TurboTax. However, the procurement process for contracting the work is a byzantine nightmare, of which companies who are management and administrative heavy are the only ones who can possibly compete.

The net result is you have systems being put together using objectively bad processes and whose outcomes are guaranteed to be more expensive and less likely to work as intended.

A former employer of mine was a small startup in the intelligence analysis space, and had a product that generated a lot of interest in various government circles, as it solved some problems better than what they were currently using. The red tape to actually get any sort of contract approved was so tough to get through the owner seriously contemplated hiring a company whose sole purpose was helping other companies negotiate said red tape.

In the end, they pivoted to the commercial space.

To bring this back to the original point: I would love to have a super-simple tax system that didn't require paying third parties to file for me to make sure that I filled everything out correctly, and leveraged the tax code to best fit my circumstances. However, I do not have much faith that such a thing will come about anytime soon... once bitten, twice shy, that sort of thing.

selimthegrim• 7 years ago

Considering Oracle was pulling any liberal arts graduate with a pulse off the street to manage the programmers, I believe it.

danielhughes• 7 years ago

I've often read headlines noting that the tax-prep lobby spends huge sums to preserve the status quo. But the numbers quoted in the article as evidence don't appear to support that claim. $6.6m seems low relative to these figures https://www.opensecrets.org/lobby/top.php?showYear=2018&inde... *

*I can't vouch for this site or its data

Relevant quote from the Tech Crunch article: "One reason why folks Congress could be pushing this through is all of the money that H&R Block and Intuit spent to lobby Senators and Representatives. ProPublica estimates that the tax prep industry has spent $6.6 million to advocate for the IRS filing deal. The Ways and Means chair, Neal, received $16,000 in contributions from the two companies in the last two election cycles, according to the ProPublica report."

chillacy• 7 years ago

$16k to sell out? Don't these people raise millions?

peteretep4• 7 years ago

If the marginal cost is zero of raising, raise all the amounts

diminoten• 7 years ago

Not really, no! Most national elections sure, but I think most congressional races aren't nearly as expensive.

dgacmu2• 7 years ago

Big donors are a high return-on-time for busy politicians. I donated the max (2*$2700) to a few candidates during the previous midterm elections, and was (naively) surprised to be invited to have brief 1:1 meetings with each of them. Money speaks depressingly loudly in politics. Corporations have to go through PACs, but many have their own (Intuit has their "21st Century Leadership Fund" PAC, which you can view here:

https://www.opensecrets.org/pacs/lookup2.php?strID=C00361741...

Not all candidates accept PAC funds, but enough do.

It's disheartening.

peteretep4• 7 years ago

Also add to that: I suspect most people in Congress would need to hire an accountant anyway so it would benefit them in the least

TomMckenny• 7 years ago

What they receive is only part of the calculation.

What your opponent will receive in the next election or primary is a bigger issue. And that implied stick is much cheaper than giving out carrots all the time.

DubiousPusher7• 7 years ago

The perrenial misunderstanding about lobbying in the US is that it's about money. It's not. It's about access. The money spent by lobbying firms is almost always in pursuit of that access. AKA buying a $10,000 plate at this donor dinner gets you a sit down with the Senator.

Not only do lobbyists get more accessible they get more credibility. The lobbyists are high paid lawyers at respected firms. They have degrees from respected schools. They have worked on the issue at discussion at lemgth. So when citizens are stacked up against these people they seem comparatively crankish.

This provision isn't in the bill because Intuit bribed someone. It's because that 6.6 million bought a lot of sit downs with committee members. Sit downs in which lobbyists told a convincing story of how it would actually be better for everyone of the IRS couldn't do this. Honestly they probably made some process argument for this. Something like it would get challenged in court anyway and be a big waste of money. Or about how you should make it illegal so the Executive Branch won't do it on their own and they'll have to take congressional input. And the lobbyist almost certainly believes whatever line their feeding the politicians.

It's like most broken things in life. No one is evil stuff just breaks.

hbosch• 7 years ago

I think this is a very level-headed view of lobbying and I want to say that I appreciate your comment. It’s enticing to imagine that Intuit is building a new pool on Chuck Schumer’s vacation property, and in a dark room somewhere a bunch of fat white guys are lighting this bill in fire with the ends of their cigars.

One other factor is that in “government time” we’re not far removed from the Healthcare.gov fiasco and in the middle of a debate over the technical debt of our easily hacked voting machines. Along with that, Premera and Equifax have suffered attacks.

I imagine there is nobody inside the actual government that is willing to try and “outdo” Turbotax.

wwweston2• 7 years ago

Seconding this. I wish more people understood that "lobbying" is largely making a case to congressional staff, not another word for bribery.

And half the problem is that we need more lobbying, not less.

Donor access is an issue, but I think the larger problem that no one knows how to address with campaign finance laws of any kind is that someone with enough money can simply use that money to hire an army of persuasive people, much as you described.

gowld5• 7 years ago

Paying for access is a bribe. What confuses people is that yes it really is incredibly cheap to bribe Congress and get crazy high ROI, because Intuit can get organized (it's already a corporation with management) afford $6Million in bribes but Americans for sane tax policy can't.

This is what "moneyed special interests" refers to.

csharpminor• 7 years ago

Reported donations also don't capture that lobbyists can threaten to contribute to an opposing campaign. A candidate receiving a $10k donation may also have received a $70k threat (in the form of a donation to an opponent) had they decided otherwise on an issue.

blindwatchmaker4• 7 years ago

I'm sure it's just coincidental that senators and their family/friends frequently get lucrative positions on the boards of various companies, investment sweeteners, and actual positions in these companies for family. For example Joe Biden, a leading Democrat, has been in bed with the credit card industry for most of his career and supported/written legislation in their interest. MBNA was one of his biggest donors and hired one of his sons at an executive level, no doubt with very high pay.

The campaign contributions are just window dressing for the rest of it. It absolutely is bribery.

malloryerik2• 7 years ago

No one is evil stuff just breaks.

Are you implying here that the problem can't be fixed or ameliorated?

buying a $10,000 plate at this donor dinner gets you a sit down with the Senator

What if there were no donor dinners because campaigns were limited to a set amount of public funds?

SilasX7• 7 years ago

I'd like to see a readout of these oh-so-convincing arguments.

I think we caught a glimpse of what lobbyists are telling senators when Ted "Series of Tubes" Stevens sloppily repeated the explanation of the internet he was fed.

(To head off the argument: I agree that the "series of tubes" part itself was correct; the problem was the lacking understanding of the relationship between "data transfer has a cost" and "why net neutrality is bad". Also the dubious anecdote about intern emails. "Series of tubes" is just the label for cluster of confusions, not the part he got wrong.)

rayiner10• 7 years ago

Neal, received $16,000 in contributions from the two companies in the last two election cycles[.]

This statement is false. If you look at Open Secrets, $16,000 lines up exactly with what H&R Block and Intuit employees donated to Neal in 2016 and 2018. H&R Block and Intuit have tens of thousands of employees--it's not surprising that many donated to a Democrat with a high-ranking committee position.

Fun fact: By the article's parlance "Google" gave more to Neal in 2018 than Intuit. Gasp--Google must be in on the tax filing scam too!

cure• 7 years ago

Those numbers sound about right. It is surprisingly cheap to influence our Representatives and Senators.

Maybe it would be within range of a decent crowdsourcing campaign to raise the amount of cash to buy enough influence and lobbying to move the needle on things that are in the public interest, like this issue.

Ugh. If only more of our Representatives and Senators actually worked for the people, rather than for whomever promises them the most money...

snowwrestler2• 7 years ago

Maybe it would be within range of a decent crowdsourcing campaign to raise the amount of cash to buy enough influence and lobbying to move the needle on things that are in the public interest

This is what PACs and nonprofits do. If you want to participate, there is probably already at least one for whatever issue you care about.

fbonetti• 7 years ago

As noted by the economist Luigi Zingales in his book "A Capitalism for the People", companies that are receiving subsidies (or other favorable treatment from the government) are highly incentivized to keep receiving those subsidies. For example, if the tax preparation industry stands to lose $100 million if e-file becomes free, they will lobby up to that amount to retain the status quo.

The problem is that those who wish to reform the status quo are not as well funded or financially incentivized to create a counter-lobby. Ordinary citizens, who would benefit the most from making e-file free, would have to form a counter-lobby group and put up at least $6 million in order to have the same level of access as the tax preparation companies.

Zingales' proposed solution is to do away with subsidies and special treatment for individual companies, as they inevitably lead to cronyism.

indemnity2• 7 years ago

Meanwhile, in my little country (NZ), as a regular salaried worker, I only had to interact with the IRD in the years that I had a few side gigs in addition to my regular employment.

Most years I don't interact with them at all. Don't even have to file.

I guess in the USA they are worried the IRS will get it wrong, so on the chance they will, everyone has to follow really complicated processes, even if their tax affairs are simple...Am I wrong?

lysp• 7 years ago

Being your close neighbour - how do you handle work related deductions. ie. IT equipment?

indemnity2• 7 years ago

If I remember correctly, I got a tax deduction for 30% of its value per year through depreciation.

gtirloni• 7 years ago

In Brazil, our IRS provides the software for free and it gets better every year. There are some talks about not having to declare anything if your revenue situation is simple, in a few years.

I don't trust our government as much as the US population doesn't trust its government but this level of paranoia only leads to inefficiencies. Now instead of a central authority providing codified norms in software, you have countless tax filling vendors providing theirs, lobbying, etc.

Same with right to bear guns against the government. I guess it's the old shovels and gold digging, there's someone profitting from your hopes and dreams, or in this case, fears.

rayiner10• 7 years ago

I guess in the USA they are worried the IRS will get it wrong, so on the chance they will, everyone has to follow really complicated processes, even if their tax affairs are simple...Am I wrong?

New Zealand has extremely limited deductions compared to the United States: http://taxsummaries.pwc.com/uk/taxsummaries/wwts.nsf/ID/New-.... For example, just from Google, it looks like you can't deduct expenses for daycare in New Zealand.

What we're worried about in the U.S. is that making deductions "opt in" will lead to an effective tax increase from people not claiming them (or being afraid to contest the "bill" sent to them by the IRS). You know the studies showing how organ donation rates shot up when it was made "opt out" instead of "opt in"? Same thing.

eeeeeeeeeeeee• 7 years ago

We just like creating businesses for everything here. Someone needs to squeeze profits out of each segment. Like healthcare.

mrhappyunhappy3• 7 years ago

You see, the tax code is incredibly complicated but for the vast majority it’s rather straight forward. Predatory services like tax preparation feed on the fear and insecurities of average Americans by pitching taxes as some difficult task. In reality, one only needs a handful of pages to get their taxes completed and sent in. This process would be even easier if the IRS did it for you, but politics is not a career of public service, but one to reap maximum personal benefit. We have no laws barring public servants working for the same industries that put them into office so there is a massive conflict of interest, and nobody to do anything about it. The power is not in people’s hands and never has been.

pishpash2• 7 years ago

It's not the form that's complicated. It's knowing that there is some form that exists that will get you money back. Plus knowing what to do next year.

The software is actually bad for you because you forget that reading every IRS booklet and form is about the only way to learn the logic of the tax system if you wish to exploit it correctly.

gowld5• 7 years ago

The USA has "deductions", which are convoluted rat races where everyone does a bunch of paperwork so they all get a small discount which is cancelled out by higher overall rates. The IRS can't tell you which deductions to take, since they don't know your whole life situation.

It's the same structure that makes you pay 3% extra for everything you but so you can get 1-2% back as a credit card refund, and makes you get a supermarket loyalty card, and frequent flier miles, etc.

cbo100• 7 years ago

Australia has "deductions" and the filing forms are plenty complicated, doesn't stop them making a nice website with a free e-filing system.

For pretty much everything is prefilled, and you just double check from your own records, fill in the various deduction screens for whatever class of deductions you're claiming.

fyfy18• 7 years ago

That's how it works in the UK too. By default taxes are taken from your paycheck, and that's the most interaction the majority of people have with the tax organisation. If for some reason you pay too much tax (e.g. you start/quit in the middle of the year) they will automatically send you a cheque with the refund.

Even if you are self employed or run your own company you can do most things online, with a nice easy to use form. Last few years when I've done it, it takes around 30 minutes to get everything done (including finding all the numbers I need to enter from banks, my accountant, etc).

eyeareque• 7 years ago

Uhg, how do we stop this? Is it too late?

internet_user2• 7 years ago

Would be even nicer if taxpayers would have to remit taxes on their own, instead of automatic deductions by the employer.

Preferably, they'd have to count paper bills with their own hands, savoring each one for just a moment, before handing it over to the government.

x3n0ph3n3• 7 years ago

I've often lamented a system that makes people feel good about getting back money that was already theirs (without interest) and calling it free money.

kevin_thibedeau• 7 years ago

That's how we learn how great BB is.

JudgeWapner• 7 years ago

that would be so nice, wouldn't it? Millions of people prosecuted for tax fraud, because they had to choose between paying the gov later or paying for food/rent/healthcare NOW.

rogerkirkness3• 7 years ago

The easier it is the file taxes, the closer you get to a direct link to your bank account where you "don't have to think about it". Affordances and friction can be good. And if you (actually) believe in equality, those affordances should apply to all.

shhehebehdh• 7 years ago

And if you (actually) believe in equality, those affordances should apply to all.

Assuming one actually believes it’s an affordance, as opposed to a pointless inconvenience and cash grab. I suspect those whose views you’re attempting to impugn generally have the latter viewpoint.

rogerkirkness3• 7 years ago

Pointless cash grabs are an affordance. Would you rather have a competent government? That's only useful if you depend on them more than they depend on you.

throwaway287391• 7 years ago

Ugh, I hate this argument so much. It's the argument Grover Norquist goes around making to every Republican in Congress that that (in addition to Intuit's lobbying efforts) to stop this from ever happening. (There's a great episode of Planet Money [1] about it.)

In addition to just about every major country other than the US, California already has this and it's absolutely fantastic. I've literally never heard anyone who's actually used it complain about it and say they'd rather not have the option of filing their taxes in this way.

Imagine if your cell phone bill worked like US federal taxes. They would send you a blank sheet of paper and make you write down your minutes, texts, and megabytes for the month, and any other applicable fees you might owe, calculate the total bill yourself from that, and send a check for that amount. The provider already knows what you owe and calculated it themselves; they just aren't telling you, and you're threatened with additional fines or burdensome audits if your calculations don't match theirs. This causes you weeks of anxiety and dozens of hours of lost productivity every year. (Paraphrased this argument from the subject of the Planet Money episode.)

[1] https://www.npr.org/sections/money/2017/03/22/521132960/epis...

fattire4• 7 years ago

+1 on that Planet Money episode. Everyone in this thread should give it a listen.

The IRS could no doubt offer a great "public option" for tax filing software that would blow the others out of the water, AND be free. We need this.

rogerkirkness3• 7 years ago

The cell phone company doesn't have guns or regulate my property rights. Your argument is weak. Turbotax is better than government software will ever be, and it's close enough to free that no one is out in the cold on it.

sharno• 7 years ago

The situation is even worse for foreigners in the US. As a non-resident I have to use websites with horrible UX, it's totally confusing and I have to gather all the documents and print the forms to mail it to the IRS.

mattferderer3• 7 years ago

If I read this right, you can still use the free service the IRS provides if you make less than $66,000.

Has anyone used Turbo Tax or H&R "free" versions to file? I can't use them & last time I tried they charged you to submit your taxes electronically but otherwise it was simple & easy.

I also know many cities offer services to help people file simple taxes for free.

I believe this bill also states the IRS cannot send debt collectors after people making less than $66,000.

This bill may not be as bad as it looks. I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge. I question if it's necessary to bar it, but I'm guessing that was to keep their deal with the Free File software.

Either way it would be nice to see representatives state their position & reasoning behind this bill. It seems it has wide support across the aisle which is rare these days.

arkades• 7 years ago

If I read this right, you can still use the free service the IRS provides if you make less than $66,000.

You did not. You can contact the private companies such as H&R Block and request Their free service if you make less than 66k - and subject yourself to their upselling and scam artistry, to try and get you to pay anything more than "free."

I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge

The vast majority of people file extremely simple taxes, as they're salaried workers with minimal assets. Most first-world countries provide a pre-populated tax form with the relevant data (since your employer already submits it), for you to peruse, edit, and hit the submit button on. If other countries do it without a problem, I don't see why it's too technically difficult for us to do the same.

arcticbull5• 7 years ago

Exactly. W-2 and 1099 income is really straight-forward. If anything the IRS should provide ways for you to submit all your non-W2/non-1099 income to them and roll them up into a new form so that no matter what your situation you can "fetch" your current returns, sign them, and submit them. No need for third-parties at all. Any additional complexity is a symptom of rent-seeking IMO.

fattire4• 7 years ago

- and subject yourself to their upselling and scam artistry, to try and get you to pay anything more than "free."

Don't forget data mining. Dunno if these apps have ads, but if they do, be sure to add that in as well.

mattferderer3• 7 years ago

I 100% agree with you that simple taxes should be easier to submit. The IRS could & should send you a pre-filled simple tax form that you have the option to sign & send back or agree to online. No "competing" software solution required.

I don't think the IRS should build software for complex taxes & strategies is all I'm saying. That's what accountants are for.

I do understand the argument that a simple pre-done tax solution would mean some people would miss out on deductions. But if you calculate the time & cost it currently takes to submit your taxes, it probably equals out.

mbrameld• 7 years ago

You did not. You can contact the private companies such as H&R Block and request Their free service if you make less than 66k - and subject yourself to their upselling and scam artistry, to try and get you to pay anything more than "free."

I went back to school full-time for most of last year to get some helicopter ratings and didn't have much taxable income, so I used the free H&R Block service.

There was exactly 1 attempt at an upsell, and it was at the very beginning of the process where I was told if I used the free service I would have to enter all of my information but if I used the paid service they could pull my information from prior filings to save me some time.

Was your experience with one of the free programs different?

deepsun• 7 years ago

I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge.

Well, I do expect them to:

1. Verify 99% of taxes automatically anyway, and that's a very difficult challenge. There's no way IRS can use a human to verify every single tax filing.

2. Make a public service off it for those 99%.

3. I suppose that even for complex cases it's probably even _easier_ to make a software for that. There's no human that can remember thousands of pages of tax code.

Humans are still needed, but for correcting/adjusting/verifying the software itself.

freddie_mercury2• 7 years ago

I don't expect the IRS to make software for complicated taxes as that's a very difficult challenge.

The IRS already has this software. They are literally the best placed people in the world to make this software.

How do you think they check taxes for 300,000,000 people + businesses? And their software is already pre-populated with data from employers, banks, brokerages, and all the other places that automatically file data with the IRS.

mattferderer3• 7 years ago

To my (very limited) understanding, I'm under the impression their main way of verifying taxes is by comparing what you reported vs what everyone else who reported a tax form on you sent in.

I 100% agree that the IRS should handle the majority of simple taxes. I just don't think it's reasonable to expect them to find all the possible deductions or suggest complex strategies for you. They could offer common suggestions & try to remind you of common deductions though.

Green_man• 7 years ago

Has anyone used Turbo Tax or H&R "free" versions to file? I can't use them & last time I tried they charged you to submit your taxes electronically but otherwise it was simple & easy.

Yeah, I've used H&R's free filing for 4 years or so now. When I lived in a state with state income tax, they charged me for that, and offered to charge me to remember my data for next year (I declined). their website indicates that state tax filing is now free, I wonder if it depends on the state, or if things just changed since 2015 tax year filing.

unfortunately I don't have any other tax experiences to compare to, but it was very easy. as a student, I don't have complex deductions or income, but as long as I can use the American Opportunity Tax Credit, and it doesn't take too long, I'm happy.

Dig1t3• 7 years ago

This is definitely a nuanced issue, and some people in this thread are being alarmist. Another legitimate issue that many people cite is that by creating a system whereby people can just click a button to pay their taxes is that it can cause people to pay more taxes in general by not fighting for every deduction that they can. People are complacent, and if they are told by the government that they owe some dollar figure, the great majority of people will just click the button and put in their bank account info to make the problem go away.

Say what you will about the greed of tax companies, there absolutely is merit in those arguments. However, there is also something to be said for the effect of large numbers of people being lazy and not fighting to keep every dollar they are entitled to.

fattire4• 7 years ago

So wait. Your defense of being forced to pay $$$ to a third party company to data mine your info in a convoluted, frustrating and expensive process rather than using a free, simple, fast service is that maybe possibly it will be SO convenient and friendly that some people will elect not to bother "fighting for every deduction that they can"?

https://www.npr.org/player/embed/708195702/709698927

mrhappyunhappy3• 7 years ago

Lazy, really? The average person has enough crap to worry about to figure out tax forms. We shouldn’t require effort when much of the process can be automated.

j16sdiz3• 7 years ago

The "free" program provided by tax companies only do the simple tax part. Nobody save tax using those free programs.

maxerickson• 7 years ago

Get rid of most deductions that aren't easily reported by third parties.

Problem solved.

(The recent tax bill went a long way in this direction by increasing the standard deduction)

77pt77• 7 years ago

If I read this right, you can still use the free service the IRS provides

The IRS doesn't provide any electronic filling services.

Those "free" services are provided by a consortium of private institutions.

There is no way to efile without giving all your data to private companies.

crispinb• 7 years ago

Citizen overheads for essential services are as high or higher in the US as in mainstream developed nations, but laws dictated by corporations mandating (or making essential-in-practise) private provision clumsily hide them behind a fake 'low tax' banner.

Here in Aus our ATO makes the (dead simple) etax directly available to end users. Its popularity speaks for itself, and there'd be hell to pay if the ATO ever removed the service. Cf public healthcare etc - corporations are rightly scared of public provision. People like it & it's very sticky.

macinjosh• 7 years ago

As a vehement proponent of free markets I wholly oppose this sort of crony capitalism. I think this is something everyone in politics can and should agree on.

If the government is going to collect taxes they shouldn't be giving a certain industry a leg up on for charging money for people to pay taxes.

Calloggs• 7 years ago

Planet Money covered tax filing a few years ago and visited it again recently: https://www.npr.org/templates/transcript/transcript.php?stor...

My understanding is that the main opposition appears to be (1) the tax preparation lobby to protect their business interests and (2) anti-tax activists that believe that making people calculate their own taxes will make them more aware of how much they are paying in taxes.

The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.

fattire4• 7 years ago

Link to audio:

https://www.npr.org/player/embed/708195702/709698927

Dig1t3• 7 years ago

Yes, you're right that people in that camp are unlikely to review their tax filings from their 3rd party. However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can. The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money. In the Planet Money episode they spoke with the Republican dude and his biggest point was that his goal was to support a system where people paid as little tax as possible, and this current system we have is just that.

gowld5• 7 years ago

If complicated taxes are a Republican anti-tax strategy, why did Reagan and the 1980s republicans pursue a strategy of vastly simplifying the tax code?

Doing taxes is a tax -- in hours and fees. Only the wealthiest people who can spend $10K on tax prep to save $100K via loophole deductions, oh.

sanderjd2• 7 years ago

Except the tax preparation industry must be taking a significant enough cut to make it lucrative to spend money lobbying. Is that cut smaller than the total extra tax that would be paid due to mistakes in the auto filing system? I'm skeptical.

hobs2• 7 years ago

If republicans wanted to make a system where people would save the most money we'd just reduce the tax loopholes and simplify the system - the system we have now actually only has the wealthy pay the least money.

Some would say the republicans think this is a feature.

metaphor4• 7 years ago

The bigger the refund, the happier the customer and the more likely they are to come back next year and give you more money.

Doubt it. We're talking 1040EZ filings by people in the 22% and lower tax brackets, not complex itemizations typical of 24%+ tax bracket filers.

The 5-digit PIN from the previous year's e-filing that's required if you want to expediently e-file this year is enough. Most people aren't going to remember that detail, but the e-filing service you used last year never forgot and they'll gladly auto-fill that block for you as a repeat customer.

losteric• 7 years ago

However there is an incentive for that 3rd part tax company to save their customer as much as they possibly can.

lol. No.

First of all, that myth already assumes a complicated tax code which requires a for-profit middleman. We should be able to minimize our tax exposure without paying corporations.

Secondly, the vast majority of filers don't qualify for loopholes. When every tool offers the same refund, competition is for the cheapest/simplest tax experience... while the industry as a whole is strongly incentivized to create an ever more convoluted system, ensuring their yearly rent-seeking continues.

rebuilder3• 7 years ago

If private tax filing products saved money for their users, as compared to a hypothetical, IRS-produced product, what are these companies worried about? They'd have a clear competitive advantage over the IRS product.

jacobolus4• 7 years ago

It’s not really about making people more or less aware of what they are paying.

The point is to make filing taxes as time consuming and obnoxious (and therefore emotionally painful) as possible, ideally without the public connecting the dots and getting outraged.

ecopoesis• 7 years ago

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

cascom7• 7 years ago

I think it’s actualy both

rattlesnakedave3• 7 years ago

A better way to do 2 would be to do away with withholding. After a year of that we’d see a radically different tax system.

randysavage• 7 years ago

Forcing everyone to make quarterly estimated payments would lead to riots in the streets.

adjkant2• 7 years ago

Interesting in theory but in practice most Americans do not have the financial literacy to budget properly to meet taxes.

What happens when you don't have the cash to pay? Do we then see a whole new sector of predatory loans? Imprisonment? Increasing unpayable fines? None of those are good ideas, yet when things like this happen, our system has already fallen into these pitfalls. Witholding is an essential idea.

What would be nice is if we make the easy filing system but explicitly highlight the amount you paid in taxes compared to your income. Most people only judge on refund amount and rarely check the math on the exact taxes owed.

u801e9• 7 years ago

I've always thought it would be better to replace the income tax with a national sales tax. Then, for those who earn less and have to spend a greater proportion of their income on essential expenses, the government would credit them through their employer's paycheck (essentially the opposite of what federal withholding is now). For those who earn more, they would receive less credit or won't receive any credit.

projektfu2• 7 years ago

I'd say within six months we would be back to the same tax system. People would either get a monthly bill or withholding would be reintroduced. Payroll processors would give people the option to do the withholding. As an experiment we could try to switch to withholding taxes on a quarterly basis. There would be lots of trouble as people hit that first quarter's reduced paycheck.

tathougies14• 7 years ago

Sure.. Having had to pay estimated tax before, i say make everyone do it. Then we'd get rid of these taxes like no ones business

guelo• 7 years ago

I would classify causing mass pain for political gain as purely evil.

dwighttk3• 7 years ago

So:

Politics is evil...

Checks out.

tathougies14• 7 years ago

Right because filing your taxes is the moral equivalent of strapping the population to the torture rack

tathougies14• 7 years ago

The second argument blows my mind because I can't imagine that the set of people who would just pay the IRS without double checking their math are reviewing the tax filings from the third party they use right now. In other words, I would really like to see a survey of how people currently file their taxes in comparison to how they think they would if there was an IRS free filing for everyone or something like the ReadyReturn mentioned in the NPR story.

I'm actually of the second opinion and, aside from two years dealing with medical issues with my wife, I've filed my taxes by hand for my entire life, and think everyone else should too.

robmaister2• 7 years ago

There's a few companies that are allowed to efile that do very little besides convert the IRS paper forms to web forms and do the arithmetic for you. They tend to be a lot cheaper than TurboTax/H&R Block. I've been using one of them (OLT) the last two years has worked well enough for me and efile processes a lot faster than paper.

I also believe people should be filing their own taxes and understanding how the system works. I've owed money the last two years by underestimating self-employment taxes, so this year I've set up a spreadsheet that tells me how much I'll owe each quarter with all deductions built in and a tiny bit of overestimation.

cascom7• 7 years ago

It’s worth it to me to pay a couple hundred dollars not to deal with it it and have someone else's signature on my return - that being said I have a back of the envelope spreadsheet that estimates my tax liability using about 5 inputs and is usually pretty accurate vs my prepared return

HashThis• 7 years ago

Congress sells out the american people. Congress doesn't work for the American people. Congress works for moneyed interests (corporations). This is congress aiding crony capitalist theft

onetimemanytime• 7 years ago

Conspiracy theory: what if IRS (the Govt) when designing the free software with all the options--thousands and thousands of pages https://www.politifact.com/missouri/statements/2017/oct/17/r... --lean on the side of the government when in doubt? Intuit, HR Block etc have some sort of guarantee and incentive to save users, IRS not so much. Doesn't even have to be a conspiracy theory ("We need the money so let's make them pay $xx Billion more this year") just the way incentives work. Maybe simplify the code first?

onefuncman2• 7 years ago

The IRS outsources the development of the free software.

All the IRS does is publish the tax code in a specific XML format. MEF (mechanized e-file) is the interchange specification. It's rather a shame there's not more open source effort around tax filings...

tokyodude• 7 years ago

maybe not exactly the same but it is aguable if the majority of people had to write check to pay their taxes instead of having their taxes auto-deducted by their employer they'd push much harder for lower taxes and less government spending

it's much harder to make $40k a year and write a check for $5k than to just get a net pay of $35k with the $5k never reaching your bank account. (note: No idea what income tax is at $40k)

PS: don't have an opinion if this would be a good or bad idea. can see it both ways

freddie_mercury2• 7 years ago

Why is it "arguable"?

What you suggest is exactly how it worked before 1943 and there was a massive expansion of government, government services, and tax rates between 1913 and 1943.

The actual historical evidence strongly suggests this theory is spurious and easily dismissed.

dwighttk3• 7 years ago

Checking math? You must have simpler taxes than I do. By the time I’m done entering various non w2 forms I don’t even know what math I’d check.

RayVR• 7 years ago

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 actually be able to pay the government.

Again, this is just for the sake of argument.

_archon_• 7 years ago

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 be massively reduced.

Making the filing and paying of taxes difficult and painful won't change a person's tax liability, it'll just irritate every citizen until we collectively demand an easier process. If you can't pay, you get penalties and a payment plan. Don't forget that the IRS is a government entity capable of legally charging, suing, etc. with the force of law. Why would having to travel to a payment center reduce someone's tax liability?

I guess I want to know more of the argument, for the sake of argument, because the argument doesn't make sense to me as presented.

dragonwriter4• 7 years ago

My bet is that within the first year of this taxes would be massively reduced.

My guess is within the first year, they'd be reformed on administration to put less needless pain on taxpayers. My guess is also that with the needless administrative headaches so visible, it would actually make it politically feasible to pass tax increases that would otherwise be impossible, so long as you also deal with the needless administrative headaches.

Plus, I'd guess that even before that, every single politician attached in any way to creating the administrative headaches would be hounded out of office, or worse.

conanbatt6• 7 years ago

Yeah ,withholdings are garbage from an anti-tax pespective.

Great example of that today is that most americans believe the trump tax reform didnt help them (only 17% believe it helped them) but it literally and factually increased the income for 80%. At least one reason for that is that withholding was reduced, but refunds were reduced as well. Availability bias makes people remember refunds, but not their monthly payments.

ransom1538• 7 years ago

The US has the most idiotic tax system. Your employer, your mutual funds, your 401k, your bank -- everyone reports what you make to the government. The government already knows what you owe (excluding those that itemize). They should just print out a summary and hand over a bill / refund.

ivm• 7 years ago

Recently I was filing my taxes in Chile for the first time and it took about 10 minutes because the tax service already knows most of my activities, including stock purchases via a local broker and dividends from them. I only needed to review the form for correctness and press "send".

conanbatt6• 7 years ago

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.

sametmax2• 7 years ago

Which many countries do already.

In France, before this year, if you were an employee, you rarely filled a tax form, you just validated a prefilled one, usually with one click on the internet.

Now it's just taken every month from your salary, and you get a chance to correct it once a year.

tathougies14• 7 years ago

No they don't. There's a gazillion things you could do or claim to lower your tax bill.

Moreover, if you set up all yoyr withholdings correctly then you do not need to file anything. You only need to file if you owe (ie you set up withholding wrong) or want yoyr money back (ie your withholding was wrong)

RickJWagner• 7 years ago

"It could also submit pre-prepared tax returns for people to approve and then file based on the salary data the agency already has."

That's the dream. Put the onus of doing the calculations on the government, and you get the right to disagree if you find fault with it.

Wouldn't that be great!

jorblumesea• 7 years ago

Why do regular citizens even file their taxes in the first place? The IRS has everything they need, from W2 to financial statements from brokerages. All of this filing is required by law anyways. Do it for me and send me a bill or refund.

gowld5• 7 years ago

Congress can't permanently bar anything. A future Congress can undo anything a past Congress does.

wirerc• 7 years ago

It's really a problem for other businesses even more so than consumers. Productivity is probably halved while everyone is thinking and talking about taxes for several weeks. It's all I hear at work. I am surprised there is no business SuperPAC to fight against this.

gaoshan• 7 years ago

So... maybe it's time someone build (or fund others to build) a free, online, tax prep service. Something that handles all but the really challenging cases. Do it just to screw the people behind this sort of idiocy.

a3n• 7 years ago

Thus preserving our "beloved" private e-filing companies.

I've said it often, we are all mere resources to government, law enforcement and corporations.

ramon2• 7 years ago

In Brazil it has been by software for many years, recently there is a mobile version. For all tax payers.

NamTaf• 7 years ago

This blows my mind. Here in AU, I can lodge mine online through a web portal. It's pre-filled with a variety of information including my reported taxable earnings (through company reporting), my superannuation information, my private health insurance (reported by those companies), any dividend payments made to me, etc. If any of the pre-filling is wrong (in my experience, it never is unless there's info it doesn't know about), I can correct it manually.

I basically only have to enter the deductions I wish to claim. Of course, if I earned money on the side that wasn't reported, I can self-report it too.

The only reason you'd pay for an accountant here is if you have complex tax affairs, or wish to save yourself time. Even when using one, you're ultimately responsible for the accuracy of your tax filing, and you're supposed to review the submission they draft.

I certainly believe that tax law should be understandable by the layman if all they're doing is a simple salaried employment, and by extension in all cases a person should be able to complete their tax requirements entirely on their own (even if that involves learning a large amount of tax law knowledge). There's something deeply unsettling to me about the concept of tax law being too obscure for the everyman to file themselves even in simple situations. Tax is a contract between the government and its citizens. The idea that a third-party private entity must be involved by law seems, to me, very opposed to the libertarian concepts that the US apparently holds dear.

PorterDuff• 7 years ago

One problem I can see with a standardized computer filing system is that there is unlimited ability to build complex tax law.

ramon2• 7 years ago

ProPublica estimates that the tax prep industry has spent $6.6 million to advocate for the IRS filing deal. Is this legal?

azinman2• 7 years ago

"The Ways and Means chair, Neal, received $16,000 in contributions from the two companies in the last two election cycles, according to the ProPublica report."

It's embarrassing and absurd how cheap it is to buy off congress from making everyone's lives easier. Can't a gofundme raise more than 16k to counter them?

thanatos_dem• 7 years ago

Well that’s quite a slippery slope... it’s going to be corporations vs citizens in a bidding war making all politicians multi millionaires?

How about we go back to when politician wasn’t a full time job, and you barely got paid for it? Make it illegal to pay politicians for any public services apart from a set nominal salary.

cobbzilla2• 7 years ago

Just playing devil’s advocate:

What if a fixed/low salary only attracts the already-rich whose interests will never be well aligned with the general public?

If you want superstar government that is the very best at what it is supposed to do, you need a superstar salary structure, something more like professional athletics. Our president should be paid millions (with complex incentive structures for measurable achievements), but under “at will” employment terms and accountable to the people.

austenallred• 7 years ago

I'd be willing to bet a whole lot that more than that amount of money is changing hands. Be it favors, other money, etc.

toomuchequate• 7 years ago

The government shoots themselves in the foot?

Can anyone explain given the unbelievably bad record of government, why they would ever want more of it?

nichos• 7 years ago

Exactly this. Often times when people complain about waste and corruption, their solution is more government.

outside1234• 7 years ago

Most of it works. Social Security, Medicare, Defense, ...

There is the same sort of corruption and inefficiency in a corporation as well.

rasengan0• 7 years ago

I could've already intuit that

mh_yam• 7 years ago

How about simplifying the tax code so we don't need computer programs at all?

minikites2• 7 years ago

Which parts do you consider overly complex?

xanth• 7 years ago

Why? The more equitable the tax code the more complex it becomes. And assuming you're aiming for the most fair system I don't understand only applying our computational resources to rendering superheroes and recommendation engines, when we could scale the tax code complexity (and fairness) relative to our compute resources.

avsteele• 7 years ago

Disappointed by the overwhelmingly negative commentary here.

There are multiple private companies providing this service for low amount, as many have mentioned; for free for incomes below a threshold.

1) Why would you want the IRS to duplicate this effort and compete with these companies? Remember 'Free' in this context means paid for by tax dollars. Do you think the IRS is going to spend less to implement a filing system than one of the existing vendors has? If they do it in-house, do they even have the expertise? If they contract it out, is that much different from what we have now?

2) Everyone needs to file state taxes anyway. Seems unlikely the IRS is going to handle this, as it adds a great deal of complexity and isn't really part of their mandate. So if you create a free IRS filing system, then people still need to go to one of the existing vendors and import their info and pay to file state taxes anyway.

There are good reasons to think the IRS creating a system is a bad idea. Blaming passage on a few $K in lobbying is lazy.

eightysixfour• 7 years ago

2) Unless you have no state taxes.

jppope2• 7 years ago

Pretty sure these arguments wouldn't change if the IRS provided a free service to submit federal taxes.

1) They could still provide free federal tax submissions 2) State taxes could still be submitted through the companies

If the companies do in fact provide a service that is valuable the IRS should not be competition for them.

Now with that said. Intuit loads up their service with tons of dark patterns, and they spend money lobbying... why would they be doing that if they provide a valuable service?

areyouseriousxx• 7 years ago

They do provide free federal tax submissions. Everytime I see this stuff come up, I'm in disbelief.

I used Free File for over a decade when I had a lower income and 1040 type employment.

You seriously click a button here: https://www.irs.gov/filing/free-file-do-your-federal-taxes-f... Pick a provider and fill out the form. It doesn't even take more than 5 minutes. 10 if you're slow.

How is it on a site full of highly intelligent and educated individuals, there is one single comment about Free File and how simple it is. And it has been around for many years.

There are tons of comments in this thread about how income tax is not automated and free in the US, when it is actually almost automated(fill out name and address and income and the software does the rest) and free for 70% of people in the US. How? How are this many people commenting and no one appears to be aware that almost all of the comments in this thread are incorrect?

On the state level, the federal government, for obvious reasons, cannot control that, but you will be happy to know that many states also support forms of Free File, although are often more restrictive. But with that said, many state taxes are just percentages of what your federal tax liability is so they are often half a page long forms for most people.

And regardless of all of that, and regardless of income, if you have a typical 1040ez income, you can go down to the public library, get the form which is literally two pages and fill it out and mail it in. It also takes about 15 minutes and in 100% absolutely free. Well, you have to purchase a stamp.

Seriously, do you not realize this has been the case forever? Are you located in the US?

And if you make over $66k a year? Come on, you can afford $50.

astazangasta• 7 years ago

1) Because the IRS can provide it to taxpayers for free. Of course they have the expertise. They are the ones who review the damn filings.

The IRS should really just prepare everyone's tax return for free automatically using your submitted documents, then provide you the opportunity to approve or correct your filing. This would save everyone a huge amount of money and time (aka money). It would be a, you know, "public service", the thing governments are supposed to do.

ddlatham2• 7 years ago

Upvoted.

1) I'd like the IRS to at least have a role, since the IRS is the only one who has a copy of all my tax information provided by employers, banks, brokerages, etc. They have a unique role in that they can pre-fill all the information, where someone like Intuit cannot. However, an opportunity where they simply provided that information to a third party with my permission could also be an interesting model. I haven't seen any exploration of that.

2) California, at least, already provides this service. But few use it because the federal government doesn't. If the federal government stepped up, many states would follow.

I believe that the IRS providing it like most of the rest of the world would be a big step forward, but would be open to a role for private industry too.

webdevatlurk• 7 years ago

Why would you want the IRS to duplicate this effort and compete with these companies?

Is tax collection not a function of the government? I'd rather my taxes fund a free, easy tax filing system than pay fees to rent seeking middle men. Those fees are just an inflated tax by another name. We should be eliminating those kinds of taxes, not entrenching them.

If they do it in-house, do they even have the expertise?

Government websites and software have a reputation for being ugly, slow, broken and poorly designed. Government is also capable of building good tools. Two organizations that have done good work and could conceivably work with the IRS are:

- https://www.usds.gov/

- https://18f.gsa.gov/

I'm also pretty sure the IRS has plenty of expertise around the filing of federal tax returns.

Everyone needs to file state taxes anyway.

I don't see your point? Everyone will continue to file their state taxes separately, electing to use or not use available tools, as they always have.

lhorie• 7 years ago

paid for by tax dollars

You make it sound like that's a bad thing. If federal taxes don't go towards things that _the entire country's population_ could use, then, why are there taxes in the first place again?

If you've got a complex tax situation that TurboTax asks you to file by mail, or even if you just want to file yourself, you have to go to - you guessed it - the IRS' website to get all the forms and instructions. The IRS already has to navigate all that complexity to put out all these forms and instructions for every field, tax table, eligibility flow charts etc and the government certainly employs developers[1] already. The government also has to budget for printing millions of 1040 pamphlets for the entire country, and they somehow are able to come up with budget for things like that Trump wall, so surely coming up with budget to implement electronic filing isn't a question of money waste?

[1] https://v2.designsystem.digital.gov/components/

peteforde2• 7 years ago

One thing I don't understand (possibly as a Canadian, possibly just as a conscious person) is how little it costs to bribe your highest-ranking politicians.

The article suggests that tax filing is an $11B industry and that companies spend ~$6M lobbying your corrupt senators. The chair of the Ways and Means committee received ~$16k in donations from Intuit/H&R.

Wait, what?

Never mind how inexcusably transactional this political 69 sesh is... it's obviously table stakes for these people.

What I can't process is that $11B of revenue only spent $6M to bribe these guys. Why not spend $100M? Why not spend X? Are the senators just selling themselves short?

For perspective, $6M is like 10-12 totally normal homes on my totally normal suburban street.

If I was in the business of bribing politicians, I would allocate a lot more than $16k to the chair of the committee. Just saying. At least send all of his grandkids to the Ivy Leagues.

chronolitus• 7 years ago

Maybe we can't comprehend it, the same way that I can't comprehend, say prostituting myself for money. If I consider the prospect, it would have to be for ridiculous sums. Yet everyday people are selling themselves for - from my point of view - a pittance.

I guess, if you're in the business of selling your principles (corrupt politician), you're suddenly competing with a wide pool of equally corrupt people, probably with cutthroat tendencies, who are willing to go cheaper than you and take your place? Could be that driven, principled, smart people are hard to find, but people willing to be corrupt politicians are dime a dozen and replaceable.

peteforde2• 7 years ago

There's many different kinds of sex work, but the movie Indecent Proposal taught me that everyone has a price. My first question, if someone solicited me for prostitution, would be to clarify not how much but what would you like me to do? If you want me to sleep with your hot wife, my price is within reach. If you want me to be gangbanged in a public park, you probably can't afford it. All semantics aside, while I don't know anything about you, my gut tells me that most people would turn to prostitution with far less trauma both faster and more consistently than you might expect. In fact, it's really only the culture in the west that gets really uptight about pretending many romantic relationships aren't highly transactional.

Plus, my hope is that good citizens would make money selling sex long before they sell the trust of their electorate. It's only a morally bankrupt crime that could in some cases be treasonous if you get caught, right?

Yetanfou• 7 years ago

If I was in the business of bribing politicians, I would allocate a lot more than $16k to the chair of the committee. Just saying. At least send all of his grandkids to the Ivy Leagues.

Why, that is classical supply and demand, Economics 101. If you can buy a service for $10, why would you pay $100? If $16,000 is enough to buy the chair of some committee you'd batter not pay her much more than $16,000 or the next time she comes around in some position where she has the power over some piece of legislation which might get in your way you'll have to dig deeper still. Not to mention the fact that your fellow lobbyists wouldn't like you for raising the going price of politicians, senators and committees and you'd be hard pressed to find another lucrative position in this market.

hellllllllooo• 7 years ago

This is pointless obstruction and ironically a waste of my tax money. You could easily have the government automatically complete your taxes for the simple cases and have software like TurboTax for the difficult ones.

To the people complaining about the possibility of a government run site being poor have you used TurboTax? I've used it twice now and will never use it again. The dark patterns, upselling and fake loading screens really obscured how simple my taxes actually were to do.

dosy5• 7 years ago

this is crazy. basically a cartel in cahoots with lawmakers.

imagine if New company offered software to do this free?

I'm guessing rules make this impossible

BenMorganIO• 7 years ago

I sincerely hope this never comes to Canada.

baroffoos• 7 years ago

From what I understand, there are a lot of businesses that make money off the system being very complex but what is stopping an open source program being created that does everything for you like the paid tools do?

fock• 7 years ago

probably the lack of an open API, which is stable? (at least that's the case around here)

laktak• 7 years ago

As a comparison: in Austria you can file your taxes online (for free).

If you forget to file them for two years the gov will do an automated filing for you and transfer the money you are due to your bank account.

RandomTisk• 7 years ago

I'm surprised more people aren't skeptical of the IRS themselves. Inverting the way the US does their taxes would disrupt a lot of careers of a lot of of IRS employees. I would imagine there is considerable pressure to keep the status quo from within the IRS itself.

exabrial• 7 years ago

The symptom is tax filing. The cause is wreckless spending and near 0 efficiency. The enabling factor is the force of law to extract your money via tax.

ToFab123• 7 years ago

In my country (Denmark) all companies reports everything to the IRS. Most people just have to review their numbers (on IRS website). Most people rarely has to alter that info or add to it. It is rare that a private person needs to hire an accountant to help with the tax filling.

navane• 7 years ago

Same in NL. I just press next-next-next-finish like I'm installing software in 2005.

ggm• 7 years ago

The tax law should be written as exemplar runable code.

jason_slack8• 7 years ago

I just filed my taxes this morning.

I owe the government $4,600. I received an "underpayment penalty fee of $44" because I did not "pre-pay an estimated tax" each quarter. Something I have never done in the ~25 years I have been paying taxes.

Not only do they want the $4,600 by 4/15 they also want an estimated $1,200 "pre-payment" for 2019 by the same date or I will incur this same fee of $44 next year.Plus 3 more payments of $1,200 each quarter. So they want to hold my money without paying me interest. At least in my bank I earn more than the $44 penalty in interest each year.

This is bizarre. I surely didn't know about this nor did I read anything about new tax laws as I imagine most people don't.

lukeqsee3• 7 years ago

Strictly speaking, you're holding their money for a year without interest.

The estimated payments are not prepayments—they are payments that match what most W2 employees would pay every paycheck, but isn't the case for 1099 (or otherwise self-employed) individuals, since they don't have taxes withheld from their paychecks.

jason_slack8• 7 years ago

I get where you are coming from.

What if I have a baby in January or February? Then I would qualify for a deduction and then I am indeed overpaying them.

What if I lose my job? or get a job that is less money?

It's not their money unless I earn the money to pay them, IMHO.

It should go both ways.....why can't I ask them to estimate a refund then and give it to me in advance?

tomohawk2• 7 years ago

Actually, witholding started in WW II to help fund the war. Prior to that, people made quarterly payments. It was left in after the war, because government never lets an emergency go to waste.

travisoneill1• 7 years ago

And if you are due a refund they are holding yours, but good luck getting any interest on that!

edraferi• 7 years ago

Not your fault. The Republican tax law of 2017 changed how your existing withholding instructions were interpreted, decreasing your withholding more than necessary in order to artificially inflate the perceived benefit of the new law. Now you’re paying for it.

The really annoying thing is that I agree it’s a good thing to have more accurate withholding and smaller refunds. They just screwed it up for political reasons.

All this could have been avoided if they just required employers to get updated W4s instead of defaulting to misinterpreting your existing instructions.

Recommend you submit a new W4 ASAP.

dhimes• 7 years ago

Yep. We got hit with an enormous bill we didn't see coming either. The new tax law crushed us.

But strictly speaking, they don't see it as holding your money, they see it as your money is due when you earn it and if you are witholding "too much" from your paycheck then you are holding their money.

We have got to pass a law saying all lobbying must be done with full transparency- no secret meetings, etc. We have got to limit the access that megabuck gives to our politicians. It's getting insane.

dboreham• 7 years ago

That's weird because there used to be a safe harbor rule where you didn't owe the fine the first time it happened. So either you don't owe that $44 or something changed..

Perhaps you just didn't withhold enough on ordinary income (which requires overriding payroll defaults). There's probably no safe harbor for that.

jason_slack8• 7 years ago

I claim single 1 for everything as does my wife

cascom7• 7 years ago

Not saying I don’t commiserate - but it kind of makes sense - you underpaid us during the course of the year by $4,600, assuming you make the same again next year, we need you to pay us quarterly to make up the estimated shortfall - if it turns out you overpaid we’ll true you up (via a refund)

jason_slack8• 7 years ago

But again, if I am a person who see's a refund each year, why doesn't the government give me a refund up front and trust me to pay it back if my circumstances change?

You see, they expect me to accommodate them, when it is convenient for them, but they would not accommodate the reverse because it doesn't accommodate them.

tathougies14• 7 years ago

Estimated tax has to be filed by anyone with non withheld income. This is readily available knowledge on the irs website. Its not your money once uncle Sam taxes it. It is the irs's money the moment you earn it. Out of courtesy, they loan it to you for a quarter but it is certainly not 'your money'. We shouldnt brag about not paying the same tax everyone else pays.

If this makes you mad, perhaps you'd be interested in lobbying for lower taxes

janandonly• 7 years ago

To me (as a Dutchman) this sounds crazy. Here in Holland the only way to file your taxes as in individual (I don't know about company's) is to login to the government tax website (with my digid (a government issued digital identity)) and then to simply check if all the information that they have collected on me is correct. It usualy is.

All I have to add is my deduction items, and BAM! it's done. Also, we automatically pre-pay our taxes because it is calculated and payed for by all employers.

kokx• 7 years ago

The dutch tax service even has a great slogan for this ideology: "Leuker kunnen we het niet maken. Wel makkelijker". Roughly translated, this means: "We can't make it nicer. But we can make it easier.".

Every year, they add some improvements to the entire system. They basically prefill your entire income and capital. Including stocks, dividends and other things. The only things you need to fill in yourself are some of your deductions (there are some which are prefilled as well).

They open the filing of taxes every year on march first. And every year there are lots of people who fill it in on the first day. This year there was even someone who handed their taxes in 18 seconds past midnight.

consp2• 7 years ago

For those who are concerned about privacy: the banks are required to file your 1st of January balances and only the whole sum, not the specification and only the Social Security number in combination with the balances. You can specify more detailed (e.g. 'green' investments) but that is up to you.

snorberhuis• 7 years ago

You can have an accountant do it for you. I don't file my taxes in The Netherlands. This makes sense if you own a business.

eythian• 7 years ago

I find the Dutch way (slightly) crazy, as someone from NZ for the most part, you just don't file taxes and it works out. If you have a more complicated situation you might need to, but otherwise there's no point. Everything is withheld correctly.

At least the Dutch ones tend to just be click-click-check-done, so it's not too bad. But it was sad moving to filing annual tax returns from a much simpler system.

consp2• 7 years ago

I find the Dutch way (slightly) crazy, as someone from NZ for the most part, you just don't file taxes and it works out.

This is generally the case as long as you do not deviate. In the past I requested to delay having to file taxes and they rejected my request because I did not have to. The 'but' is that as soon as you screw up, or one of your bosses screws up, or you forgot to file something, you have to file from that point onward.

It is always a good thing to do anyways as you might get money back.

tomohawk2• 7 years ago

Missing option #1: just don't collect income tax on 80% of people, since its not worth it. In this case, IRS would do automatic calculation, and if they say you owe nothing, you don't have to do anything.

Missing option #2: it is just foolish to trust the tax collector to tell you how much you owe. The only way this would possibly work would be radical simplification of the tax code. Since that is not going to happen...

JTbane• 7 years ago

There should be an API for taxes, in which your employer, banks, or yourself can report income and recieve an exact tax amount to be paid quarterly.

Most deductions and credits should also be done away with to simplify the tax code, but I doubt the Intuit lobbyists would let that happen.

superslug• 7 years ago

It's ironic that the 'postal mail' version is free but the online version costs money. Mindnumbingly aweful method of handling resources. Its much more convenient for the government and the tax payer to file electronically

paparush• 7 years ago

Your lobbying dollars at work.

geekraver• 7 years ago

Whenever you see a bill called “X First” for some X, you know who it’s going to shaft - X.

fopen64• 7 years ago

In Brazil the govt supplies the software for free, runs in all major operating systems, and autofills what the IRS already knows if you have a digital certificate.

JDiculous2• 7 years ago

First of all this whole movement to keep taxes a pain in the ass to file is extraordinarily infuriating and uniquely American in its idiocy. I'm in South Korea now and filing taxes is as simple as logging into a website, entering your SSN, and verifying that the information is correct. Completely free and takes 5 minutes.

Second, I'm tired of people blaming TurboTax. The headline says "Thanks TurboTax". No, TurboTax does not vote on laws, our Congressmen do. If any Congressman is taking bribes and voting for this bullsh!t, then the Congressmen are at fault and need to be voted out of office.

I decided to take a quick look at the bill to see if it's really as outrageous as the article makes it, but I can't even understand what the bill says. It's like a 30 page document of legalese. Where in the document does it say that the U.S. would be banned from offering free tax filings? Why the hell do laws have to be written like this to be so overly verbose and indecipherable to anyone without a law degree? There should at least be a succinct summary at the top.

Sutanreyu• 7 years ago

Can we not?

thecleaner• 7 years ago

Corporations when there's no competition - "we are global leaders in innovation". Corporations (like TurboTax) when there's competition - "(sob, sob, sob), save us. here's some money"

User23• 7 years ago

My tax simplification plan of choice is repealing the 16th amendment.

JDiculous2• 7 years ago

This is so infuriating and needs to change. Ultimately the problem is our Congress who votes for this nonsense. It's a uniquely American problem, in most of the rest of the developed world tax filing doesn't require manual data entry, is quick (< 5 minutes), and free.

Made a video to help raise awareness of the problem and solution

https://youtu.be/5YVnSVulQAE

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

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