IRS builds task force to explore running its own free e-file system

https://federalnewsnetwork.com/it-modernization/2023/02/irs-builds-out-task-force-to-explore-running-its-own-free-e-file-system/

by toomuchtodo • 3 years ago

399 201 3 years ago

federalnewsnetwork.com

idopmstuff3• 3 years ago

Just send the taxpayer a bill that says what the IRS think they owes. That information is already there! It's already being calculated! Just print and send!

(I am being somewhat facetious here, as I'm aware there's always vastly more complexity to anything being done by a bureaucracy the size of the federal government than meets the eye, but still.)

throwaway5959• 3 years ago

It’s not a problem of technology, it’s a political issue thanks to tax software providers.

tastyfreeze3• 3 years ago

That is the lobby portion. There is also a fairly large portion of the country that doesn't want to make it easier to file taxes because it encourages complacency with having the government take some of your money.

logicalmonster2• 3 years ago

That corporatism is a part of it, but not the entire story. It's not like the IRS is a helpless victim of capitalist lobbying here. The IRS, and all parts of government, like having power over peoples' lives.

Here's an interesting and relevant news story.

https://news.yahoo.com/irs-urges-millions-taxpayers-delay-15...

If even the IRS doesn't know what their own rules are within the many pages of vague, complicated, and contradictory rules, what chance does an average person have to not mess up at least one thing in their taxes? The immense complexity of the tax code and the chance for getting something wrong gives them power to theoretically try and ruin anybody they want to go after, or at least have them have a lot of influence over peoples lives.

Governments want power and influence, and the IRS isn't going to vote to give away their own power. Having everybody being afraid of the IRS and making people jump through hoops gives them power and influence. This type of power isn't something that will go away with a fight.

snotrockets• 3 years ago

Not just them. There's a whole contingency of right wing (both D & R) donors who ask for making taxes frustrating for most, as they don't want people to look favorably on the act of paying taxes, to keep people like the late Justice Holmes Jr. a minuscule minority.

deelowe2• 3 years ago

Almost every deduction I take is report both by myself as well as the relevant 3rd party. They literally get a report from brokerages on stock transactions and yet I also have to calculate cost basis and all that. Why?!

tastyfreeze3• 3 years ago

To try to catch you lying of course.

kortilla2• 3 years ago

Those are the easy cases. The hard ones are deducting expenses for businesses.

bradleyjg3• 3 years ago

You don’t have to. If the bases are all reported to the irs, you just need to put the totals on schedule D.

It’s amazing how much whining there is about these forms. A smart high schooler could do even a moderately complicated tax return. It’s when you own a business of some kind (including investment properties) that things get hard.

morpheuskafka• 3 years ago

You don't have to calculate cost basis since the brokerages started reporting it several years ago. You just enter the total form your 1099-Bs onto the Schedule D.

There are a few cases (some crypto 1099s) where they tell you the basis on the statement, but don't actually send that to the IRS since it's not a security. In that case, you'd copy

There are a few scenarios where the brokerage doesn't know the right basis though--examples would be a wash sale across two different accounts.

acdha• 3 years ago

This is a political problem. It’s not like people at the IRS don’t see the appeal but that Congress hasn’t authorized doing it:

https://www.propublica.org/article/inside-turbotax-20-year-f...

idopmstuff3• 3 years ago

Yeah, it's largely a problem of Intuit doing a huge amount of lobbying of our elected officials.

kodah4• 3 years ago

That information is already there! It's already being calculated!

This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm.

That's to say, the system you described probably isn't ever going to materialize. The IRS is not some omnipotent entity. They're going to need something akin to TurboTax that asks you a bunch of questions and juxtaposes that with things they know for certain like your net income and net losses that are reported throughout the year. That system also needs to be able to read and adapt to evolving tax code as time goes on.

ok123456• 3 years ago

Make a buffer of $3k: you don't owe a return unless the difference between what they have per-calculated and what owe is over that. This would eliminate 95% of returns and tax documents.

This is roughly what the UK does.

ldoughty• 3 years ago

They didn't stop the IRS from telling us what they know and what they expect, and if it's accurate and you don't dispute their information, you pay the bill and attest you have no other income.

I wouldn't care if I over pay. After paying someone hundreds in fees to do my taxes I don't usually get much of any money back. I'd rather let the government keep $400 than give it to a tax company that probably won't actually help me in an audit.

renewiltord2• 3 years ago

Interestingly, enough, this is yet another thing to add to the list of things that are impossible to do (according to the Internet) but are already done by someone else that I've encountered in the US:

1. Final price including tax

2. Fiber to the home

3. Optional tax returns

4. High speed rail

5. Unarmed alternatives to police

Of those, the following have (despite being impossible to do though already done) managed to find themselves unimpossibled:

1. Fiber to the home (I had it)

2. High speed rail (Acela)

3. Unarmed alternatives to police (Camden, NJ)

The fascinating thing about the Internet is all these things that just are so impossible to do (usually in the US) but are somehow already done elsewhere and then, given time, the impossible is done. At the rate of impossibilities, I think we might actually be the case that dS<0 is possible globally.

klyrs2• 3 years ago

For those incredibly rare events, the IRS doesn't need perfect omniscience. For the vast majority of the population, for the vast majority of their years filing taxes, it can be extremely simple. A checkbox "did you have a kid, get married or divorced, or die this year" will pretty much cover it for most people.

Business taxes are different. That's fine. Accountants are a cost of doing business.

dqv• 3 years ago

This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm.

The child tax credit and other tax credits are bad examples. The IRS isn't going to bust your front door open because you didn't take a tax credit. What would end up happening under the push tax system is:

IRS: "We think you owe $4,200.69 in taxes"

Parents: "Not so fast! We had quadruplets this year, we're taking a credit!"

IRS: "Yikes, we'll give you $2,000 this year as a refund, good luck."

(I obviously have no idea what the tax credit for quadruplets is, this is not tax advice.)

It just doesn't make sense that we need to ask these questions every tax year: "Did you have kids? Did you get married? How much money did you make according to the W2 your employer already sent us? What other income did you make according to the 1099s we were already sent by other institutions?"

All of this just so a small group of people can be... checks notes... reminded to take a child tax credit? They can always just put a cute little reminder about the various tax credits on the bill.

The only other examples are highly-regulated or people who are already operating under the table (in which case the IRS already doesn't know and the IRS will continue to not know). Business tax returns are almost always going to have to continue as the IRS pulling the information, but for normal people, tax returns should not be a burden.

Teever• 3 years ago

It must be pretty disappointing to be a tech-savvy American who has a rough idea of the extent of surveillance that the NSA performs yet is also aware of how little benefit you're able to get from it.

It's sad that the IRS can't prefile taxes. The information is there.

theptip• 3 years ago

The system proposed above is how other countries such as the UK already do it, so hypothesizing that it’s impossible is an easily refutable position.

In countries that do auto withholding/filing, you still need to tell the tax authority about any tax events, but for most workers, most years don’t require you to take any action.

idopmstuff3• 3 years ago

For the average tax payer this might be truthy

It's completely true for most people. "And a new paper estimates that at least 41 percent of American households — some 62 million tax filing units — could have their entire tax returns handled this way with no further intervention necessary." https://www.vox.com/23055489/irs-automatic-filing-prepopulat...

Even if that's too high of an estimate, there are absolutely 10s of millions of people for whom the IRS already has the correct amount of taxes calculated based on the forms they receive from other entities. Sure, you might have to ask people a few questions, but my statement is accurate for an enormous percent of the population.

smileysteve• 3 years ago

This covers not only the average but the 90%.

The IRS doesn't have to have facts on your marriage and children; all w2 employees already keep a w4 up to date with this information - or at least are legally bound to.

repomies69• 3 years ago

Weird that in other countries it tends to work as described. My experience is from European countries is that most information is automatically filled in, then you fill the corrections. Most years you don't have to correct or add any information as they have already all of it.

itake2• 3 years ago

My employer over-reported my income in 2021 multiple times on multiple w2s by 1.8x. We are still trying to sort it out.

I don't think I want a system where my employer could financially ruin me by misreporting income to the government.

josegonzalez• 3 years ago

In which case you'd have the possibility to contest and file something more specific to your situation.

rqtwteye3• 3 years ago

This is why the IRS sending you a pre-filled return would help with such a situation. Right now the employer can make mistakes and you don't even know.

Vespasian2• 3 years ago

Similar example from Germany:

In one year I had some "extra income" besides my job and had to file a return and pay some extra money.

The next year they asked me what my "extra income" was for that year and when the letter got lost by me they just assumed the same amount as the prior year and sent me the bill for that.

After the initial shock and beating myself up for that mistake, I could simply file a correction and got it fixed with no problem.

seanmcdirmid• 3 years ago

You have that option if you have a very simple tax return. It’s like the IRS’s version of “I’m feeling lucky”.

kwhitefoot• 3 years ago

This is how it works in Norway. Same in the rest of Scandinavia I think.

cvccvroomvroom• 3 years ago

Norway did this by text message 20 years ago.

That the US makes it a labyrinthine game of special exceptions and complexity belies the obvious gamification geared towards the rich and to frustrate everyone that goes well past any excuse of bureaucracy. It's not a conspiracy theory, it's obvious wealth transfer from everyone not obscenely rich or obscenely poor disproportionately excluding centamillionaires and billionaires.

NoblePublius• 3 years ago

The scope of the study predetermines its outcome. The reality is there is no need for the vast majority of Americans to file anything. The IRS has all of their pay information and must merely send a bill or refund. The only thing a taxpayer in this scenario would need to file for is a mistake.

ProAm• 3 years ago

The IRS doesn't know about the loopholes we want to use though and there is the rub.

readams• 3 years ago

They actually do know about all the loopholes you're using. Using a loophole isn't about changing how you file your taxes, it's changing how you live your life to be more tax-efficient.

AlotOfReading• 3 years ago

Somewhere around 90% of Americans take the standard deduction and the IRS is in a better position to judge eligibility for most of the adjustments outside that (e.g. EITC) than many taxpayers are. There's always going to be a way to fill out your own taxes for people with complicated tax situations, so there's no harm in simplifying things and reducing mistakes/fraud for the vast, vast majority of people.

jhbadger• 3 years ago

Most people don't qualify for those. If you think you can (legally) pay less tax, great, go for it. I'm sure you'd still be able to file taxes the hard way if you want. That's how it works in most non-US countries. The government tells you how much you owe, and you can either accept it or file paperwork demonstrating that you can pay less than that.

pfranz4• 3 years ago

There is no rub. Here[1] are 2010 numbers from the IRS showing 42% of Americans used 1040A or EZ. Many more /could have/. Since 2010 the standard deduction has gone up and there's no reason for a lot of people to itemize.

In many other countries the government provides you a pre-filled form. You can sign and return or file your own with relevant "loopholes."

There are two groups of people who want to keep tax filing difficult. Grover Norquist feels if paying taxes is too easy people won't be angry about it. This increases support for cutting taxes. The other group are tax preparers, like Intuit.

[1] http://www.freeby50.com/2012/12/what-percent-of-people-file-...

shmerl• 3 years ago

They finally woke up. Next step - eliminate "tax filing" altogether.

Razengan• 3 years ago

Something I’ve wondered: Why not just include taxes at every point of use of a service that is funded by tax?

Like say fuel prices (to pay for roads), police interactions, etc.

thedufer2• 3 years ago

Consumption taxes are regressive, so this would shift a lot of tax burden from the rich to the poor.

asoneth• 3 years ago

True, though I wonder to what degree a per-person dividend (some sort of universal income) could offset the regressivity of consumption taxes.

That is, we go ahead and tax consumption of land, road space, emissions, extraction, etc and everyone receives the same monthly sum that is enough to cancel out the taxes paid by a person who uses a minimal share of resources.

(Though I'm not sure I'd consider police interactions as a source of consumption taxes as per the original poster.)

kazinator2• 3 years ago

1. Rich people consume; some consume a lot. Not just individually; they have businesses that consume voraciously.

2. Tax credits can relieve regression in consumption taxing; small consumers can pay as little as nothing.

tastyfreeze3• 3 years ago

It treats everyone equally. That is a good thing. Progressive taxes are a sham to make more people ok with income taxes and collect more in taxes. It is a win-win for the IRS.

rileymat24• 3 years ago

Depending on your political philosophies many people are looking for a much more progressive tax structure, the one you outlined is very regressive if not done very carefully. I am not commenting on whether that is right or wrong, but that is why many would be against that.

rileymat24• 3 years ago

Also, I am not exactly sure how you price police interactions, that sounds like a fun one to theorize about because of all the different factors. But probably a poor idea.

wtallis• 3 years ago

I don't think that idea can go very far before running into serious problems. Gas taxes to pay for roads is straightforward, but what would taxing at point of use for "police interactions" even look like? Are you suggesting that police departments be funded entirely by traffic tickets and the like, or that every time you call 911 should add a toll to your phone bill? The conflicts of interest and other perverse incentives are rampant. What is the "point of use" for services like the military, whose whole purpose is to prevent ordinary citizens from having to directly participate in the national defense?

wpietri2• 3 years ago

Ooh, I especially like the idea of the fire department doing this. A burly guy with a steel helmet and an axe goes around with a credit card reader before they turn on the hoses. I'd pay up!

fells• 3 years ago

A direct e-file, obviously, is great, but I really just want to get a document near the beginning of the year where the IRS tells me what they believe my taxes owed/returned should be. Let me accept/verify or contest it and make everyone's lives easier. Anyone who'd need to contest/change theirs, probably already has an accounting firm handling all this anyways.

ollien2• 3 years ago

This is called return-free filing and has had bipartisan support for a long time

https://www.propublica.org/article/inside-turbotax-20-year-f...

clumsysmurf• 3 years ago

and has had bipartisan support for a long time

Not really ... Americans for Tax Reform (Grover Norquist) .. a very influential conservative group, opposes this because they want people to associate taxes with pain. If its easier to do, its less pain.

https://www.propublica.org/article/how-the-maker-of-turbotax...

pfranz4• 3 years ago

Any time this comes up, its good to bring up California's 2005 pilot program; ReadyReturn. "When the FTB launched the ReadyReturn website, Intuit sued and lobbied California legislators to kill the program."

https://en.wikipedia.org/wiki/CalFile#ReadyReturn

GalenErso2• 3 years ago

On what grounds did they sue? "You're hurting my profits"?

iambateman• 3 years ago

Yes! This podcast episode is an excellent primer on that story: https://www.npr.org/sections/money/2019/04/03/709656642/epis...

LinuxBender2• 3 years ago

I absolutely agree with this. I have CPA's and lawyers do my taxes and I still get the IRS arguing about what I owe and by the time they tell me I am already receiving a penalty. Battling it out with the IRS takes ages and the IRS courts that's really a thing are only open part of the year which can drag things out even longer leading to more penalties even if they agree the original amount was incorrect.

GalenErso2• 3 years ago

I have CPA's and lawyers

How complex are your taxes that you need more than one CPA and lawyers to do them?

kortilla2• 3 years ago

After Trump’s tax law increasing the standard deduction, about 14% itemize. https://taxfoundation.org/standard-deduction-itemized-deduct...

So what you’re proposing would work for most individuals. I don’t agree with the “accounting firm handling all this” for the remaining thought (unless you count TurboTax as an accounting firm).

geraldwhen• 3 years ago

The TCJA saves me a day every year doing taxes. Love it.

deafpolygon• 3 years ago

Literally every other first-word country has implemented this by now. Why the US is such a holdout is beyond me (I know why, lobbying.. but still).

nhooyr• 3 years ago

Nope, Canada is also a holdout :(

throwawayiionqz2• 3 years ago

If you file an extension, after Aprilc 15 you will be able to see on the IES tr

koolba2• 3 years ago

I'll accept the baby step of a fixed historical period of time that they can audit your records. It's incredible nebulous.

For example here's the info on self-employed / business audits: https://www.irs.gov/businesses/small-businesses-self-employe...

How far back can the IRS go to audit my return?
Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years.
The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly most audits will be of returns filed within the last two years.
If an audit is not resolved, we may request extending the statute of limitations for assessment tax. The statute of limitations limits the time allowed to assess additional tax. It is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds. Extending the statute gives you more time to provide further documentation to support your position; request an appeal if you do not agree with the audit results; or to claim a tax refund or credit. It also gives the IRS time to complete the audit and provides time to process the audit results.
You don't have to agree to extend the statute of limitations date. However if you don't agree, the auditor will be forced to make a determination based upon the information provided.

So it's three years, but they sometimes go back six years. But they can also go back an arbitrary amount of years, so the three / six is completely meaningless.

ncallaway2• 3 years ago

They can go extend the statute of limitations *if you agree*.

So, the statute of limitations seems… pretty ironclad. I don’t understand the issue you’re raising. If you don’t want them to look further back, don’t consent to extending the statute of limitations?

gamblor9564• 3 years ago

It's not nebulous at all, it's incredibly fixed by law.

3 years (from the later of date of filing or the due date) to audit any return, for any reason. The 3 year statute of limitations applies to taxpayers seeking refunds by filing an amended return. Note that because the amended return is essentially a new return, the IRS gets 3 years to audit the amended return.

6 years (from the later of date of filing or the due date) to audit a return with a substantial undereporting of gross income or overstatement of deductions in credits resulting in a 25% or more understatement of taxable income

No deadline for returns that were not filed. Because obviously you can't audit a return that hasn't been filed.

There is also no deadline for fraudulent returns. Fraud is something more than the type of things that would trigger a 6-year audit window, like trying to avoid tax entirely, or taking advantage of a deduction or credit for which it's clear that the taxpayer wouldn't qualify for without some active effort to falsify their return. (Think Wesley Snipes.)

nobaddays• 3 years ago

This is how they do it in most of europe iirc

InCityDreams• 3 years ago

We're once more, really laughing at this, over here, again, annual-like.

turdprincess2• 3 years ago

The government can’t magically know what your expenses and deductions are. Got married, had a baby, used a home office, paid a plumber to fix your rental property? Deducting mortgage interest?

If none of these things apply to you and your taxes are really just a single w2 income it’s pretty simple to just fill out a paper 1040 form (or even 1040ez). You just need your w2 and an hour of time.

dataflow2• 3 years ago

If none of these things apply to you and your taxes are really just a single w2 income it’s pretty simple to just fill out a paper 1040 form (or even 1040ez). You just need your w2 and an hour of time.

I think their point was that this case should be "log in, check the totals match, click OK", not an hour of your time.

Or better yet, not require you to do anything if you believe your withholdings were sufficient.

warning26• 3 years ago

You do know that in most countries optional returns are the norm, right?

Sure, if you have a bunch of weird expenses/deductions you can file, but for most people, the numbers the government has are already correct.

manuelabeledo• 3 years ago

The return free model works in several other countries. Even if it wasn’t accurate, it saves hours in filing taxes.

renewiltord2• 3 years ago

This is true. But my browser cannot possibly know whether I want:

- page zoom at 100% or different

- hardware acceleration on or off

- autofill on

- history tracked

- cookies recorded

And it is able to do it. Software engineering is usually far ahead of most other fields, it is true, but I think this concept https://en.wikipedia.org/wiki/Default_(computer_science) is transferable without it being too much trouble.

kevin_thibedeau• 3 years ago

EZ doesn't exist any more. The new 1040 is basically the same stuff though.

mock-possum3• 3 years ago

Marriage and birth are both a matter of public record, are they not? The government wouldn’t need magic to know those things, when that information is registered with the government. Employers could also report work situations to the government, as could mortgage companies. If the details of your mortgage debt is readily available to agencies that determine your credit score, why should it not be available to the government as well?

It would be a lot easier in most cases then you’re making it out to be - and even in exceptional cases, you would only have to address those exceptions, and skip the drudgery of regurgitating all the information the government could have easily found for itself.

__derek__3• 3 years ago

Got married, had a baby, used a home office, paid a plumber to fix your rental property?

The first two would be minor corrections. The latter two would naturally require more attention and detail, but they don't apply to most people.

Deducting mortgage interest?

The IRS has my 1098s. They know the mortgage interest, principal, and origination date.

saulpw• 3 years ago

87% of people take the standard deduction: https://www.irs.gov/statistics/soi-tax-stats-tax-stats-at-a-...

And taxes have never taken "just" an hour of my time. It's an entire afternoon of frustrated reading up on tax esoterica so I can figure out e.g. whether I should itemize or take the standard deduction (which I always wind up doing anyway). And 14 other things that I promptly forget about.

rhaway847733• 3 years ago

What if I mess up my 1040EZ? I input something wrong and take more of a deduction than I should get?

You end up with a situation where if the IRS ignores it, then I’m getting away with paying less than my fair share. If they don’t ignore it, then it’s a lot of unavoidable hassle for me.

If the IRS gives me their calculations (which they do already!) then I know the baseline they’re using. If something looks wrong, or they don’t cover some scenarios in my life, I can simply adjust those situations from the IRS baseline.

This leads to a much more transparent, less stressful, more efficient process.

I think the less discussed part about this is the philosophical aspect of it as well. The current system frames the IRS-taxpayer relationship as adversarial. Now, this may be naturally true for 2-3% of high earners. But it’s not for 90+% of people who are basically just receiving a paycheck.

Starting with the IRS baseline allows the process for that 90+% to be more collaborative as opposed to adversarial, with either side trying to see how much they can get away with in the latter system.

pkaye• 3 years ago

There days 90% of filers use standard deduction. If they can automate the simple cases its a good start.

Rebelgecko• 3 years ago

How many people have expenses and deductions that impact their taxes AND that the government doesn't know about?

Something like 85% of people take the standard deduction. I itemize most years, and pretty much everything I itemize (taxes and mortgage interest) are things the government already knows about. I think the only exception is charitable donations.

It would be a great time saver to just get a form from the IRS saying "here's everything we know, edit any mistakes or things we missed".

throwawayiionqz2• 3 years ago

the IRS tells me what they believe my taxes should be

File for an extension. Then after April 15, download your wage & income transcripts from the IRS. Use that to reconcile with your own records and file before October

mock-possum3• 3 years ago

Wait what? Can you explain this approach a little further?

rhaway847733• 3 years ago

I just wanted to add that an extension is not an extension to the time you have to pay your taxes.

So if you file for an extension, don’t pay anything by April 15, and then it turns out you owe $1000 in taxes in October, you will now have to pay $1000 + penalty + interest on the $1000.

Filing for an extension only extends the time to file your taxes. Not the time to pay your taxes (I think the one exception to this was when COVID hit, where even the date to pay taxes was extended, but I’m not a 100% sure).

Semaphor• 3 years ago

We have that in Germany. It's called a "pre-filled tax declaration" and even if things differ in the end, you can still use it as base for your actual declaration. Though I still pay the 15€ a year for a tool for convenience

pickovven• 3 years ago

Came here to say this. It's so obvious and the downstream political implications are hugely positive.

bushbaba• 3 years ago

That would lead to lots of under collection of taxes. The benefit of the current approach is that the IRS ends up collecting more money.

rodgerd• 3 years ago

but I really just want to get a document near the beginning of the year where the IRS tells me what they believe my taxes owed/returned should be.

This is what we have in New Zealand, and it's wonderful; most people simply don't need to do anything other than check their assessment and get on with their lives. Even if you've got e.g. investments you can usually do your filing with no more effort than taking the PAYE (income tax) assessment and bolting on your additional sources of income.

Much like the US banking system, it bemuses me how backward the US is in this regard.

neilv• 3 years ago

It should be done in such a way that preparing and filing your tax returns doesn't share your financial information with some company that uses it for other purposes.

I have some faith we'll get this right, because I can see some details of how the IRS does things (despite the complexity nightmare handed to them by lawmakers), and the impression I get is that there must be a lot of people there who are working conscientiously and effectively.

rqtwteye3• 3 years ago

"and the impression I get is that there must be a lot of people there who are working conscientiously and effectively."

Totally agree. The IRS is not the problem but the people in Congress who do everything they can to obstruct them.

shaburn• 3 years ago

Imagine the UX.

xeromal• 3 years ago

If it's anything like TreasuryDirect....

cebert• 3 years ago

I hope this ultimately results in tax filing for simple returns to be free for everyone. I’m tired of lobbyists for Intuit and other corporations attempting to prevent this.

beej713• 3 years ago

Me too. I use free fillable forms to efile, and any years they aren't offered by my state, I file paper returns.

And I always wish it were simpler.

bruceb• 3 years ago

Or could just have one person go through the top 10 free versions of existing offering and make a page showing taxpayers how to avoid paying the "upgrade offer" for each service.

Also highlight the companies that offer free state returns as well.

beej713• 3 years ago

I get that, but I'm also opposed to the idea of a middleman with no value-add for what is purely a government process. The IRS should offer the baseline service and then third parties can add value where they see fit.

kazinator2• 3 years ago

You don't need some complicated new "system"; you need some API that takes some structured data, validates it and processes it (in the system you already have). That's it.

leeroyjenkins11• 3 years ago

After working on APIs from FMCSA, it's not easy, because they have no customer. My org was required by law to meet their deadlines. They setup a test api 2 months after the deadline. Their backup method of sending the data was another 2 weeks after that. It was through soap because they said that was the most secure. We had a team contact them about ambiguity in their documentation and it took 6 months to get a reply.

crazygringo3• 3 years ago

Just a reminder -- since a lot of people don't know about it -- the IRS has had "Free File Fillable Forms" [1, 2] for many years. Everyone (no income limits) can use it to e-file for free.

The difference is that instead of being a "wizard" interface like other tax software, it's just online fillable versions of the tax forms, that do 99% of the math for you based on the values you enter and automatically add forms and link values between forms as necessary.

I've used it for well over a decade, and at the end of the day it's just the same "doing your taxes" that my parents and grandparents did, but on your computer and easier. For anyone who has an engineer mindset it's entirely doable, even if you have to Google a few things to make sure you're doing it right (e.g. what's a qualified dividend vs. a regular one?). The real secret is keeping a PDF of your previous year's return next to you while you do this year's, because you'll usually just be filling out mostly the same lines in the same way with different values.

[1] https://www.irs.gov/e-file-providers/free-file-fillable-form...

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

rwbt• 3 years ago

But can one e-File with Free File Fillable Forms? If I have to print out the return and mail it, then it's a no go for me.

lordgilman• 3 years ago

Yes, it uses the same API backend as the other commercial e file systems.

crazygringo3• 3 years ago

Yes. Just click submit at the end, and in somewhere between 15 minutes and a couple of hours you'll get a response from the IRS whether it was accepted or rejected with an error message of what didn't match up.

(Sometimes it takes me 2 or 3 tries because I mistyped a number from a W2 or missed a line or something.)

drdaeman2• 3 years ago

Hah, I can't e-file my taxes at all, because it is not possible to e-file as "married, filing separately" if one has a non-resident alien spouse (without SSN or ITIN). Aka married overseas, US hadn't yet granted a visa yet, no point in trying to obtain an ITIN (that's harder than having to mail the form).

The form is totally fine - according to IRS, one just needs to write "NRA" ("non-resident alien") instead of spouse's SSN and that's it. But for some technical reason (despite, AFAIK, IRS having at least 4 iterations of XML schemas) e-filing is said to be not possible - one gotta print and mail it.

Worse, I had to explain how this works to "specialists" at H&R Block, as they almost made a mistake of suggesting to file my returns as "single" (glad I did my own research, huh). And I can't use FreeTaxUSA because they don't support such scenario either.

Edit: Upd: freefilefillableforms.com doesn't let me type in "NRA" in that field either. (Doesn't really matter, works for me as long as I get a PDF out of this)

mock-possum3• 3 years ago

That’s for federal filing only right? What do you do for your local state taxes?

kompatible2• 3 years ago

My state has its own iFile system that works pretty flawlessly as a pseudo-wizard but actually a free fillable form. It expects you to file federal taxes first so your 1040 can be used to fill in the details.

LocalH• 3 years ago

Not all states have their own income tax

joecool1029• 3 years ago

Just a reminder -- since a lot of people don't know about it -- the IRS has had "Free File Fillable Forms" [1, 2] for many years. Everyone (no income limits) can use it to e-file for free.

Just a reminder, because even *less* people know. This is a third party service not run by the IRS. In past years it was Intuit, this year it looks like according to the site's privacy policy: https://www.freefilefillableforms.com/home/privacy_statement... that it's these randos out in Missouri: https://www.olt.com/main/home/default.asp

crazygringo3• 3 years ago

I did not know that, thanks! Looking into it, according to Wikipedia it's "operated by a private organization, the Free File Alliance" [1], which is a "public-private partnership with the Internal Revenue Service (IRS) to provide free electronic tax filing services" [2]. The Missouri company you list is one of the "7 participating Alliance members" [2].

I honestly don't know what a "public-private partnership" means, or how that's different from the IRS just contracting a company to build a product. But it seems awfully integrated into the IRS's website, so there's clearly a "partnership" -- it can't be total randos (hopefully??).

I don't see any obvious red flags in the privacy policy, is there something to be worried about?

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

[2] https://en.wikipedia.org/wiki/Free_File_Alliance

CaptainNegative• 3 years ago

I had to give up on e-filing with Free Fillable Forms last year because it claimed an arithmetic error where none existed and it would not allow me to e-file until that non-error was corrected.

The same forms I ultimately generated with both TaxHawk's and H&R Block's software were identical to those I wasn't allowed to submit with FFF.

Fire-Dragon-DoL• 3 years ago

Does CRA (Canada) have anything like this?

I tried their fillable forms, but you have to do the math manually and are very error prone

fwungy• 3 years ago

They never caught Trump for tax evasion because he does what all rich people do: hires the top lawyers and accountants to handle it. If they could bust Trump they could bust the rest of them.

The whole tax code is a legal maze to protect the wealthy and keep the middle class down.

That's why it can't be simple. There is no place to hide ulterior motives in simple.

pessimizer6• 3 years ago

That has nothing to do with e-file, though, or even pre-file, where they just send you the total and you can choose to pay it or file the hard way. It has nothing to do with the tax code being simple. It does have to do with class, because paying to file taxes a good way to separate innumerate broke people from a day's pay, every year.

Turing_Machine• 3 years ago

If you do it aboveboard using lawyers and accountants to minimize the amount of tax you owe, it's tax avoidance. Legal as church on Sunday. Tax evasion, on the other hand, is a crime. That only comes into play when you commit some manner of fraud to get out of taxes.

Difference between the two:

1) You get $4,000,000 from (complicated but legal business deal) and report it on your return. Your lawyers and accountants successfully argue that due to subparagraph q of the Arglebargle Business WhangoZango Act of 1919, originally designed to allow orphanages to deduct the cost of gruel, this money is not subject to taxes (or gets taxed at a lower rate, or whatever). That's tax avoidance -- perfectly legal -- and that's why people like Trump, the Pelosis, the Kennedy family, the Zuckerbergs, the Kochs, the Heinz-Kerrys...pay accountants and lawyers big bucks.

2) You get $4,000,000 from your meth business and don't report it at all, having failed to take your attorney Saul Goodman's advice on how to launder it. That's tax evasion, and that's what gets you sent to PMITAFP.

beej713• 3 years ago

One question I had was would it be possible to stop using paper returns? If the IRS forced it, how many filers would be dropped through the cracks today? 10 years from now?

cricalix• 3 years ago

A non-US perspective (Irish). My employer reports my pay, deductions, benefits in kind, income tax, etcetera every month to the Revenue (goes by the acronym PAYE - Pay As You Earn). At any point up to three years after the end of a tax year, I can log in and adjust my tax credits, such as medical, carer benefit (ie, taking care of someone long term) and so on. I'll get refunds within a week if I'm owed one; I just did this for 2021's tax credits for working from home (electric, natural gas, broadband). The only paper paperwork I have to do at the moment is capital gains on shares or property.

I have no idea if this approach is compatible with the various state and federal taxes that the US has to deal with; I just know it's so much easier now than when I was a student in the US.

wpietri2• 3 years ago

I'm not an expert, but I think the state/local issues just complicate the implementation. But that sounds wildly better than our increasingly archaic rituals.

russellbeattie• 3 years ago

I need a job so I applied to Intuit. Happily they rejected me so I don't have to hold my nose to work for the company responsible for lobbying against this basic service for over two decades. They've spent $41 million dollars ensuring the tax system remains opaque so that Americans feel that need their software.

The vast majority of Americans - 87% - simply take the default deductions and don't have complex investments or custom deductions to deal with. We shouldn't need to pay Intuit every year just to make sure we fill out the forms correctly and get a refund in a timely manner.

pessimizer6• 3 years ago

As this is not in any way complicated, a number of companies ranging from fly by night to massive lobbyists manage to do it just fine, and the IRS doesn't have to figure out how they're going to find the tax expertise, I don't know what a "task force" has to "explore." If they really wanted to do it, they'd just announce that they're doing it. This is the IRS hiring external consultants to generate reasons why they can't do it.

DesiLurker• 3 years ago

Meh.. every year this happens around tax season. Every year Intuit and grover norquist ensures the momentum crashes and burn. lets see how many days after April 15 this gets dumped.

topherjaynes• 3 years ago

This is a significant problem to solve. How do you think they will build the task force to build a plan? As a product manager, I am terrified this is a class he what would it take to build this and a complex answer would come back that make.

What advice would you give the team scoping the problem -- outside of changing the tax system?

pessimizer6• 3 years ago

Buying one of the dozen companies who do it already? The tax code may be rocket science, but the IRS don't lack the expertise. If aaafreetaxfile.biz can handle it, I bet the IRS can figure it out.

xen2xen12• 3 years ago

Doesn't the IRS already audit the Turbotaxes of the world? IIRC the IRS checks the software you use before you can use it. If they already check someone else's software..

LatteLazy• 3 years ago

There is an episode of Yes (prime?) minister Where Sir Humphrey explains that to avoid implementing a popular, good idea you don't refuse, you bury it in a fact finding, task force, committee of investigation.

roamerz• 3 years ago

The task force should be comprised of a PM, 2 seasoned tax professionals, an accountant, 2 backend engineers and 2 programmers. That task force should report to the head of the IRS with all communications available to the public and all meetings streamed live. Getrdone.

gist• 3 years ago

The legislation gave the IRS $15 million to stand up the task force, as well as nine months to deliver a report to Congress on whether the direct e-file system would be cost-effective for the IRS to operate, and whether taxpayers would use the system, rather than rely on third-party tax preparers.

For whatever reason this reminded me of something (and I don't have the exact quote) that Steve Jobs apparently said about Wozniak and a (again iirc) a basic compiler that Apple needed (maybe in discussion with Microsoft?).

'If we need one Woz can write that over the weekend'.

Point is amazing that they are spending $15m to just put together a task force and a report to analyze the idea.

(How many on HN remember the quote that I am referring to I was not able to easily find it).

adamm255• 3 years ago

Heck being a US Taxpayer looks stressful. Useless comment, but my lord y’all have made live way too complicated!

ypeterholmes• 3 years ago

The government should send everyone an itemized bill that you can correct. The idea that we have to figure it out ourselves is unnecessary and has created significant emotional/financial pain and an entire cottage industry of nonsense. Of course when this was being piloted, guess who paid to squash it? The cottage industry.

dang• 3 years ago

IRS Free File: Do Your Taxes for Free - https://news.ycombinator.com/item?id=34462122 - Jan 2023 (247 comments)

TurboTax’s fight against free tax filing - https://news.ycombinator.com/item?id=31072202 - April 2022 (394 comments)

Filing taxes could be free & simple. H&R Block & Intuit lobby against it (2017) - https://news.ycombinator.com/item?id=30856968 - March 2022 (114 comments)

FTC sues Intuit for its deceptive TurboTax “free” filing campaign - https://news.ycombinator.com/item?id=30846071 - March 2022 (555 comments)

Ask HN: How does TurboTax get away with dark patterns? - https://news.ycombinator.com/item?id=30409523 - Feb 2022 (122 comments)

Filing Taxes Could Be Free and Simple. But H&R Block and Intuit Lobby Against It (2017) - https://news.ycombinator.com/item?id=30185484 - Feb 2022 (18 comments)

Killing TurboTax - https://news.ycombinator.com/item?id=26330584 - March 2021 (662 comments)

Show HN: ustaxes.org – open-source tax filing webapp - https://news.ycombinator.com/item?id=26138446 - Feb 2021 (219 comments)

TurboTax Tricked You into Paying to File Your Taxes (2019) - https://news.ycombinator.com/item?id=26102695 - Feb 2021 (306 comments)

TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free (2019) - https://news.ycombinator.com/item?id=26060414 - Feb 2021 (199 comments)

FTC Is Investigating Intuit over TurboTax Practices - https://news.ycombinator.com/item?id=24409093 - Sept 2020 (194 comments)

IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax - https://news.ycombinator.com/item?id=21923220 - Dec 2019 (448 comments)

IRS Tried to Hide Emails That Show Tax Industry Influence over Free File Program - https://news.ycombinator.com/item?id=21393758 - Oct 2019 (188 comments)

TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free - https://news.ycombinator.com/item?id=21281411 - Oct 2019 (447 comments)

TurboTax to charge more lower-income customers - https://news.ycombinator.com/item?id=20461169 - July 2019 (81 comments)

Congress Scraps Provision to Restrict IRS from Competing with TurboTax - https://news.ycombinator.com/item?id=20119916 - June 2019 (18 comments)

TurboTax Uses a “Military Discount” to Trick Troops into Paying to File Taxes - https://news.ycombinator.com/item?id=19994118 - May 2019 (42 comments)

Listen to TurboTax Lie to Get Out of Refunding Overcharged Customers - https://news.ycombinator.com/item?id=19870242 - May 2019 (44 comments)

TurboTax and H&R Block Saw Free Tax Filing as a Threat - https://news.ycombinator.com/item?id=19810981 - May 2019 (143 comments)

TurboTax Hides Its Free File Page from Search Engines - https://news.ycombinator.com/item?id=19758126 - April 2019 (262 comments)

TurboTax Uses Dark Patterns to Trick You into Paying to File Your Taxes - https://news.ycombinator.com/item?id=19718284 - April 2019 (274 comments)

Congress Is About to Ban the US Government from Offering Free Online Tax Filing - https://news.ycombinator.com/item?id=19613725 - April 2019 (696 comments)

How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - https://news.ycombinator.com/item?id=19392673 - March 2019 (253 comments)

H&R Block and Intuit Lobby Against Free and Simple Tax Filing (2017) - https://news.ycombinator.com/item?id=18956883 - Jan 2019 (190 comments)

Would You Let the I.R.S. Prepare Your Taxes? (2015) - https://news.ycombinator.com/item?id=17751383 - Aug 2018 (424 comments)

Why I'm boycotting TurboTax this year - https://news.ycombinator.com/item?id=16844458 - April 2018 (23 comments)

H&R Block and Intuit Lobbying Against Simpler Tax Filing (2017) - https://news.ycombinator.com/item?id=16841449 - April 2018 (232 comments)

H&R Block and Intuit Are Lobbying Against Making Tax Filling Free and Easy - https://news.ycombinator.com/item?id=13922482 - March 2017 (234 comments)

How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - https://news.ycombinator.com/item?id=13853150 - March 2017 (439 comments)

TurboTax Takes Aim at Smaller Rival in Fight for Filers - https://news.ycombinator.com/item?id=11150694 - Feb 2016 (87 comments)

Would You Let the I.R.S. Prepare Your Taxes? - https://news.ycombinator.com/item?id=9381437 - April 2015 (150 comments)

Would You Let the I.R.S. Prepare Your Taxes? - https://news.ycombinator.com/item?id=9380232 - April 2015 (124 comments)

Filing taxes: It shouldn't be so hard - https://news.ycombinator.com/item?id=5488084 - April 2013 (56 comments)

How the Maker of TurboTax Fought Free, Simple Tax Filing - https://news.ycombinator.com/item?id=5443203 - March 2013 (330 comments)

awinter-py• 3 years ago

french tax code has a semi-official DSL syntax

https://github.com/MLanguage/mlang

just adopt theirs, add a message layer, and call it done

IRS builds task force to explore running its own free e-file system

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