

Why Can’t the I.R.S. Help Fill in the Blanks? - martey
http://www.nytimes.com/2010/01/24/business/24digi.html

======
kowen
I lived and worked in Norway for several years, and each year I received a
pre-filled tax return from the government. If I recall correctly, I had three
choices:

\- Send a PIN code by mobile phone which acted as a digital signature to file
"as is"

\- Log in to central location on the Internet and click a button to file "as
is"

\- Sign it and send it in.

If I needed to make adjustments, then only the third option was viable (I only
had to do that once).

It literally took me less than 5 minutes to verify and send in. Fairly
painless - the only pain being in the amount of taxes I paid, Norway being a
socialist country, and all.

The resistance from third party tax preparation companies and software
providers reminds me of the Parable of the Broken Window
<http://en.wikipedia.org/wiki/Parable_of_the_broken_window>

~~~
thwarted
Accountants need to eat too (to paraphrase a rallying cry of the
music/creative industries).

~~~
jlhamilton
Accountants are relatively talented people and should be doing useful work,
not makework.

~~~
nkassis
I Agree. My father is an accountant and hate doing taxes. He would much prefer
a more simple method like this where it would be harder for errors to occur
and avoid lengthy audits. He makes much less from those government audits than
from other type work.

The complexity of the Tax code is also stupid. A lot of it could be simplified
but that would eliminate government jobs quickly. Accountants won't care,
there's a lot of lucrative work that still needs be done. In fact, most tax
returns aren't done by CPA (or CA in Canada) anyway. H&R Block and others
might be pissed and try to block this but they charge too much anyway.

------
indiejade
_Requiring taxpayers to file returns without being told what the government
already knows makes as much sense “as if Visa sent customers a blank piece of
paper, requiring that they assemble their receipts, list their purchases — and
pay a fine if they forget one,” said Joseph Bankman, a professor at the
Stanford Law School._

Agree.

The problem is that the "big box accounting shops" like H&R Block, Jackson
Hewett, et al. throw their weight around and complain. Paper tax returns are
horribly inefficient, but that's how the big box accounting shops make the
majority of their income.

Given that taxes (withheld) are essentially an interest-free loan to the
government, it seems _more_ than logical that the government could pay a
"dividend" of sorts to people by simplifying the filing process without the
use of some overpaid H&R Block agent, a CPA or tax lawyer.

~~~
jvdh
Wow, isn't a democracy with such a powerful lobby grand?

~~~
Sukotto
It's even better now that the supreme court ruled that they can start spending
as much as they want on political advertising. :-(

------
tjic
The core issue isn't "the government already has this data".

The core issue is "the how-much-tax-do-you-owe algorithm is terrificly
complicated". Sure X counts as income ... unless you're blind, or you've got 3
kids, or you adopted a windpower system conforming to X,Y,Z standards during
the tax year (but not between 1 July and 15 Aug), etc., etc., etc.

Why is the code base so complicated?

Look to something called "public choice theory". If the tax system is really
complicated and easy for politicians to modify, then they can sell
modifications to the tax code to campaign donors (never listed in the clear as
"Joe's Trucking pays no taxes this year", but always obscured as "a measure
relating to certain income deductions for firms within 16 miles of an
interstate but not more than 24 miles from a navigable body of water
connecting to the Mississippi, excluding all firms that have filed for a
rebate on depreciable expenses in the preceding four tax years".

As long as the tax code is monstrously complex and rapidly changing, it's a
nightmare to keep a SOFTWARE code base in sync with a LEGAL code base.

------
dazzawazza
I have moderately complex tax affairs here in the UK. Each year it takes about
an hour.

I log on to the Revenue and Customs website, it asks me some basic questions
about what I'd like to declare and then optimises the sections of the 'form' I
need to fill in. So for example I don't need to declare any offshore assets so
I never see that section of the form.

At the end it presents me with the entire form which I can download as a PDF
for personal filing. I declare it to be true by clicking a check box and I
send a cheque to the government (or in a bad year they send me a cheque).

It's all SO easy. They have a great phone line with people who answer
questions honestly.

The only caveat being that you should do it well before the January deadline
for personal tax as the website gets a bit slow in January.

~~~
kierank
You're lucky. When I did it the site kept crashing. It was more awkward in my
opinion than you seem to make out. However, from what I gather it's nothing
compared to the US system.

~~~
dazzawazza
I have had it stumble a few times. I usually just log out and log back in.
Only once has it lost any information from a previous session.

I'll admit there is a chance I've been lucky but I still think it's a great
system.

------
savrajsingh
If you read product reviews for Intuit's software on Amazon, you'll find that
it's horrible and most people have to suffer through using it because they
have no choice. A huge market exists for tax and accounting software,
especially for small businesses, until the IRS figures out how to do it for
us. eg:
[http://www.amazon.com/Intuit-409578-QuickBooks-2010-for/prod...](http://www.amazon.com/Intuit-409578-QuickBooks-2010-for/product-
reviews/B002KINBBU/ref=cm_cr_pr_hist_1?ie=UTF8&showViewpoints=0&filterBy=addOneStar)

~~~
sokoloff
I suspect that's mostly people complaining about the actual byzantine nature
of our tax code and the inherent complexity that it causes. Plus, they're in a
bad mood realizing just what all that government cheese is costing them
personally.

I doubt that it's actual disatisfaction with TurboTax itself. (No connection
with Intuit, other than a happy user of their products for almost 2 decades
now.)

------
johnwatson11218
For several years I didn't file on time, rather I filed for a 6 month
extension. Then I would walk over to the I.R.S. office during lunch and
request all my reported income. Those are the forms that I used to file at H&R
Block.

This was much easier than me keeping up with all the W-2 forms that arrived in
the mail at different times.

I asked the I.R.S. agent why I couldn't just use this method to file by 4/15
and he said that they don't have all the info together until about the sixth
month.

I agree with the article but I think the real problem is all the deductions
that people tell the I.R.S..

~~~
elblanco
Why did you stop?

~~~
johnwatson11218
well this year I bought a condo and want to file for the 8K tax credit sooner
rather than later.

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cperciva
One big reason is fraud: It's much easier to catch someone who is trying to
lie to you if you don't start by telling them what you know.

~~~
abalashov
Ah, but, it is possible to call the national tax hotline and find out exactly
how much income has been reported in connection with you via W-2s and 1099s.
In fact, many people who don't keep good records have to do this every year
just to find out how to start calculating their AGI.

It's a rather obscure feature, but it can be done.

~~~
mahmud
Interesting. How safe is this hotline? does it log callers and automatically
mark them for eye-balling?

Gonna have to ask around about this.

~~~
abalashov
I am not sure of the details. For all I know, it may involve speaking to a
live person, and in so doing may be a red flag for an audit. I've just heard
about it...

------
ThomPete
Coming from Denmark I can tell that you that we do get pre filled Tax papers.
Often there is nothing to change.

The fraud part has nothing to do with whether they can prefill papers or not.
In fact even if they do make mistakes they will often catch them a year later.

So it's in your interest to make sure the numbers are correct.

Most often they are.

Also if you think about it. The investment the IRS should invest in getting a
system that makes it possible to do this would be an investment easily paid
back.

Having a incremental tax system it do require you to tell your expected annual
salary up front as this will affect how much you are taxed. But it's all
pretty automated theses days.

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elblanco
Timely article as I sit here filling out my returns thinking at every step
"doesn't the government already have this information somewhere? and if I were
to get audited, wouldn't they just call on those same resources?"

There are probably no more than 4 things I would have to add (charitable
contributions, out of country property ownership, working abroad income, etc.)
to make it complete. Literally everything I'm typing in has already been
submitted, withholdings, gross incoming, marital status, employer(s), stock
ownership, education, medical expenses and insurance, personal property and on
and on and on.

------
SamAtt
TurboTax can download my W2 from ADP (our payroll provider) and get the rest
from my previous tax return. Then it submits it all via e-file

(This isn't an ad for TurboTax since I assume all the other packages also do
this)

In the end I didn't have to type a single thing this year. Just click continue
and a few radio buttons. Which I assume is what it's like for most people with
simple returns.

~~~
lutorm
Downloading the W-2 never worked for me (and I worked for the University of
California, so not a small employer). I suspect the number of people that can
download their W-2 is small. Same for the 1099 forms, not a very high success
rate.

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d_c
This would be a dream-like scenario for Germany. Here you have to fill out all
the fax forms you get sent (empty) and include copies of all receipts. This
includes receipts of your payroll, earnings from bank accounts, etc. They have
a new software so that you can submit your tax return online but there is
nothing pre-filled unfortunately.

~~~
fbailey
Well you have to keep the receipts, but you don't have to send them in.

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jrgnsd
The South African Revenue Services implemented e-filing two years ago, with
great success. Most income tax payers can file online in minutes, using
information gathered from employers. IIRC, the number of tax Rands gathered
rised significantly.

Obviously, fraud can be commited by omitting income generated from non-
registered employers or informal employment, but as far as I know, they keep
quite close tabs on people's bank accounts.

One factor that contributed to the success of the initiative, is the ease with
which companies can submit their employees details, using software provided
for free by SARS.

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malkia
I wish Dan Brown novels were 1% as complex as the US Tax Code. At least then
they would've been interresting...

