
Why We Fear the IRS - acheron
http://www.bloombergview.com/articles/2016-01-04/why-we-fear-the-irs
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PaulHoule
People don't realize that the U.S. has the most efficient tax system in the
world in terms of what we spend to get a dollar of revenue and that means
there is a very low amount of bullshit per mile.

I have gotten just about every kind of income there is at some time in the
last 30 years and been self-employed and also made mistakes, or had documents
be disappeared by the maid, had customers and publishers make mistakes on
1099s, etc. I'm actually better than average at dealing with paperwork but
sometimes when I am stressed I get in a funk where I don't open my mail for a
month.

Thus I have gotten real scary letters about how I owe $40,000 (the IRS didn't
correctly process the decimal point on a 1099 I got from Wrox press) or I owe
$351.82 (just got that one right after Christmas, despite the fact that I paid
them $350.82 out of my bank account on Dec 5) I even was late to file my taxes
for one year by a year and a half and have sometimes completely screwed up
estimated tax payments.

Practically though I have dealt with all these situations and the IRS people
have been very nice to deal with on the phone and via mail. Every time I have
had much more apprehension of how bad it is going to be it turns out to be no
big deal. I have paid fines but these are not at all punitive and if you are
in some situation where you really can't pay you can negotiate a payment plan
with some write-off of the debt with help from a tax lawyer or enrolled agent.

Back in the 1970s the IRS was awful and there would be horror stories like
what happened to R. Crumb, but both Reagan and Clinton introduced major
reforms in how the tax system works that greatly improve the "customer
experience."

I have seen how they have integrated with the IRS with Obamacare and they have
done this in a way that addresses the issue of people having unpredictable
income that is actually simple and practical for everyone concerned.

So don't believe the right wing propaganda. The worst administrative problem
the IRS has is that they still have a shocking number of people filing fake
tax returns, collecting the money, and running. My uncle was working for the
IRS and flabbergasted about this in the first few years of e-file and I don't
think it has gotten any better.

~~~
xlm1717
You don't have to believe right-wing propaganda to see it's a mess. You even
provided many examples. Like the author says, you can either try your taxes
yourself, or dump hours into working with a tax accountant going through every
possible thing you could pay or deduct. And people do realize how efficient
and machine-precise the tax machine is when they come after you for every last
penny if you got it wrong or didn't do it. Even if you don't get the police
knocking on your door, it's a huge hassle that everyone has to go through
every year, and why April 15th is an unofficial, tongue-in-cheek "holiday".
There's still a lot of room for improvement on the "customer experience".

~~~
PaulHoule
I see the glass as half full.

You are right it is complex, but some of that complexity is inherent to the
problem of determine what the income of a self employed person actually is.

When I started my taxpaying career I would fill out the 1040EZ in 15 minutes,
that was one of Reagan's best things. A lot of people only get W-2 income for
them and the experience is streamlined.

The key thing is emotional. If you have a complex life over a long period of
time you will have trouble with your taxes but you also will have trouble with
your bank, phone company, airlines, and many other public and private
organizations. The people at the IRS are not ogres who want to wreck your life
but who want to orderly keep the lights on.

Don't get me started about how they'll (almost) stick probes in to your
orifices in Japan or how people in Italy pay a fraction of what they should.
VAT taxes work a lot like the "Flat Tax" some people like, and the
administration of those is far worse than the administration of income and
payroll in a small biz, I funded one that had a near death experience. If a
small business has to pay it in multiple jurisidictions, such as US states,
it's maddeningly hard. A central VAT could help with that though.

(For instance, you have to pay a few $100 in NYS just for the privilege to
file your sales tax. You can get started quickly making and selling a few
widgets that cost, say $50 and thus learn something about product-market fit
with a tiny investment. It's a great way to make money and have fun and maybe
you can scale it up. No way are you going to pay that fee before you start
doing such a little thing and practically you won't later.

You think you got away with it because it takes a long time for the government
to scan all the paperwork for problems.

Get up to having a storefront with a corporate registration and you will
likely get caught and then you owe something like $5K of sales taxes so if you
are not good with paperwork you'll find the corporate veil works against you
and not with you this time and you could end up with no corporation in weeks
unless you pay up the cash and all of it. A photo of our shop that was barred
by the state was in the local newspaper If it wasn't for the faith and good
will of our customers, who bought into the company, it would have been done
for. )

