
IRS Tried to Hide Emails That Show Tax Industry Influence over Free File Program - foob4r
https://www.propublica.org/article/the-irs-tried-to-hide-emails-that-show-tax-industry-influence-over-free-file-program#169990
======
lazyguy2
This is normal.

The only people who are experts in a particular industry are the people
running the businesses that make up that industry. So the government, in order
to try to make rules that don't suck, depend on their input when drafting the
rules.

This, and in combination with significant lobbying, means that given enough
time the industry being regulated gets to have significant amount of control
over the rules being created.

Oil, airflight, cars, steel production, cable television industry, etc etc.
Everything that the government tries regulate suffers the same fate to
differing degrees.

And when it comes to certain industries, like banking or medical industry, and
handful of executives of top corporations end up rotating in and out of
government. Being a VP one year, a lobbyist for a couple years, and then end
up as a higher level bureaucrat on some cabinet or board somewhere.

They have a phrase for it:

[https://en.wikipedia.org/wiki/Regulatory_capture](https://en.wikipedia.org/wiki/Regulatory_capture)

~~~
dmix
There’s always a whole lot of idealism when people call for regulations as a
panacea.

Then you end up with companies like Boeing who are the only players in the
country and no one even tries to compete given the massive overhead and then
people get surprised the one company who gets 99% of the oversight ends up
having a say in the oversight.

This type of thing needs constant vigilance and churn to avoid capture. But at
the end of the day it’s just going to come with the whole arrangement every
once in a while.

Of course we could come up with ways to have this type of oversight which the
market can’t practically account for financially or organizationally but again
that’s wishful thinking as almost every situation like this has resulted in
some level of capture.

Pretty much the only option is hoping they actually attempt to fix processes
when it goes wrong, at least for the next while. But more often than not rules
get rushed in during the panics which merely reinforces the company’s monopoly
by adding even more special rules only a billion dollar entrenched company
with the decades of other specialized processes they themselves helped
establish through lobbying.

No one wants to remove regulations for the sake of competition but I think we
need to be more realistic about the monsters we’re creating in exchange for
worse monsters.

Instead of being surprised every time the fragility of the whole system gets
exposed at least once a decade. While perpetually hoping and expecting for
better oversight for the next time it.

~~~
sokoloff
> No one wants to remove regulations for the sake of competition

I suspect a lot of people actually _do want_ to do this. In cases where all
else is equal, I’d strictly prefer less regulation. Even where regulation has
an epsilon positive impact, I would often prefer to not have that regulation.

~~~
bluGill
There are a lot of regulations that are more harmful than helpful. How many
transit projects don't get seriously proposed because the cost of looking for
endangered species (in a city that is already not conducive to wildlife) makes
the costs too high - resulting in everybody driving at much higher
environmental cost but not study needed for that.

I don't have answers, but the problem is real.

~~~
earthboundkid
American transit costs are very high by international standards. People like
to blame EIS or regulations or unions, but Europe has all of those things too
and is much cheaper than the US. We just suck:

[https://www.citylab.com/transportation/2018/01/why-its-so-
ex...](https://www.citylab.com/transportation/2018/01/why-its-so-expensive-to-
build-urban-rail-in-the-us/551408/)

~~~
bluGill
I agree fully. The regulation I pointed out was one example, of why things go
wrong, but there is something more that I don't know going on.

------
rebuilder
Why is it the default that everyone files their taxes? How long does that
take, on average?

Here's how it could work, based on a real-world example from another country:

Before each tax season begins, the IRS sends each taxpayer an estimate of how
much they are expected to earn that year, based on previous years. They are
assigned a tax bracket based on this estimate. If they think the estimate is
wrong, they send back a new number and their tax bracket is adjusted
accordingly. The taxpayer can also give estimates of their deductions at this
point, for a more accurate estimate of the tax bracket.

Employees withhold taxes from wages before payment, based on the tax bracket
each employee is in. They report the wages paid and pay the IRS the withheld
amount.

Investment funds etc. are required to report gains and losses for each of
their clients to the IRS.

At the end of the year, the IRS sums up the income they know about from these
reports, compare the sum due to the sum already paid from withheld taxes and
send the taxpayer a summary. If the taxpayer has no other income to report,
and has no complaints about the data the IRS already has, they don't need to
file anything further. The report comes with a bill for taxes remaining, or if
too much has been paid, a summary of how much will be returned.

For the majority of taxpayers, that is, those whose source of income is wages
from employment or government benefits, all this takes maybe 10 minutes a year
to handle. Some people still need to file, but they're a minority.

~~~
dbdjfjrjvebd
In the UK waged and salaried employees need to do nothing.

~~~
nexensis
The UK system is very smooth as a small business owner.

When an employee leaves a job they are given a P45 form to hand to the new
employer, which contains a summary of any pay to date for the current tax year
along with a tax code.

All I have to do when hiring is enter this information into the accounting
software and everything just works. National Insurance, Pensions and Student
Loans are calculated monthly and taken via Direct Debit, as are VAT payments
and returns. Employees are automatically emailed payslips with breakdowns of
their pay and deductions.

Any relevant information is submitted to HMRC (the UK's IRS) by the accounting
software, so it takes me ~10 mins a month to complete payroll for 5 employees.
When an employee leaves, creating a P45 for the next employer takes a single
click.

The gov.uk website is exceptionally well organised and contains detailed lists
of everything an employer or employee needs to do at all stages in the
process.

The US self-assessment system seems opaque, inefficient and ripe for abuse in
comparison. It also places the stress of reporting taxes onto every individual
rather than just the employers.

~~~
SmellyGeekBoy
As a fellow British small business owner I assume you're familiar with the
UK's self-assessment scheme as well? I've always found it to be very quick and
painless, and unlike the US system there's no need to get an accountant or
even any specialised software involved.

~~~
nexensis
I was really surprised how easy it was, it takes maybe 10 mins if you have the
information and logins to hand.

Honestly I can't think of many ways to improve the UK's online accounting
process from either an employer or employee's standpoint because I already
spend less than a day total per year on it.

------
chmod775
> The emails are striking for what they lack: no counterproposals or efforts
> by IRS officials to push for a better deal.

This alone should be grounds enough to fire everyone involved for
incompetence, even if corruption can't be proven.

~~~
lazyguy2
You'd have to fire all the people in the top positions of the Federal
government.

People want to eat yummy sausages, but they don't want to know how sausages
are made.

This is how sausages are made if you define 'sausages' as 'market regulation'.

~~~
danShumway
People tolerate bad inputs when the outputs are good. They ignore the sausage-
making process specifically because they don't want to give up the yummy
sausage.

But this particular sausage isn't yummy. It's gross, and the packaging is
deceptively labeled, and it steals from veterans.

If I was being handed a yummy sausage, I might not want to ask many questions.
But this one smells funky; so now I want to know what's in it, and what went
wrong cooking it, and I'm even thinking I might want to get my sausages made
by someone else from now on.

~~~
vonmoltke
To continue this analogy, the problem is that if you ignore how the yummy
sausages are made you don't really know what is normal and what is off when
you examine the process behind the rotten ones.

People naively think the problems will be obvious. The issue at the heart of
the analogy, though, is that those same people would find what they define as
problems with the process for making the yummy ones. Thus, the "problems" are
not as obvious as they think.

------
xenocyon
Kind of a sidenote, but I'm continually surprised that agencies that get hit
with an FOIA request are allowed to be the arbiters of whether the request
should be granted or not.

~~~
ceejayoz
Well, that's step one. If there's a disagreement, it can go to the courts.

> After ProPublica sued in federal court, the agency dropped that objection
> and released the records.

~~~
xenocyon
But the burden of proof should be the other way around. The agency should have
to be the one to go to court for a denial, rather than the burden lying on the
citizen to sue to get the request granted.

~~~
torstenvl
That's unworkable. The vast majority of records of any given agency are non-
releasable. The federal courts would be inundated and/or Congress would have
to set up an entire system of administrative courts just to deal with the
deluge of every divorcing spouse who wants to know the balance of his or her
spouse's Thrift Savings Plan and every request for an internal phone roster or
personnel disciplinary files. Your proposal would effectively gut the Privacy
Act.

------
magashna
>“The notion that the Free File Alliance ‘dictated’ the terms ... to the IRS
is absolutely false,” the spokesman said. “When IRS decides on any issue, the
agency gets what it desires. No one dictates to IRS.”

So what _does_ the IRS get out of this?

~~~
tlb
Not having to do the hard work of making a usable tax filing system and
providing phone support for users. Tax filing might be a 10x harder problem
than health insurance signup, and healthcare.gov left a bad odor all around
Washington.

A good theory for government is to always do the minimum -- do only the part
that can only be done by the government and let private companies compete to
do everything else. The IRS is doing roughly this, by providing the e-filing
API. The surprising thing is that TurboTax has so few competitors.

~~~
hyperbovine
Health care signup was fixed and now works well. I suppose your theory of
government is great if the thought of companies like Intuit gouging private
citizens to the tune of billion$ a year until the end of time gives you warm
fuzzies. This canard that the government is congenitally incompetent and can
never ever do anything as well as the sainted Private Sector needs to end.

~~~
tlb
You could bolster your claim that it's a canard by linking to several other US
government-built websites doing as complex a job as filing taxes that are
convenient and easy to use.

~~~
maximente
the US digital "corps" (not sure what they're called) is widely regarded,
helping the VA if not healthcare.gov directly. people are even giving up
vaunted Private Sector jobs to join them.

i have a feeling, if not defeated by anti government types they could do the
job.

~~~
thedufer
> the US digital "corps" (not sure what they're called)

You're likely thinking of USDS (US Digital Services), or possibly 18f?

------
elicash
Any FOIA experts here? I wonder why FOIAs aren't posted online for all to see
and are instead just sent to the requestor? It seems lots of people are
interested in the same information -- and once it's been vetted, putting all
those (let's say) emails into one giant searchable database seems like it'd be
in the public interest.

I'm sure there are both legal obstacles and practical ones. I'm just curious
what those obstacles are.

~~~
fulldecent2
The solution is that you can create a transparency website and file FIOAs to
get all the FIOAs and you can post them.

This isn't a "why didn't they" problem. It is a "how can I" problem.

~~~
dlgeek
You're describing [https://www.muckrock.com/](https://www.muckrock.com/)

------
grandinj
Even third world countries like South Africa can afford free online tax filing
for the majority of taxpayers.

~~~
etherealG
Totally agree, it seems crazy that my country of origin can figure out how to
have a free online filing system and the US can't. Not sure how to
characterise the problem, since corruption isn't a simple enough measure, we
have tons of that in South Africa too. It's complicated I guess.

Also, please stop using outdated terms like "third world countries". The world
hasn't been broken up into 2 different brackets of income for a long time. See
[https://www.gatesfoundation.org/Who-We-Are/Resources-and-
Med...](https://www.gatesfoundation.org/Who-We-Are/Resources-and-Media/Annual-
Letters-List/Annual-Letter-2014#MYTHONE)

------
arminiusreturns
I love the amount of servile placation for the corruption in the form of
normalization that gets touted here... as if we haven't heard the "but
congress needs expert input" a thousand times from K-street itself.

------
glofish
The strength of the lobby is purely attributable to the policial will that
wants to allow that lobbying to be effective.

The main argument I heard against simplifying the tax code (and allowing
automated free filing) is that it would eventually lead to a slow but steady
increase in taxes. Another way of saying this is that: the "pain" of paying
taxes makes people scrutinize the tax code and acts as a deterrent.

If you were to frame it in that context (and if that statement were indeed
true), I am sure more people championing a simple tax code would stop doing
so. I would rather pay $100 to Intuit's potentially unneeded service than
$1000 as a tax increase.

I am not claiming that it is true - I don't have a way of testing this
hypothesis - but it is something that is worth musing about. There are always
unintended consequences.

~~~
failrate
That is the entire Grover Norquist argument in a nutshell, and I call
bullshit. Most people are not involved enough in legislature to have any
meaningful input into whether taxes will rise or not, so they are eating the
complexity cost with no benefit. Sure, people in general should be more
involved in their government, bit that is a totally different issue. I think
it is more likely that people are confused by the currwnt tax laws and forms,
so they aren't clear on what their tax obligations really are.

~~~
glofish
I think the issues that you mention were overly conflated.

People do not need to get "involved" into legislating beyond voting for
someone representing them - and choosing the person they believe will do so.

People do most certainly are clear what their obligations end up being when
they submit their tax return.

The question is only whether the process should be easier or is it better if
it is tedious and ineffective. The question of whether Intuit also profits
along the way is almost marginal here.

As much as I wish the world was logical, I came to believe it isn't - it is
always full of unintended consequences.

------
tempsy
I'm fairly optimistic that easier tax filing is just a matter of time. Several
of the Democratic frontrunners have said they support it. I'm not sure what
the Republican stance is but I doubt they would be against it either.

~~~
callalex
Spoiler: they are. The reason? Blatant corruption from Intuit and H$R Bloc

~~~
themaninthedark
H&R is from Missouri, which is Republican dominated but Intuit is from
Mountain View, CA. I think this is a bi-partisan problem.

~~~
jermaustin1
Where giant multi-national corporations the size of Intuit or H&R set up HQs
has less to do with their politics, and more to do with their bottom lines and
the talent they are trying to aquire.

Intuit needs developers, UX/UI designers, entire tech infrastructure as they
are a SaaS and Software Business. H&R Block is a franchising company with some
enterprisey software (that's a lot more complicated to use than any of the
TurboTax editions) that the tax preppers use.

A lot less tech goes into H&R Block than Intuit, so H&R Block can be in a
lowish-noish tax state like Missouri or Kansas and take the decent developers
that they have to maintain and update their backend tax-prep software.

~~~
themaninthedark
I understand that, my comment was more to my parent that was saying the
problem was republicans and corruption. While I do think there is corruption
involved; companies their politics and policies are made by people who work in
the companies.

With Intuit being a company in an area that is overwhelmingly liberal, I would
hazard that the majority of the people working there are as well(It is
possible that the key positions are occupied by conservatives but over a
period of years and consistently makes it less likely.).

------
mikelyons
If instances of corruption like this are so public, why can't anything be done
about them? If something can be done about them why isn't anything being done?
If something is being done why is it so ineffective? If it's effective why are
instances of corruption like this so public?

------
shmerl
Intuit are simply corrupt thugs.

~~~
not2personal
Intuit is going to try to do what benefits them. The IRS are the corrupt party
in this transaction.

~~~
journalctl
“I guess we just can’t do anything about corporate lobbying, the one problem
that has existed since the beginning of time that is totally immutable and
impossible to change.”

------
briandear
Why is the free file thing such a big deal? Considering the taxes paid, tax
prep software is a tiny expense — and it’s deductible. How about complaining
about a tax code that requires accountants and lawyers just to understand?
Complaining about tax filing software is like complaining about a paint chip
on the Titanic. The tax prep industry is a result of a ridiculously
complicated tax code and the ridiculously complicated tax code is the result
of politicians that reward or punish people as a means to garner more
relevance. See Milton Friedman’s speech on tax code complications and the
reasons behind it.

~~~
alexmingoia
Agreed. Tax filing is complicated because taxes are complicated. A flat tax on
all personal income from all sources as the sole tax would make tax filing
incredibly simple. It’s equal in that everyone pays the same rate, and fair in
that the more money people earn the more they pay. It would eliminate double
taxation, tax uncertainty, save the economy money by eliminating tax
accounting, and eliminate tax loopholes by eliminating different
classifications of taxable goods, services, transactions, and events.

~~~
rebuilder
Paying 20% of income in taxes (for example) is a much heavier burden to bear
if you're making 20k a year than it is if you're making 200 000. Which is why
progressive taxation exists.

~~~
whamlastxmas
Back in my youth I didn't "get" this the marginal utility of a dollar. I was
also a libertarian and Ron Paul supporter. How naive I was.

~~~
alexmingoia
The law of diminishing marginal utility refers to homogenous goods. The
marginal utility of the dollar only has meaning in the context of a particular
good or service. Whether someone earns $20,000/year or $200,000/year says
nothing about the marginal utility of dollars with respect to a particular
good or service. The diminishing marginal utility of dollars is the same with
respect to a gallon of milk for example, whether one has $20,000 or $200,000.

I’d also like to point out that “utility” is subjective. There are serious
methodological shortcomings with quantifying the subjective satisfaction of
various goods and services, particularly heterogenous goods like housing.

------
momokoko
Please stop with this. Free File is provided free of charge to a massive
portion of the population. This is a solved problem. It is significantly more
productive to spend your time supporting awareness of Free File.

The group that does not qualify for Free File most often requires the services
of a tax professional anyway. Not because it is complicated, but because the
monetary benefit of a tax professional is going to be more than the cost of
their services.

These IRS grumpings by fringe libertarians is wildly unproductive and has no
place on HN as it does not fall within any of the guidelines for content.

~~~
wallacoloo
> the monetary benefit of a tax professional is going to be more than the cost
> of their services.

Sure, structuring your spending in advance to optimize taxes is something you
might want to ask outside help for. But when it comes to _paying_ your taxes
based on how you’ve already used your money, why does it make sense for there
to be anything other than one value which both you and the government agree is
owed? Why should it be negotiable?

~~~
momokoko
If you have an AGI(meaning your income after deductions) of more than $66k a
year you have to pay $40-$60. Meaning you likely make $85k+.

Come on. Seriously? That's worth making this crazy fuss about?

~~~
kchoudhu
Absolutely.

You're paying a tax to pay your taxes. That's fucked, and doubly so because
you're paying the toll to a parasitic company that _only_ exists because of
the government's inability to provide basic services.

