
How the Maker of TurboTax Fought Free, Simple Tax Filing - danso
http://www.propublica.org/article/how-the-maker-of-turbotax-fought-free-simple-tax-filing
======
rm999
This stuff aggravates me. My taxes aren't abnormally complex (single, one
state, very few deductions, one w-2), but I get several 1099s for my
investments and end up spending an hour filling them in manually, importing
CSV files from my brokerages, and double checking the numbers. What annoys me
is all the forms clearly state the IRS has also been sent this information;
I'm literally filling out forms in a slow, error-prone way just so the IRS can
run a simple == check to make sure I entered them in correctly. I feel like
it's something my third grade teacher would force us to do to kill time.

I don't care about the 30 dollars turbotax charges me, I'll send 30 dollars
straight to the CEO or promise to burn it. What bothers me is that I've been
forced to do manual data entry - a pet peeve of mine as a programmer - because
the government has been lobbied specifically to be less efficient.

~~~
MatthewPhillips
The government is not bad at code because of lobbying, they're bad at code
because of fluctuating budgets, low salaries, and ridiculous processes.

~~~
navait
The IRS was recruiting for interns at my university recently, who could
eventually become full time workers. However, I found that at best I could
enter as a GS-9, and those were positions with 5 years of expirience. The best
salary I could get from that was $53,000 in NYC. Even the lowest offers my
friends were getting were $60k in a low-cost area.

If the government was able to fund it's IT operations at market rates, or pay
outside the GS we'd all be much better off. I don't know about the federal
level but my state relies on outside contractors to make web applcations, who
mostly do a half-assed job and disappear when maintenance becomes a problem.

~~~
cbs
The government doesn't do anything at market rates. They employ below market
rates, and contract external companies above market rates. This is
(unfortunately) by design.

~~~
reverend_gonzo
For what its worth, government jobs are also a bit more secure and generally
provide pensions and other benefits.

Whether those benefits are worth a decreased salary depends on the individual.

~~~
jdotjdot
Unfortunately, the pensions are largely gone the way of life 401(k)s, and with
the furloughs that have been coming due to Congressional instability, those
things are not really that true anymore.

------
jcr
> _The following month, an ad in The Sacramento Bee, paid for by the CCIA,
> cautioned "Taxpayers beware" and said ReadyReturn "could be very harmful to
> taxpayers." The ad pointed to a now-defunct website, taxthreat.com, opposing
> ReadyReturn._

Well, they won't be doing _that_ again!

<http://taxthreat.com>

<http://taxthreat.info>

<http://taxthreat.org>

<http://taxthreat.us>

(Note To Self: Eventually, I might regret this.)

~~~
scott_s
Thanks for making my day.

------
danso
The fact that a tax-hater such as Grover Norquist opposes reforming the tax-
filing procedures illustrates the complex dichotomy between giving government
_good_ responsibility without giving it dictatorship-like responsibility.

In Norquist's opinion, making taxes _too_ easy to file will make citzenry too
complacent about how they're being nickel-and-dimed and will lull them into
not pursuing reform. OK, fair enough.

But what about a scenario in which for 30-50 million Americans file for their
taxes by sending a SMS (as it's apparently done in Scandinavian countries)?
And all the other taxpayers, they're wondering: "Why the f-ck can't _my_ taxes
be that easy??"

Isn't this scenario as likely to lead to overhaul of our complicated tax code?

~~~
sc68cal
>But what about a scenario in which for 30-50 million Americans file for their
taxes by sending a SMS (as it's apparently done in Scandinavian countries)?
And all the other taxpayers, they're wondering: "Why the f-ck can't my taxes
be that easy??"

That's why Grover Norquist and others are lobbying against this. If taxes
_weren't_ a hassle, their movements would lose an important emotional
touchstone that fuels many people's aggravation against the government. Being
able to tap into that frustration, in order to enrich themselves and their
political donor class is very effective.

~~~
d4vlx
Exactly, instead of having a convenient -option- that could save many
Americans time and money Norquist and people like him are forcing the rest of
the country to use a less efficient method. In other words they are taking
away people "freedoms" in order to force them to fight to get their "freedoms"
back. Norquist is of course more than happy to provide helpful guidance on
what freedoms should be fought for.

------
Nursie
In Australia there is a program distributed by the government each year, based
on some sort of spreadsheet type thing, that looks up as much info as it can
from central records (when provided with identifying info) and then walks you
through the rest of the process of filling in a return.

Not as simple as "yes, that looks right" that happens in a bunch of places, or
the UK system (no tax return unless you have special circumstances) but it
works well.

~~~
yyqux
Yes, it works fairly well, but unfortunately has crushed the capitalist
Ubermenschen who never had a chance to build TurboTax Australia under the
government's boot heel.

I've actually had my return automatically amended a couple of times to give me
more money back based on tax rulings on deductions.

------
DanielBMarkham
Couple of notes.

1) The IRS itself gets most of the tax advice wrong that it gives out to
taxpayers

2) Paying taxes is one of the few transactional relationships you have with
your government. If you ask me, a government representative should come to
your office and you should pay him in cash, not hide and automate taxes so
that they disappear.

3) There is a difference between a simple tax system and a tax system that is
simple to operate. Taxpayers deserve a simple tax system. Continuing to
automate the byzantine monster we already have is a terrible, terrible idea.
How would reform ever take place?

4) Think for a minute what this implies: that a government agency that is
responsible for collecting money should also be the sole source for computing
how much money is owed. Where else would you allow such a conflict of
interest? Should the police come by your house to determine what crimes might
have been committed? Would you want inspections by the local health department
of your private cookout? Right now we have administrative courts and such, but
the principle is fairly clear: reporting by the citizen, oversight and
acceptance of reporting by the government, and the court system to sort out
problems. You don't start putting everything in one bag under the name of
ease-of-operation. That's whacked.

5) I do not believe these candidates campaigned on this. What I believe they
said (or meant) was that the system should be simple enough to eliminate the
burden on the taxpayer, not that compliance with a bad system should be
automated.

As a side note, have any of these people ever created software or worked for a
project inside the IRS? The guys I know that have could tell you horror
stories. Testing alone should give anybody who knows programming and the IRS
nightmares. This is a tremendously bad idea, both from an execution and a
structural standpoint. When something doesn't work, the answer isn't to just
do it harder or throw computers at it.

Having said all of that, having the IRS give you the information that's
already been entered once so you don't ever have to re-enter things? Excellent
idea.

ADD: Completing taxes is not hard because we don't have technology applied in
the correct manner. It's hard because the tax code is a complex,
unintelligible POS. The only people benefitting from continuing to hide the
POS that the tax code is are those folks who made it complex in the first
place (And will continue to add to its complexity the more that we ignore it)

~~~
guelo
1) Source?

2-3) The idea that it should be painful to pay your taxes so that people won't
want to pay their taxes is a political idea, not a technocratic idea. But I
don't give a shit about your politics. Keep your politics out of my government
services. Political meddling by ideologues is what makes government services
so awful. Whatever the government is required to do after the law is passed
should be done in as friendly and efficient manner as possible. Advocating for
the most painful possible experience for millions of people is evil in my
opinion.

4) Nobody said anything about "sole source". You could still get your taxes
prepared by whoever you want. The rest of this paragraph doesn't make sense.

~~~
talmand
He's not quite correct in saying "most", but they do give bad advice a large
amount of the time.

<http://www.nbcnews.com/id/7492730#.UVHtJBkuF7c>

I would agree with your statement about politics and whatnot.

As for "sole source"; yes, you can have anyone prepare your taxes but the IRS
still says yes or no to what they were provided. If the IRS decides that your
preparer was wrong then that's where it might get interesting. I read it as
saying there are possible issues with having one agency having both judgement
and collection powers. It's much like the complaint lately about prosecutor
offices benefiting from seizure laws leading to obvious abuses, such as the
attempted hotel seizure in NY I believe.

------
paulyg
Many in this thread seem to be glazing over one important detail. This system
would be opt-in. Don't trust the IRS? Have a lot of complicated deductions?
Hire a CPA or use Turbo Tax or fill out the paper yourself. Approx 13% of
filers used a 1040ez last year. This system is perfect for them. I would
venture a guess that 1/2 of 1040a filers could also use it. Again though it is
your (hopefully informed) choice to do so.

~~~
ams6110
Being more cynical... deducting taxes from your paycheck before you even get
the money is already (by design) lowering awareness of how much we are taxed.
Imagine if we had to write a check to the IRS every month like we pay our
utility bills...

Making your tax return a "click here" effort while on the one hand appealing
has the disadvantage of further reducing your awareness of how much you are
taxed.

This is why I do my taxes by hand, with pen and paper. I want to read the
instructions and fill out the forms so I never lose awareness of how insane
the system is.

~~~
paulyg
The only two monthly expenses I still write a check for is the water and
sewer. That does not stop me from realizing how expensive my mortgage,
electric, etc is. Trying to save people from their own stupidity or ignorance
by making them fill out menial former is not the answer.

------
JimWestergren
Stats about tax declaration from Sweden last year:

Via internet: 19,9%

Via PIN code: 20,1%

Via telephone: 12,5%

SMS: 6,6%

Smartphone app: 2,3%

Total: 60,4% filed electronically

The rest sent in papers via the mail. (the old method)

Source:
[http://www.skatteverket.se/download/18.71004e4c133e23bf6db80...](http://www.skatteverket.se/download/18.71004e4c133e23bf6db800078977/1336458264283/topplista_-
_antal_personer_per_lan_som_deklarerat_elektroniskt_per_3_maj_2012.pdf)

Personally I have filed via the internet since 2005 both private and for my
company.

~~~
itafroma
How people file isn't a problem in the US: in 2010, 70%[1] of tax filers (~90
million people) filed electronically and that number has almost certainly
increased since. The issue in the article is whether the IRS (our federal
taxing agency) should be allowed to file returns on behalf of citizens (i.e.,
do most of the work for them).

[1]: <http://www.nbcnews.com/id/42275764/>

~~~
khuey
I wouldn't consider "how" people file a problem. I choose to file on paper
still, and will until I can upload my tax data from my machine directly to the
government's computer without passing through some third-party provider that I
don't trust to keep my data safe.

------
facorreia
In Brazil this kind of tax statement has been done online for many years using
software supplied by the federal government. Unfortunately the government
doesn't supply the data as well. It knows much better than me how much money I
was paid, how much I paid for medical services, what my bank statement says,
and so on, because we have a very comprehensive and intrusive set of laws
about accountability towards the government. But still the government has us
entering a lot of information from a lot of sources every year (information, I
repeat, it already has) and we face harsh liabilities if we fail to retrieve
and enter the correct information.

------
pm24601
Intuit could not get the Minnesota tax returns right. Minnesota had to
threaten to refuse any TurboTax generated returns for Intuit to fix the
problem: [http://www.twincities.com/business/ci_22767151/minnesota-
tur...](http://www.twincities.com/business/ci_22767151/minnesota-turbotax-
flap-fixed-but-some-10-000)

"On Monday, March 11, the state released a list of 13 specific line items that
led to errors on Minnesota tax returns filed through the Intuit software and
other tax-preparation products from the company.

"These were very serious to us," Terri Steenblock, the state's assistant
commissioner of individual taxes, said Monday at a news conference. "We've
never seen issues like this."

Last week, the state advised people not to use Intuit products to file their
state taxes. Those products include TurboTax, Lacerte, Intuit online and
ProSeries."

------
ilaksh
This seems an easy to grasp example of how the free market actually benefits
the wealthy disproportionately. I think its an over-simplified concept.

Yes, we definitely need to remain free and diverse, but we need to figure out
how to factor more actual science, especially science related to human needs,
into our decision-making systems. Right now its just whoever manages to
collect the most money buys the policies.

I think that the concept we have of money is inadequate. We need to start
tracking and taking into account more data rather than just how many points
everyone has regardless of how they got them or how they want to spend them.
And I think to make things fair and effective the rules and enforcement need
to be automated.

Imagine a computer game where there was only one stat. Does that sound like a
fair, fun, or sophisticated game?

~~~
jdminhbg
> This seems an easy to grasp example of how the free market...

I can't even begin to grasp what part of lobbying the government to prop up
your business via threats of penalties and imprisonment you are interpreting
to be "the free market."

~~~
ilaksh
You aren't going to get something that works better without altering the
fundamental structures. The way things are set up you can't take lobbying,
money, and special interests out of government. Because every politician needs
money for everything and there is one number tied to your bank account that
goes up or down on the basis of how much people give you, with little to no
accounting for what you did to get it.

What I am saying is that we need more variables. There needs to be some math
equations and technology that actually support and automatically enforce the
market ideal. Because making laws and relying on people to do the right thing
just isn't adding up, since there is no money in doing the right thing. We
need to improve the nature of money so that doing the right thing adds up.

This is an oft-repeated conversation but I just don't believe that fair and
free market ideal ever actually existed.

~~~
xenophanes
Trying to make people do the right thing with math and technology sounds scary
as hell. How will that work? What about edge cases and outliers?

What we need is philosophy and persuasion. People need to learn better and
understand why there actually are benefits to doing the right thing, not have
an algorithm monitor them and punish for deviations.

Doing the right thing already is in one's self-interest. The problem is bad
philosophy claiming otherwise. The solution is things like Objectivism which
explain _why_ the free market is good for people like you, _why_ smaller
government is better for everyone, how to live the right way _and_ be better
off (and how to think well in order to understand these things clearly. a
great deal of the opposition to these things is confused and up to low quality
standards).

~~~
ilaksh
I agree that we should improve philosophy and education but I think you are
mistaken about incorporating math and technology into 'doing the right thing'
being scary. What we have now is what's scary -- a game with no automatic
enforcement of rules and very few rules to begin with, where everything is up
to the discretion of what amounts to a bunch of dungeon masters. Only in this
'game' the dungeon master only likes say 1 out of 10 players, he gives them
all of the breaks, and the rest are working with rigged dice. I'm suggesting
that even though World of Warcraft can have a lot of loopholes and corruption,
its more fair than Dungeons and Dragons, or Monopoly.

------
joras
Taxes are prefilled in Estonia also, you can see all of the information on the
webpage, and in case of a home loan or investments, you can send that
information to the tax form from a bank site with one click. If you're married
you can file joint tax. And thats it.

The whole process takes about 10 minutes, the deductibles are calculated and
returned quite quickly, this year I was returned about 100euros, mostly
because of my daughters dance lessons that are exempt of tax.

I dont see the reason people try to defend TurboTax here, yes, taxes are more
complicated in US, but still, government does the same calculations anyway,
have the same data anyway. Why not do this automatically. And if government
wants to screw you, well, then I dont belive that turbotax or alternatives
could help you anyway.

~~~
salvadors
On my Estonian tax return last year, I had to declare overseas income too, and
was impressed that it even did the exchange rate calculations at the relevant
dates for me.

------
mcenedella
The choice is between letting the government do your taxes for "free", versus
having a company whose reputation rides on getting your taxes done as
efficiently as possible with the least tax burden to you. Anybody who would
choose to have the government complete them, hasn't been paying attention to
the lengths revenue-strapped states will go to maximize their tax collections.

It's a bit like letting the user car salesman set the price you pay for the
auto versus haggling for yourself. It's also simpler, "free", quicker, and
less intensive to let the professional do it for you.

But free can sometimes be the most expensive way of all.

~~~
raverbashing
This is total BS

Go reread the article, unless you're really in pro of companies charging for
what should be free.

Pro-tip: if the government thinks you owe X, it's not Turbotax that's going to
change that.

~~~
ScottWhigham
No need for the hyperbole. OP's question is logical. On one hand you have a
company who is taking your money and has a reasonable expectation that, as a
result of using their software, you will save more money because they will
help you find deductions and tax credits that you would've been hard pressed
to find yourself. These companies compete in a free market for your money,
both with other software companies and with CPAs/CPA firms. The "winner" (for
a particular user/client) is the one who (a) has the best reputation of not
getting you audited, and (b) who gets you the best price:deduction ratio.

On the other hand, you have a government entity whose sole charge is to
collect revenue. Is their system going to be designed to help you get as many
deductions as possible? Are they going to prompt you to deduct moving expenses
(just to pick one example)? Maybe, maybe not. The question is legit though and
thus causes us all to say, "Wait a minute... maybe, since there is a financial
incentive for them not to show me deductions, that they will hide some of that
(or make finding it as complex as the tax code)."

If Intuit/et al help you save $5000 in taxes this year by helping you deduct
all that you can, Intuit/et al do not make one penny more - that money simply
stays in your pocket. If the IRS helps you save $5000 that you would have
otherwise paid (b/c you did not fully deduct all that you could have), then
the IRS loses $5000. That in and of itself highlights the problem.

~~~
raverbashing
"nd has a reasonable expectation that, as a result of using their software,
you will save more money because they will help you find deductions that you
would've been hard pressed to find yourself."

That has a lot less to do with software and more with you knowing the allowed
deductions.

Funny how I have no problem finding these deductions using the _free_ sw
provided by the government (in more than one country)

I understand this is strange, but it works because deductions are often
balanced. For example, you filing a deduction for medical expenses signal a
correspondent owing of taxes by the doctor/hospital, so you're helping with
enforcing collections.

" Is their system going to be designed to help you get as many deductions as
possible? Are they going to prompt you to deduct moving expenses"

More or less yes. There may be the case where the software is going to be
completely useless (like Argentina), but then you just skip the sw and go for
a tax consultant.

"If Intuit/et al help you save $5000 in taxes this year by helping you deduct"

If you really can save 5k you 1 - probably know it 2 - may get the help of a
tax consultant

But most people don't have deductions and should just file the 'default' for
free.

------
eumenides1
Isn't there free options in the US? In Canada, we have StudioTax.
<http://www.studiotax.com/>

It's free and on a donation basis. I switched from TurboTax to this and I'm
really happy with it.

I'm surprised there isn't a open-sourced free way to do taxes. That way we can
address the tinfoil hat based worries of the government doing your taxes and
have free and easy software.

~~~
teamonkey
I might do the same, having just filed last years' Canadian taxes with
TurboTax. I didn't have a problem with TT but I do have a problem with
Intuit's actions here.

Coming from the UK where it has been automated all my working life, I resent
having to file my taxes each year. As others have said, the government has
nearly all the information anyway.For anything else, then only short
declaration forms should be necessary and not a full return.

I also don't like the lump sum return or payment if there's any discrepancy.
In the UK the most common option is to have an adjustment to your tax code,
which simply deducts more or less tax at source over the following tax year.
You don't even need to give them your bank info.

~~~
eumenides1
The only reason why i used TurboTax in the past was because my parents used it
and they were comfortable with the UI. But I've since taken over that task and
I have no such love for their UI, especially when a free alternative is
available.

------
MatthewPhillips
The IRS switched to an xml file format a couple of years ago for e-filing,
which broke the first week of the tax season. They were unable to accept any
returns for around a week, IIRC. This article is a little overly optimistic
about their chances of fully replacing tax prep, in my opinion.

~~~
Joeri
The belgian government is so ineffective we didn't have one for two years
because they failed to organize a ruling cabinet after elections. And still we
have prefilled returns that work well. It's not that difficult.

------
gyardley
Yes, TurboTax is being rather transparently venal, but that doesn't mean
they're wrong. I doubt the American government is competent enough to get tax
calculations right, and I suspect they're hungry enough for revenue to make
all their default assumptions in their favor. At least that's been my
experience with every state and federal tax authority I've dealt with for the
past half-decade or so.

Once we have a tax code that's simple enough and a government that's competent
enough to get things right, then we can talk about having the government fill
out our tax forms. Until then, the government's just going to be ripping off
the blindly trusting, a little bit at a time.

~~~
danso
> _Once we have a tax code that's simple enough and a government that's
> competent enough to get think right_

How do you foresee this happening if we -- the government and the public --
maintain a status quo in which feasible optimizations are never pursued
because hey, we have a private alternative that doesn't charge _too_ much to
do it?

For the government to become more competent, the people have to demand reform.
For people to demand reform, they have to be aware of how much better things
_could_ be. Private competition helps spur that reform, but this doesn't mean
that the government shouldn't itself be expected to optimize things. This is
not an either-or zero sum game

~~~
gyardley
I'm arguing that without these prerequisites, this 'optimization' isn't an
optimization at all - it'll be a step backwards, because it'll just end up
ripping people off.

People certainly _should_ demand reform, but not _this_ particular reform at
_this_ particular time. People should absolutely demand a simpler tax code - I
don't know about you, but I'm still holding out hope we'll see some tax reform
in 2013.

'Competent government' is a harder problem. Americans aren't Norwegians or
Germans, and simply aren't good at large bureaucracy. Unless America starts
subcontracting out its administration to the Swedes, better government is
going to take either a change in American character or something smaller and
less-centralized.

~~~
danso
> _Americans aren't Norwegians or Germans, and simply aren't good at large
> bureaucracy. Unless America starts subcontracting out its administration to
> the Swedes, better government is going to take either a change in American
> character or something smaller and less-centralized._

This is a strange assertion, as if Swedes had an innate gene that allowed them
to be more adept when they joined public service. Let's assume that that's not
true and it's an ability learned through environment and civic education...I'm
arguing that that reaching this ideal situation of "good character" will
require -- _when it is possible_ \-- to make interaction with the government
more efficient. Else, you may end up in a situation in which citizens are so
distrustful of the government that they never see the point of achieving good
civic character. And then we never end up being as good as the Germans and the
Swedes.

------
LarryMade2
This is why the US can't have shiny things.

I've always thought the IRS should provide us with a lot of the tax info,
since it gets reported to them so regularly.

~~~
jbellis
The IRS computer systems are stuck in the 80s. You can get them to send you a
copy of the information they have; it will be ready around August.

I'm not exaggerating; I've done this a couple times because I'm terrible at
keeping track of the paperwork otherwise. (Protip: you can file an extension
until October with no penalty.)

~~~
fr0sty
> Protip: you can file an extension until October with no penalty.

Caveat: This is true ONLY if you are due a refund. If you owe tax you will be
charged interest (and possibly penalties) for paying after the deadline[1].

<http://www.irs.gov/uac/Extensions-and-Payment-Options>

~~~
mikeash
Technically speaking, I believe you can still file in October, as long as you
pay in April. So you can estimate (guesstimate) and pay, then calculate
properly and file later, if that's advantageous somehow. If you pad your
estimated payment so that you overpay, you should be safe from penalties, in
the event that you can decently estimate up front but can't actually file a
full return for some reason.

------
rayiner
There is a lot of reading between the lines that needs to be done with this
article:

> It's already a reality in Denmark, Sweden and Spain.

This is roughly equivalent to saying: "New York, New Jersey, and Louisiana
already do it, why not the whole country? Lobbying must be to blame!"

> William Gale, co-director of the Urban-Brookings Tax Policy Center.

So the left agrees with it, I wonder what the right thinks?

> Conservative tax activist Grover Norquist

Now things are getting interesting.

> opposes IRS government tax preparation. > allowing the IRS to act as a tax
> preparer could result in taxpayers paying more money > calling return-free
> filing a "massive expansion of the U.S. government through a big government
> program."

> In 2005, Norquist testified before the President's Advisory Panel on Federal
> Tax Reform arguing against return-free filing. The next year, Norquist and
> others wrote in a letter to President Bush that getting an official-looking
> "bill" from the IRS could be "extremely intimidating, particularly for
> seniors, low-income and non-English speaking citizens."

> The letter says the IRS wants to "socialize all tax preparation in America"
> to get higher tax revenues.

> A year after Norquist wrote Bush, a bill to limit return-free filing was
> introduced by a pair of unlikely allies: Reps. Eric Cantor, R-Va., the
> conservative House majority leader

The article says Intuit spent $11.5 million lobbying in the last five years
(which in the U.S. is table scraps--see $30 million paid by Yahoo! for
Summly).

What is really more likely here. That Intuit has managed to buy the government
for $2 million a year, or instead that they've successfully hit on a message
(free tax filing = government takeover of return preparation) that resonates
with rightists and billionaires who have good reason to not want the IRS to
have any part in tax return preparation, not to mention ideologues who see
simpler tax filing as a slippery slope to making it easier for the government
to raise taxes without push-back (on the theory that citizens are more likely
to push back against taxes if they are forced to face the numbers every
April).

------
nawitus
This is one of the things that's done correctly in Finland. I've never had to
do my taxes, it's always been correctly pre-filled.

------
yyqux
Government sucks since it's inefficient and bureacratic and wastes people
time. In order to remind people of this fact we must ensure that it remains
this way so that people don't get the incorrect idea that government can be
efficient.

------
enduser
Those of you who live in Silicon Valley might consider writing to Rep. Zoe
Lofgren about this. The article mentions she is one of two Representatives who
co-sponsored a bill to limit return-free filing. From the article:

"A year after Norquist wrote Bush, a bill to limit return-free filing was
introduced by a pair of unlikely allies: Reps. Eric Cantor, R-Va., the
conservative House majority leader, and Zoe Lofgren, D-Calif., a liberal
stalwart whose district includes Silicon Valley."

------
cletus
There are two things that disturb me about the US government:

1\. As a whole, it seems to operate on the assumption of guilt; and

2\. It seems bought and paid for by special interests, pork barrelling and so
forth.

As a foreigner I of course have foreign retirement and bank accounts. If they
total more than $10,000 (at any point in the last calendar year) you need to
report them. This is FBAR (Foreign Bank Account Reporting).

Failure to do so can result in civil penalties up to the 300% of the balance
and/or criminal prosecution. Why? To fight money laundering, drugs, terrorism
or child pornography (every piece of onerous US legislation or prosecution is
justified by ostensibly fighting one of more of these things; even sharing
MP3s).

How are foreign retirement accounts treated? Are they taxable? How do you
report them? _Nobody really knows_. Just tick "Other" and write "Retirement
account" and hope for the best.

If your foreign assets are above a certain amount there is another separate
form you need to send to the Treasury department IIRC.

You can e-file this form... if you use Internet Explorer. The JavaScript
actually doesn't work in any other browser in a way that locks your account
after 2-3 attempts.

In Australia the ATO (Australian Tax Office) produces e-tax, which for most
people allows you to file taxes for free. But beyond that, the ATO doesn't
seem to have this same level of mistrust of its citizens that the IRS does.

In Australia it doesn't scare me to make an honest mistake. In the US it does.
This is not only for taxes but things like immigration issues.

In some European countries, once a tax return is accepted, that's it, it's
done. The government basically can't reopen that later in an audit. In
Australia I think they can go back 7 years. No idea what it is in the US.
Probably to the day you were born. Now I'm sure there are exceptions to that
rule (as in if you commit deliberate fraud) but the point of the system isn't
to punish innocent mistakes.

All the while corporations and high net-worth individuals get away with blue
murder as far as tax obligations go. The US could solve a lot of problems if
it treated foreign corporate earnings the same as foreign individual earnings
(in that you owe taxes on foreign income even if it isn't repatriated but tax
you've paid with double-tax treaty countries offsets that obligation).

Yes by all means send me to prison for failing to mention a $24,000 retirement
account in Australia I can't touch until I'm 65 instead. Great use of
resources.

EDIT: to clarify (2), which is the major point relevant to this article, I
don't understand why other governments don't seem so easily bought and sold
for a pittance (in this case $1.5M over 5 years).

Another example: toxic fire retardants used in pretty much all couches due to
a California law bought by an industry only worth tens of millions a year [1].

In the case of TurboTax specifically, I think so many people use them because
of (1) and the complexity of the tax system created by (2).

Many people use TurboTax. You can say that's because of lobbying but that's
only part of the story.

[1]: [http://www.nytimes.com/2012/09/09/magazine/arlene-blums-
crus...](http://www.nytimes.com/2012/09/09/magazine/arlene-blums-crusade-
against-household-toxins.html?pagewanted=all)

~~~
sschueller
Worst part is that we have to pay US taxes as well local taxes even if we
don't live or make any money in the US. If you live in a county with an
effective lower tax rate you have to pay the difference.

I take home less money than someone with the same job and same expenses. In
addition it's so cumbersome to file from abroad that I have to pay someone.

It's like the king of England collecting taxes from the ones who left.

We also have to declare the entire finances of any company that we own more
then 10 percent in which is a huge problem for the other 90 percent owners
that aren't Americans.

I don't think this will ever get fixed since Americans abroad also don't have
any representation in congress. :-(

~~~
niggler
"Worst part is that we have to pay US taxes as well local taxes even if we
don't live or make any money in the US."

You can resign your citizenship. I remember hearing reports of people doing
this last year (going to Singapore)

~~~
KMag
Be careful there. It's explicitly illegal to resign one's U.S. citizenship for
the purpose of reducing one's tax bill.

For instance, Saverin nominally gave up his U.S. citizenship in order to make
doing business in S.E. Asia easier.

~~~
jmadsen
This is not entirely accurate. Read further:

[http://en.wikipedia.org/wiki/Renunciation_of_citizenship#Tax...](http://en.wikipedia.org/wiki/Renunciation_of_citizenship#Taxation)

------
frogpelt
Frankly, anyone who does trust any government hasn't had very much experience
with them. At best, governments are inefficient and incompetent. At worst,
they are run by politicians absorbed with self-interest.

There are already scads of people trusting too much to other entities rather
than figuring it out on their own. These people leave their tax withholdings
at default levels, then walk down to the local Wal-Mart and trust the Jackson-
Hewitt crooks to do their taxes. Jackson-Hewitt files a 1040EZ for them,
charges $300 bucks and they leave happy because it will be automatically be
taken out of their $10,000 refund. They feel rich for about two weeks.

The solution is not more government nanny-state ideas. The solution is to find
ways to require people to be MORE accountable for their own well-being.

How about requiring every person who receives 10% or more of their yearly
salary back in a refund to attend classes on how to maximize their tax
benefits? It would be paid for out of their refund. After they go once, they
don't have to go again for 5 years.

If you're too dumb or unaware of your surroundings to know that you can file
your taxes for free with a little bit of effort, you need education.

~~~
lhc-
"The solution is not more government nanny-state ideas"

"requiring every person who receives 10% or more...to attend classes"

This seems like a bit of a non-sequitur. Don't provide an easy (and free) way
for people to submit their taxes without going to a CPA, but do force people
to go to some classes? How is that less of a "nanny state"?

~~~
frogpelt
I admit it sounds contradictory. I guess I equate a nanny-state to the
government taking care of something FOR you so you don't have to worry about
it.

To me, a required educational course about taxes and personal finance would be
akin to a driving course--not so much absolving you of responsibility as
preparing you to accept it.

------
fduran
Also unlike other countries from what I remember you mail your federal and
state tax forms and you don't even get a receipt or acknowledgement
notification, just hoping the envelope won't be lost.

A simple official paper stating your basic tax figures (gross/net income) can
also be used as a simple way to verify low income when asking for scholarships
and other financial aids right?

------
Symmetry
This seems to suffer from the same main weakness as attempts to simplify the
tax code. The people who most care about taxes and best understand alternative
systems are those who know how to work the current system. No doubt the Grover
Norquists of the world have accountants who can use differing opinions of the
rules to shave their tax bill. If our tax system was simpler or easier more
people would claim all the deductions to which they were entitled then taxes
would have to go up, but effectively only on those who already knew about all
the deductions.

We might all be outraged about this, but we're not going to change who we vote
for based on whether a given politician supports tax reform or not, we reserve
that for things that directly effect us like SOPA. Likewise people who prepare
taxes for a living will change their vote to punish politicians who are taking
away their jobs, but will ignore stuff like SOPA.

------
bjhoops1
David Cay Johnston covered this in one of his chapters in _The Fine Print_. If
you're looking to be incensed by more cases of corruption between corporations
and government, it's definitely worth a read. You'll also get to find out why
we in the US pay 38x more per bit of data transferred than the Japanese do!

------
readme
>Intuit argues that allowing the IRS to act as a tax preparer could result in
taxpayers paying more money.

Gee, you think? Thanks for saving us Intuit.

------
RougeFemme
Here in the state of Virginia, we never had return-free filing for state
taxes. But we _did_ have free online filing of state tax returns. It was
cheaper for the state to process the online returns rather than paper forms.
However, the legislature decided that it wasn't _proper_ for the state
government to provide for free a _service_ that should be provided by private
enterprise. So now your choices are to file paper forms (which costs the state
more to process) or file electronically, which, of course, costs you, the
taxpaer, money. . .but is quite a boon for private enterprise.

------
ericcumbee
"When you make an appointment for a car to get serviced, the service history
is all there. Since the IRS already has all that info anyway, it's not a big
challenge to put it in a format where we could see it,"

Say What?

------
HarlinAtWork
Personally I'm against any business lobbying to change laws to give itself a
competitive advantage. However, so that I don't have to pay more than my fair
share in taxes, I have to itemize deductions: business expenses and those that
I am entitled to. Until we can implement something more libertarian like the
Fair Tax plan, a lot of us are stuck with long tax forms unfortunately. An
online EZ form or a tax form that the Government fills out "on my behalf"
won't cut it. The Government will screw you as much as these scumbag
businesses.

------
hkarthik
US Tax reform is one of those things I don't expect to happen in my life time.
Our government is too addicted to the income stream it provides and is just
too scared to mess with it in any meaningful way.

All it takes is a fear monger with an agenda like Intuit to whisper "Our
experts estimate that you will lose $X billion in uncollected taxes with this
new scheme" to send congressmen from both parties running.

Ideally, we would see state governments take the lead here and innovate. If
they can show meaningful gains then maybe the Federal government will pay
attention.

~~~
brown9-2
If you read the article, it seems like there are at least several members of
the legislative branch in favor of reforming the tax filing process to
simplify things (and save taxpayers money).

The opposition comes from business interests whose revenue comes from helping
taxpayers navigating a complex code and processing.

~~~
sliverstorm
Are you suggesting he should actually read the article? Such nonsense.

------
just2n
Here's my idea. I suspect TurboTax would lobby against it as well.

Tax reform.

Woah. I mean make it simple enough that there isn't any need for tax
specialists, because it's just not that involved. Then filing takes seconds
for most people, audits are trivial, costs go down for everyone, and most
importantly, companies that shouldn't exist die (H&R Block, TurboTax, the many
law firms that help major corporations exploit tax loopholes). Win win win
win?

 _sigh_. Never gonna happen.

------
mikec3k
Why does anyone give a fuck what Grover Norquist says? He was never elected to
any office.

~~~
ceejayoz
He managed to get 238 of 242 House Republicans and 41 out of 47 Senate
Republicans to sign his pledge. He's not elected, but his adherents certainly
are.

------
jisaacstone
For the past three years I have filed my taxes myself, and every single time I
make a mistake +- $100 or so, the IRS sends a correction, I fill out more
paperwork and send payment / receive refund.

Y'all know this is inefficient. I spend at least 20 hours of work filing my
taxes each year, and as a fairly intelligent citizen I always make a mistake
anyway.

------
kyrra
I'm not sure what the tax code is like in other countries, but the US one is
pretty complicated due the number of write-offs you can add to your tax
deductions. A lot of those deductions are not reported to the government, so
it's up to you to figure out if its worth doing or just doing the standard
deduction amount.

------
niggler
FYI: this exists: <https://www.freefilefillableforms.com/>

I haven't used this personally for filing because it doesn't handle certain
forms like 1128, but I'm told it's pretty good for basic stuff

~~~
ScottWhigham
I think you're missing the point. The IRS has already received your
1099/W2/etc and thus it knows (a) your income, and (b) how much in taxes
you've already paid. By then having the IRS start your tax return for you, you
would no longer have to fill in that info. The IRS makes free forms available
already. Besides, are there actually people so stupid that they would give
their SSN/info to a site like that?

~~~
niggler
I think many of us here don't get paid by W2 or by 1099. We are compensated in
different ways which don't require those types of filings (e.g. K1), in which
case we do need to fill out forms.

~~~
greyboy
I can't speak specifically for the group here, but the vast majority of US
taxpayers by a large margin _are_ compensated via W-2 or 1099. Isn't that who
it should be optimized for, rather than outliers or exceptions?

~~~
niggler
To clarify, the vast majority of US taxpayers that are compensated via W-2 or
1099 are eligible to file under 1040A or 1040EZ, both of which are much
simpler and easier to deal with (and, incidentally, all of the major tax
preparers like H&R Block and Intuit offer free versions for those use cases).

The portion of that cohort that file 1040 (generally those that make over 100K
and have situations that make itemized filing more efficient than taking
standard deductions) is pretty small.

------
caycep
same thing is happening with electronic medical records. Why else does EPIC's
CEO donate heavily to Wisconsin congressmen, or sponsor memberships to the FDA
panels that oversee the guidelines and policies regarding these systems?

------
seivan
Hmm. How good is Turbo Tax, I mean I can tell it's horribly coded, but does it
have automated features/recommendations that will help you earn more? Or is it
basically what the tax system does in Swede/Finland etc?

~~~
k3n
They usually have a free version that is adequate for the most basic of
returns, and then all others require you to purchase something in order to
file through them. If you actually want the value-added services (such as the
recommendations you mention), then you pay even more.

The situation is a farce and a disgrace to our country; the pockets of a few
are getting lined at the detriment of the many. Wait, are we discussing taxes,
or healthcare, or big banks....?

~~~
gav
The free version is just for Federal, you have to pay to file your state tax
return.

What I find insulting is having to pay to file my taxes, then having to pay
sales tax on top of that.

~~~
k3n
Thanks for the clarification; luckily (?) I live in TX where we don't have
state income tax, and so I forget that.

Agreed about the "paying taxes on paying taxes", and of course the general
idea of there being a for-profit industry centered around a requirement of
citizenship. This is clearly another area that furthers the agenda of the
Plutocracy, whereby the wealthy are at a great advantage on account of being
able to afford a CPA to find all the loopholes.

------
ScottWhigham
To those saying "We should be more like Sweden/Finland!", I'd ask whether
those countries have a tax system that is also based on using tax credits and
deductions to lower your tax due? I don't know the tax codes in those
countries but my guess is that, because they use the tax entity-created
system, they do not have such a complicated tax code as the US.

In the US, you have two sides of this: (1) the IRS, and (2) CPAs, CPA firms,
and software firms like Intuit who profit from helping customers file taxes.
The question always is, "Why would I pay someone to file my taxes?" The answer
is, "If they can save you more than their fee, it's worth it." In other words,
if they charge $100 but save you $101 in "tax due", you have a net "win" of $1
thus you should hire a professional. Why does this work?

For the CPAs, CPA firms, and software firms like Intuit, you have a
professional who is taking your money and offers a reasonable expectation
that, as a result of using their software, you will save more money than you
pay in fees because they will help you find deductions and tax credits that
you would've been hard pressed to find yourself. These companies compete in a
free market for your money, both with other software companies and with
CPAs/CPA firms. The "winner" (for a particular user/client) is the one who (a)
has the best reputation of not getting you audited, and (b) who gets you the
best price:deduction ratio.

On the other hand, you have a government entity whose sole charge is to
collect revenue. Is their system going to be designed to help you get as many
deductions as possible? Are they going to prompt you to deduct moving expenses
(just to pick one example)? Maybe, maybe not. The question is legit though and
thus causes us all to say, "Wait a minute... maybe, since there is a financial
incentive for them not to show me deductions, that they will hide some of that
(or make finding it as complex as the tax code)."

If Intuit/et al help you save $5000 in taxes this year by helping you deduct
all that you can, Intuit/et al do not make one penny more - that money simply
stays in your pocket. And you probably smile, buy a new car/vacation/etc. And
you certainly tell your friends, "You should use Intuit!" If the IRS helps you
save $5000 that you would have otherwise paid (b/c you did not fully deduct
all that you could have), then the IRS loses $5000. That in and of itself
highlights the problem. Do you trust the IRS to say, "It's okay if we lose
$5000 - you're happy, right? That's what matters!"? Of course not. Having the
separation works in the US for this clear conflict of interest.

Again - I don't know the tax code of the Euro countries but I'd be interested
to hear if they have a similar setup and how they work around this. It's
logical to think that the IRS could invest $500 million building such a system
and then no one uses it because paying $30 to Intuit/etc results in a higher
refund for the above reasons...

~~~
arnarbi
I've lived in Sweden and Iceland, both of which have pre-filled tax returns to
be submitted either on paper or electronically. Sweden is particularly easy,
all I have to do is to verify the numbers and then send an SMS with a personal
code printed on my return. If I need to change anything, I log into the tax
office website, make the changes and submit.

I have deductions to offset paid interest. If I hire a person to do some
renovation in my home, the tax office pays half of the fee directly to them
and I get a deduction as well. I sold my flat this year and will need to pay
tax from the winnings, deducting costs. Almost all of this will be pre-filled.

In Iceland I had a slightly more complex tax situation. I filed jointly with
my ex wife. Mortages, minimum wage deduction (i.e. you don't pay tax of the
amount that is the legal minimum wage), property tax (house, cars), stocks and
bonds, bank deposits and earned interest, deductions for rent compensation,
was all prefilled.

Compared to this, filing my dead-simple US taxes with one deduction, filling
in a two page calculation worksheet, feels like the middle ages.

No matter the complexity of the tax code, there are systems in place for all
of them to evaluate and error-check tax declarations. The information is most
likely all there already. All you need to have is a way to authenticate tax
payers, and a front end.

And if I have a reason to think the tax authorities will not include items
that lower my dues, I can always hire an accountant to file for me. I simply
give them my "third-party filer access code" and sign the final return.

~~~
haakon
In Norway, if you qualify for simplified tax return (which I think most people
do), you don't have to do _anything_ anymore. You get a default pre-filled tax
return that you can access electronically (or on paper if you prefer), and you
only have to return it if you need to make changes.

~~~
mjn
Same in Denmark; you also get the refund automatically paid, if they owe you
anything, _with interest_ (0.5%, but still). I screwed up my withholding my
first year here (failed to apply for a tax ID at all, so taxes were withheld
by default at the highest rate). The next March I got a letter saying, your
taxes were over-withheld by large_amount. If this is incorrect, please log in
and fix it, otherwise we're going to deposit a huge pile of money in your
account in N weeks. Did nothing for a few weeks and the money showed up.

------
nico
"You'd open up a pre-filled return, see what the government thinks you owe,
make any needed changes and be done. The miserable annual IRS shuffle, gone."

That's how it works in Chile, for about 10 years now :D

------
warmwaffles
It's also another source of income as well for the IRS. Intuit makes money off
of selling their product, their earnings get taxed.

~~~
FireBeyond
The IRS is funded on a needs basis, not as a percentage of tax revenue.

------
bjhoops1
We the People white house petition, anyone?

------
fakeer
Can't you sue your Government for this crime?

It's a crime, isn't it? Your government is doing it on the behest of all those
companies who fund the lobbyists. You must be having some public litigation
system.

It disturbs me when in countries like USA such policies that directly and
greatly affect the citizens are controlled by lobbyists. My hope and
enthusiasm for changes in my own country dims by a bit.

(BTW taxation has become very simpler off late here, relatively I mean).

------
theorique
All taxes are theft of the private property of free citizens.

~~~
yyqux
So taxes are morally equivalent to stealing? I think taxes are ok, so stealing
must be ok too. I'll be over at your house to take your stuff in a jiffy!

~~~
theorique
That wasn't the moral lesson I was aiming for ...

------
nathanb
OMG big business is trying to ruin my life!

The government are not incentivized to do a good job preparing your taxes. I'm
not a tinfoil-hat conspiracy theorist. I don't think the US government wants
to institute a program to systematically defraud the population. But I do
believe that governmental inefficiency and incompetence is nigh-limitless, and
the very people who may need their tax returns the most could end up being
cheated out of them, not by malice but by indifference or stupidity.

(And there are many opportunities for the poor and underserved to have their
taxes prepared for free. Many credit unions will do it, for example, and they
are incentivized to do a good job because the tax returns will likely pass
through their hands).

I realize the counter-argument is "but you can just opt-out if you don't trust
the government". Sure. I can also choose to drive if I don't want my civil
liberties violated by the TSA (and I do, except when traveling
internationally). If the easiest and most convenient option also involves
giving away rights, most people will take it. And then when later it turns out
that it's being abused, there will be insufficient infrastructure in place for
many people to choose an alternative.

I hope this is just paranoid ranting.

~~~
UnFleshedOne
So, to extend your analogy, if flight was just invented and a flight transport
system was being proposed now, you would argue against it because TSA would
start violating your liberties when you use it and deterioration of existing
horse carriage-based infrastructure will make opt-out a non-option?

~~~
nathanb
Sure, if you want to convert my argument into straw-man form to more
effectively belittle it, that is a very effective way to do so.

A more accurate way to extend the analogy to transportation would be a company
starting a free bus service for lower-income neighborhoods. All you have to do
is link your grocery store rewards card and scan it every time you use the
bus, which will authorize the company to access all your purchase data from
that card.

You could very easily argue that this is a good thing, and perhaps at the
outset it would be. But if it turns out that the company is doing something
sleazy--rewards cards sometimes also encode personally-identifying information
which could be used unethically, for example--then at that point a person's
livelihood could very well depend on continuing to use that bus system,
especially if the convenience of the system forced other free or low-cost
alternatives to stop serving those neighborhoods.

In both of these cases (the IRS preparing your taxes and the company holding
your personal information), the organization is not incentivized to do a good
job. In fact, especially in the IRS case, the worse a job they do, the more
tax money the government takes in.

~~~
UnFleshedOne
Ah, that is much better analogy, yes. I don't think IRS _necessarily_ has no
incentive to do the job properly though. If government didn't want those
deductions and tax cuts used, they would not introduce them in the first
place. Excluding the cases where the cuts were made based more on politics
than on policy. No idea what proportion that would be.

Tax deductions are (supposed to be) made not because government wants to give
people a break and be nice, but because it wants to influence certain
behaviors. If those cuts are not used then they don't serve their original
purpose, so that is an incentive for IRS to count deductions properly.

