
Would You Let the I.R.S. Prepare Your Taxes? - scott_s
http://www.nytimes.com/2015/04/16/technology/personaltech/turbotax-or-irs-as-tax-preparer-intuit-has-a-favorite.html
======
wtbob
Of course I would, _since they already do_. Whatever I submit is checked by
them anyway, and it's generally too expensive and painful to challenge them.
So…why do I have to pay the Intuit tax every year?

~~~
vonmoltke
No, they don't. They don't know how much I paid in sales tax, property tax, or
mortgage interest. They don't know how much I donated to various charities.
They don't know how much I made from cash jobs. They don't know how much my
small side business made or lost. There are a whole slew of variables the IRS
doesn't know until I tell them, and that they take my word for until and
unless I get audited.

~~~
dragonwriter
They actually do know many of those things--e.g., mortgage interest you get in
a 1098 is also filed with the IRS. There is no reason the IRS couldn't pre-
prepare returns based on what is already required to be filled with them and
precomputed taxes based on them, and still provide you the option of providing
additional data. It would be easier for those work no additional info but also
for those who needed to put some additional info, as a lot of the work that
needs done now would already be done.

Well, there is a reason, and is that tax preparation software and services
companies spend lots of money lobbying Congress to keep the existing system
since simplified filing would kill much of their business.

~~~
vonmoltke
I used to be in an investment partnership and prepared the tax returns for
said partnership. We filled the return out and sent it to the IRS in parallel
with the members getting their K1 forms. The members actually got the forms
before the IRS did. In order for the IRS to know what each member should have
on their return the IRS would have to process the business' return first.

All those other forms are the same way. 1098s and 1099 are sent to the IRS at
the same time they are sent to the taxpayers. The IRS takes who knows how long
to process those forms from all the various generators, and it is highly
likely that most people are done with their tax returns before the IRS gets to
the forms submitted by the banks and brokerages. Same thing again for W2s.

So yes, the IRS has all this information. Eventually. They do not have it by
the deadline they set for people to make their tax accounts right.

~~~
scott_s
That the IRS does not have all of the necessary information until after
individual tax returns are due is probably _because_ people have to file their
own taxes. They don't _need_ those forms until people file their own taxes,
because they don't need to verify until after the taxes are filed. That can be
changed, if we want the IRS to send people provisional reports that say, "Here
is what we think [you owe | we owe you]. If you agree, sign and return.
Otherwise, file using the appropriate forms."

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pktgen
> A racket is a service that is fraudulently offered to solve a problem, such
> as for a problem that does not actually exist, that will not be put into
> effect, or that would not otherwise exist if the racket did not exist.
> ([http://en.wikipedia.org/wiki/Racket_(crime)](http://en.wikipedia.org/wiki/Racket_\(crime\)))

Can someone explain to me how this description does not apply to Intuit?

~~~
maxerickson
The answer you aren't looking for is that Intuit doesn't actually control the
US government.

~~~
pktgen
It's clear they have significant influence on this matter.

~~~
maxerickson
If you could convince legislators that their constituents cared about the
issue (in meaningful numbers), the lobbying would be irrelevant.

The lobbying just looks like a lot of influence because it is more noticeable
than all the not caring.

~~~
sobkas
You know that people that use lobbying will almost always care more, because
their money is on the line? Also they are willing to use that money to prove
it?

~~~
maxerickson
Yeah sure. What does that have to do with my comment?

My point is that legislators are almost universally dedicated to keeping their
jobs and will pretty much limit their responses to lobbying to the situations
where it won't lower their chances of getting reelected.

~~~
sobkas
Because they need contributions(direct and indirect) to get (re)elected or
even able to be a candidate? And there are other ways to use money to
influence this?

~~~
maxerickson
The 2008 presidential election certainly showed the impact that pulling in the
right electorate can have on the result of an election (in some literal sense,
the Obama campaign got more people on their side to care enough to vote). I
think that is the most powerful effect money can have on an election.

I don't think campaign dollars have such a big impact on the elections of
Senators and Representatives. Maybe Senators, but for representatives, the
primary force right now is the shape of the districts.

What I'd like to see is the removal of the special seats that the parties have
at the table. Make it staged signature collection for everybody, for
everything.

(staged in the sense that 5 signatures would be enough to be the only name on
the ballot but not enough to show up next to 3 other people that collected
1000+ signatures)

~~~
sobkas
Shapes maybe indicate that Democrat or Republican wins, but doesn't indicate
with one. With enough money you can outdemocrat any Democrat or outrepublican
any Republican. After election they better play ball or next time no one will
give them any money.

------
ern
_“It was a huge signal to politicians everywhere how much Intuit cares about
this,” Mr. Bankman said. “People in other states who had been interested in it
started saying, ‘We just don’t want to pick a fight with Intuit.’”_

Intuit is not a human being. It is a corporation. A legal fiction. It doesn't
"care" about anything, nor does it have fights picked with "it". It can't
autonomously decide to spend millions on lobbying. There are executives who
make decisions to keep the tax system complex through lobbying, so that they
can extract wealth from the rest of us and enjoy it for themselves and their
families.

I understand that this is a standard reporting convention, but reporters need
to call the executives who make these decisions to account. They shouldn't go
to corporate PR to do this.

Once the media and public refuse to buy into corporate person-hood, we could
see corporations behaving better.

~~~
JoeAltmaier
Agreed. My litmus test is, unless you can name a person, then the statement of
intent is meaningless. E.g. when I get emails from 'corporate HR' I delete
them without reading them.

------
Demiurge
I have done taxes using the free way historically, on TurboTax. This year, I
again opted for 'no charge' option, went though, and at the very end had to
pay $104.00 without any explanation. I tried going back but I couldn't find if
I had mistakingly selected something because they throw in payed options as
you go. But I couldn't find or change anything, so decided to file instead of
doing taxes the old fashioned paper way. I still have a bitter feeling, like I
got scammed. I talked to a few friends and they had similar experiences,
especially their older parents ending up paying more then a hundred dollars. I
really hope IRS filing will happen, but with the amount of money they are
skimming off poor folks and insider lobbying, I can't imagine it will.

~~~
lostcolony
Time to switch to TaxAct?

~~~
Demiurge
Thanks for the pointer. Definitely, next year.

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kire456
> Then Intuit mobilized against ReadyReturn, hiring lobbyists to oppose the
> effort in the capital and financing candidates who pledged to overturn it.

> “People in other states who had been interested in it started saying, ‘We
> just don’t want to pick a fight with Intuit.’ ”

Excuse me for not understanding US politics, but.. How is this not considered
blatant corruption?

~~~
TheCoelacanth
SCOTUS has decided that it's not corruption unless there is quid pro quo. In
this case, the pro part is missing, because Intuit gave them money, and the
politicians did something to benefit Intuit, but it can't be proven that
Intuit gave them the money for doing it.

------
1971genocide
As an non-american this baffles me.

Why is there so much distrust towards the government, police, and military in
US ? Isn't the US the oldest democracy ?

Society is built on trust - once that doesn't exist then nothing gets done.

~~~
onion2k
_Isn 't the US the oldest democracy?_

No. Not by about 2500 years in ancient Greece.

~~~
maxerickson
I think for the connotation in the parent comment you might say that the US
became a democracy in 1920 or 1965 (but we still deny, for instance, children,
the right to vote).

(at least, I tend to think that the modern concept of democracy is bound up
with self determination, something that ancient Greece sort of did not have,
nor did the US when it was founded)

~~~
jlebrech
if children could vote, the world would be too fun to handle.

------
hundt
I volunteer through the IRS-funded program to help low-income people file
their taxes.[1] I see a few dozen returns per year, and I don't know how
representative they are of the "typical" return.

I would say maybe 30% of them would be done correctly if they were filled out
automatically based on what the IRS knows. The great majority involve one or
more questions like:

\- (Education credit) When did you actually pay the tuition that your school
reported to the IRS as "billed"? What kind of degree program are you in?

\- (Dependents) Did you provide most of your brother's support for the year?

\- (Earned income credit) Is your child a full-time student?

\- (Married filing separately) Is your spouse going to itemize deductions this
year?

\- (Self-employed) What business expenses did you have?

\- (Obamacare) What months did you have health insurance for? Do you qualify
for any of the exceptions for the individual mandate penalty?

\- (Mortgage interest deduction) Was this a home equity loan?

\- (Gambling income) Did you have any offsetting losses?

As I said, I don't know how representative my sample is, but based on my own
anecdotal experience, I just don't buy that the vast majority of people could
have their return correctly prepared by the IRS without a TurboTax-like
questionnaire. I would like to see more evidence for that claim.

If we're talking about greatly simplifying the tax code, then that's one
thing. Or if we're talking about the IRS developing their own version of
TurboTax, fine. But the idea that "the government has everything they need and
only lobbying from Intuit is preventing them from just doing your tax return
for you" strikes me as highly suspect.

[1] [http://www.irs.gov/Individuals/Free-Tax-Return-
Preparation-f...](http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-
for-You-by-Volunteers)

------
zamalek
> If you’re a typical American and you get this packet from the I.R.S. that
> says, ‘Here’s what we’ve determined your liability is,’ no one is going to
> challenge it

That's the biggest load I have ever heard. I have anecdotal evidence that the
theory is incorrect (in South Africa we get filled-returns): _all_ my friends
validate, or pay someone to validate, their returns. Mr. Ellis has absolutely
no evidence what-so-ever in support of his theory.

~~~
_asummers
I would argue that the trend of Americans never challenging phone/cable bills
suggests that his theory might hold some water, at least in the US. If the IRS
shows a really good track record of not screwing them up in any way, people
will just accept it as free money, only challenging when they owe money.

------
rayiner
People saying "Intuit controls the government" are missing the forest for the
trees. The IRS doesn't compute your taxes and send you a bill because then
you'll forget you ever had the money in the first place. Lots of people want
to make paying taxes painful, so once a year you have to spend hours facing
the reality of how much money the government is taking from your paycheck.[1]
Intuit just jumped on the bandwagon. It's a probably the most common lobbying
tactic: support a position that politicians want to do anyway.

[1] It works too. We love paying our taxes, but my wife and I have been
stewing for a week about the patriarchal bullsht that is the marriage penalty.
The problem is that the rage subsides by Election Day--they should move tax
season to October.

~~~
acheron
I would contend that's the opposite of what happens: most people get their
taxes automatically withheld so they never saw the money in the first place,
and then get a small refund after filing. If "we" wanted people to actually
see how much money they were paying in taxes, we'd end automatic withholding.

~~~
mrsteveman1
It's been my understanding that a significant portion (perhaps approaching >
90%?) of the funding for federal spending during a specific year comes from
those "pay as you go" sources, i.e. withholding and quarterly estimated tax
payments for those not subject to withholding.

If that's the case, wouldn't the end of withholding (and presumably also
quarterly estimated payments since they serve the same purpose) leave the
federal government with a serious inability to "pay the bills" throughout that
tax year?

~~~
harryh
No. The gov't would just borrow against the expected revenue windfall in
April.

The problem is that people wouldn't save enough money to pay their taxes and
wouldn't be able to pay. It's the same reason your landlord expects you to pay
monthly and won't let you pay yearly.

------
higherpurpose
In other countries it's the employers that pay pretty much all of your taxes.
They just keep the taxes from your salary and then when they pay their own
taxes they also pay yours.

I do think there's a slight disadvantage in having the taxes essentially
"hidden away from you". This could be somewhat alleviated if instead of 10
different taxes there are just 2 or 3 at most, to make the whole thing more
understandable.

However, ultimately the benefit of having the taxes automatically done for
you, not having to "get into trouble with IRS" or other such issues, is a much
bigger benefit than the drawback of having the taxes somewhat hidden from you.

~~~
runarb
Is it so that employers don't subtract your taxes in the US? How does that
work? Do you get one big invoices in the mail for a year of tax?

Here in Norway one normally pays around 45% of one's salary in tax. The
employer has to subtract the money from your pay directly. Because no one sees
the money before it goes to the government, many people don't really think
much about it. If that on the other hand got one big bill at the end of the
year I think there would have a lot more outcry on all the waste of taxpayers’
money that is going on.

~~~
rtkwe
In the US there's commonly withholding on your paycheck for your state and
federal income taxes and Medicare/Social Security. You can tell whatever
company does your paychecks to withhold more or less depending on if you know
you have a lot of deductions (married, supporting children, etc.).

On my paycheck I have a break down for how much is being deducted this period
then year to date.

------
astraelraen
I am a CPA and unless you have dealt with the IRS over the long-term, I think
most of America has no idea how incompetent the IRS is.

You would be frightened if they prepared your taxes for any more than the
simple return, ie some W2s. I would not even want the IRS to automatically
prepare taxes for "simple" forms such as 1099-Int/1099-Div or 1099-B for stock
sales.

And I do not say that from a "job security" perspective for the tax work we
do.

The solution isn't government prepared taxes, it is less taxes.

~~~
jeffasinger
I agree, and I stand no benefit in job security from not having the IRS do it.

The IRS will assume that the entire 1099-B is income, even though your cost
basis (and therefore actual income) is right on the form.

That said, I'd love to see Intuit go away.

~~~
quesera
The 1099-B that you see is not always what the IRS gets. Specifically, cost
basis is sometimes not reported. This will sometimes be noted on the form.

------
belorn
I am a bit confused by the article, where it initial talks about how the
system would be return-free, and that it would save everyone from doing
record-keeping. But later, it talks about a system very similar to Sweden
where tax returns has been prefilled with financial data, which people have to
verify and sign. That system is not return-free and you still need to do
record-keeping, since the numbers reported in by the employer could be
incorrect.

------
towndrunk
I dumped TurboTax years ago... very happy customer of TaxAct.

------
timedoctor
This is a ridiculous idea. Might work for people who have a very simple tax
return but the IRS could not possibly calculate my tax return it's incredibly
complicated and is not based only on information that they have access to.

~~~
UnoriginalGuy
So what you're saying is "It might work for 90% of the population with only a
single job, but since it doesn't work for me personally, let's not."

------
ende
I always wondered why the IRS doesn't just deploy its own turbotax-like app.
Then the fiasco with the health exchanges happened. So maybe government just
doesn't do GUIs then. How about at least a RESTful API?

------
rmxt
These comments should be merged with this submission:

[https://news.ycombinator.com/item?id=9381437](https://news.ycombinator.com/item?id=9381437)

------
fnordfnordfnord
If it came with some sort of indemnity from audit penalties, and as long as I
could amend or re-file with my own calculated return, yes.

~~~
masklinn
> If it came with some sort of indemnity from audit penalties

Not really possible, after all you may have income streams you must declare
which the IRS is not immediately aware of, and failure to declare those would
be an audit failure.

> and as long as I could amend or re-file with my own calculated return, yes.

If it's anything like most of the developed world (which I'd expect), the tax
authority's automated systems simply pre-fill the declaration with what they
know, it's expected that the taxpayer will check and amend it, or ignore it
entirely if you want to file "from scratch".

~~~
fnordfnordfnord
Of course it's possible. It may not be likely.

>...the tax authority's automated systems simply pre-fill the declaration with
what they know,

That's the minimum that they ought to do, disclose what they know, and
guarantee that they haven't provided you with incorrect information.

------
dredmorbius
Hell yes please.

