Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

If it makes filing easier and automatic, wouldn't the returns be submitted earlier, thus negating part of that 1-2 month delay?


The reverse, actually. Here's the trick:

Tax filing opened this year on January 23, 2017. This is the first day you can submit your return to the IRS. The IRS aims to process refunds for 90% of returns in 21 days.

In order to pre-fill a tax return (and, incidentally, to validate that your tax return is correct), the IRS needs information. You're familiar with the acronyms: W-2, 1099, etc. These are called Information Returns (IRs). Depending on the type of IR, these are due to the IRS (from your employer or bank, e.g.) by January 31, February 28, or March 31. I didn't get my 1099-INT from my bank until late-February, for example.

Now, do the math.

The IRS cannot pre-fill a return until March 31 at the absolute earliest. That ignores further processing, mailing, approval, etc. time. But for those taxpayers who filed on January 23, most had their refunds processed by February 15.

So pre-filling tax returns delays the process by 2 months.

There's a very "strange" circular logic here, too. In today's system, you shouldn't file your tax return until you have all your IRs. But you might know that you're not expecting anything in February or March, so you can file "early". But the IRS doesn't know that. They only know that you don't have that associated income when they don't receive anything by the deadline.

Incidentally, this is how fraud happens. I file a fraudulent return on 1/23. The IRS doesn't have the information to validate whether I'm lying or not: they won't receive that information for another 2 months. So the run some basic risk algorithms, then shrug and assume I'm telling the truth and pay me my refund (probably in the form of an untraceable debit card). This happens all the time, usually in the form of filing returns in the names of other people, often dead people or Puerto Rico residents (due to some arcane rules relating to income tax immunity given that PR is a territory).

(People make "mistakes" all the time. Small amounts are waived, and the IRS sends collection letters to the rest. The collection rate of those letters is very, very good. Though I have some good stories about government [in]efficiency. Those letters are not "audits", by the way, but friendly reminders. Audits are really rare, despite our fears.)

The other answer is "move up the deadlines". Make employers and banks file everything by January 15 or something. Good luck with going up against every single large employer and financial institution in the States!

And now you know... the rest of the story.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: