Interesting article but it sounds like all the author had to do was schedule an appointment and wait 30min.
Also the conclusion is discouraging: rather than make self payment easier, the IRS easily has the information available to estimate and deduct taxes as they are due automatically or via an easy online form. Turbotax and other providers lobby against this for good reason, because with TurboTax you still have to input information and calculate taxes whereas with the IRS they have the data available already.
The conclusion I drew from this article is the most annoying and tedious part of this process was manually calculating taxes well in advance, which I’d be willing to bet took significantly longer than the commute to the IRS office + 30 minute wait.
The article mentions that they were "lucky" because in many places throughout the country, the physical location they would have needed to visit would have no available appointments until after taxes were due. Further, it wasn't a 30 minute appointment, it was a 30 minute appointment made well in advance, after which they (illegally?) _refused refused cash payment_, followed by another 30 minute appointment a week later. Except it wasn't timeboxed to 30 minutes because they didn't bother to tell them (or didn't know) how long it would take to make this simple transaction. Notice your options are to 1) have a bank or 2) use non-traditional digital means which all charge some form of "convenience fee" or 3) suffer major hassle to pay cash without surcharge.
Conversely, in many locations throughout the country (Fargo, ND being one of them), you can walk into the IRS building without an appointment and converse directly with an agent who will happily take cash, almost every day. They didn't want to go somewhere else, so if cost them just over a week in process. There are costs to living in bureaucratic hotspots.
It's not illegal to travel large distances within the USA while carrying large amounts of cash. But it is extremely risky to do so because it can be seized by any number of law enforcement agencies and will leave you with little to no recourse on getting it back.
Somehow, law enforcement seems to be aware of when a large cash withdraw was made recently. The only time I was ever asked during a traffic stop, "are you carrying with you a large amount of cash" was about a week after I withdrew $12k from my bank account (and signed a buttload of forms for the privilege).
Fargo ND may be one of the least accessible cities in the continental US relative to where people actually live. I assume they at least have an airport but it’s still going to be an all day trip, probably overnight, from where I live.
Remote areas don’t get a lot of foot traffic isn’t very helpful.
With multiyear budget shortfalls and high costs of living in major bureaucratic hotspots? I doubt this very much. That might be a goal, but probably not one that is regularly achieved.
You will notice that much of the de-facto mission of government for the past ~50 years has been to replace a given institutional function, for which there is a clear and attainable path to effective implementation for the good of the public, with a private middleman who may or may not be friends with/former colleagues of/funding the election campaign of an interested politician or bureaucrat (or to prevent the reversion thereof). You may argue that this is somehow more cost-effective or efficient, but it's happening all the same. So much energy is invested in the great battles involved in this mission that we have no time or funding to address the new and pressing dilemmas which as-of-yet have no solutions, public or private.
Making the calculation part tedious is as shifty as it can be. The cash part might be a tad more reasonable though.
For context, other countries are also progressively nudging people away from cash, or any in person payment means really. France gov will straight refuse any payment above 300E at the tax office, be it by cash, check or credit card. The goal I assume is straight up to simplify their operation, as there's no middle-men, and they otherwise do serious efforts to make it easy for the tax payer.
Just want to reinforce, probably the euro does not, but all US currency contains the phrase "this note legal tender for all debts, public and private" which indicates that the IRS must accept cash, they can't refuse it.
The “private” part of that is not enforceable. Though I’d personally love if it was so I could buy a cup of coffee at an airport in 2023 without using an app or credit card.
yes, the private part of that is enforceable, but it says "debt". So, a retailer can say "no cash" but if you somehow are in debt to a retailer (say for example that you already ate the meal at the restaurant), you are allowed to settle your debt with cash, all debts, public and private. If they try take you to court or try to press charges, if you're waving cash, they are out of luck.
But if they made it clear at the time of ordering that they didn’t accept cash, then a customer who orders knowing that’s the only payment medium they have would presumably be the one breaching the contract when they weren’t able to pay? I guess the remedy to that would be to create a debt, but I’d also presume that could also include any other damages incurred by the coffee vendor for facilitating the cash payment.
For instance, someone
should probably be barred from paying a personal debt of 1000 dollars in 1 cent coins. I couldn't google my way through the US code, for illustration this is the Singapore limits:
I have a family member that works for a county court and they've had court ordered payments paid with a wheelbarrow of pennies before. Made the person count out the entire thing before accepting it.
Hmm. It is pretty easy to file for an extension, which would I guess put you past the busy time for the office. Although I guess one would want to double check and make sure they don’t end up with some penalties.
Tangentially, if you use USPS money orders, it has a fun side effect of making any fraud carried out with money orders, i.e. buying something on Craigslist, into a federal crime. Which is investigated by USPIS (United states postal inspection service).
The downtown Boston tax office is 2.5 miles from the author's workplace. He could have walked, biked, or taken the MTA, which would be free if it already had a monthly pass. The MTA planner says it takes 21 min at the fastest.
Estimate, but not calculate exactly. If you're deducting say, taxes for employment throughout the year, and then I carry out some trades that result in capital gains or losses that change me to a different tax bracket, the amount you deducted is now too much or too little, meaning someone's got to pay something at the end.
We DO have withholding measures in place to minimize payment necessary at the end -- but the idea that this can be done as we go fails to take into consideration factors that simply can't be foreseen with certainty.
Never mind the fact that while many people are happy to give up time value in favor of convenience, paying your taxes early means not having that money working for you, in, say, money market funds, or treasury bills, or some other such safe place where it can be held until it is due. Especially with interest rates on the rise, it's not clear that everyone would be particularly thrilled to give up this time value.
W2 withholding is set at a fixed rate at the beginning of the year. If you get a raise mid year, that typically isn't adjusted to zero out at the end of the year and you end up overpaying. Add in all the potential deductions the IRS can't anticipate and isn't really possible to make tax payments exact.
This is the painful part about working jobs where you receive the bulk of your income in relatively few paychecks. You end up grossly overpaying on your taxes because they are essentially assuming that's the amount you receive every paycheck and withhold taxes accordingly. So if you work a boat load of OT every other pay period, and receive like $3k for the first half of a month, and $7k the next pay period, those $7k paychecks are taxed assuming you make $7k * 24 =168k each year, when, in reality you make $120k a year.
There's no good way around this either (to my knowledge). Other than maybe jacking up the number of dependents you have.
Yes, the standard withholding methods produce poor results when pay does not arrive evenly through the whole year.
It is possible for employers to use alternative methods. IRS Pub. 15-T sec. 6 has details on common alternatives and constraints.
I have no idea to what extent employers support any of these alternative methods. I imagine it's limited to employers where much of their workforce is overwithheld using the standard methods. One example might be a school district where teachers are only paid when in session.
Overpaying: so the IRS issues a refund. That's part of the process.
Deductions: 86% of tax returns use the standard deduction. It's OK for the IRS to assume that the standard deduction will be used unless the taxpayer tells them that they want to itemize.
> Overpaying: so the IRS issues a refund. That's part of the process.
Isn't this a 1 way street where the IRS wins?
For example, if you underpay don't you have to pay interest at a set rate for the whole year you underpaid where as if you over pay you'll get interest from April 15th until the time it takes to receive your refund which might be a few days or a couple of weeks?
If you file on time but underpaid estimated taxes, you only get a penalty if it’s more than than the greater of $1000 or 10%, and a variety of other conditions don’t apply (not tax advice, see Form 2210 for the gory details).
For the average citizen, a little bit of opportunity cost is much less important than the costs of getting hit by a surprise bill, so it makes sense to err a little bit on the side of overpayment when filling out your W-4.
If you overpaid, why would you wait until April 15 to ask for your money back if your biggest concern is not giving them an interest free loan? I filed in February and had my refund in about a week.
> why would you wait until April 15 to ask for your money back if your biggest concern is not giving them an interest free loan?
It's not always possible to file accurately that early.
A number of investment related tax documents don't come until March 15th at the earliest. Then you probably need to wait for your accountant to prepare everything, you review everything and finally you officially file it. For me personally this usually happens near the end of March. Realistically it can't be any earlier.
Also, if you're self employed chances are you're paying quarterly estimated taxes to avoid penalties. You're giving them money as early as a few months into the tax year. You also need to make sure you don't underpay or you can get penalties and you also owe interest. You either give the IRS an interest free loan by overpaying throughout the year or risk losing money.
The W-4 asks about things that change income like 401k contributions. If you think you'll itemize taxes (keeping in mind that the vast majority of people don't), there's also a space to put that amount so that you're withheld correctly.
Here in NZ it's as easy, except you can put your donations in ahead of time (as you make them) and get the donation tax refund right then, not wait for the end of the year
In the US that's not possible because you only deduct charitable gifts if you itemize, and you decide that after the tax year when you file. Your employer can reduce your pay and give a gift on your behalf, which is essentially the same thing.
Although usually the best thing is to donate stock with high gains to avoid future capital gains tax, but you have to understand a lot of tax rules to realize that's a good idea, and there are plenty of extra forms to file at tax time.
In NZ we generally don't have ANY deductions (nor a tax on capital gains) - this makes filing tax easy - if you have one employer chances are they got your tax exactly right - most people don't even need to file - and certainly none of that fluffing around telling your employer how many 'deductions' you want them to fudge your PAYE with. As an employer it's equally simple, I do my payroll with a simple line in a spreadsheet.
NZ doesn't have a separate capital gains rate like the US, but capital gains are still taxed as income, so donating stocks might actually be more worthwhile there unless there is some special tax treatment. Obviously simplified filing is nice.
> Interesting article but it sounds like all the author had to do was schedule an appointment and wait 30min.
Two appointments. They stood him up during the first one, and wouldn't take his money.
It's also interesting how much effort they put into dissuading, people to pay in cash to the point of encouraging actions that would waste money on all kinds of fees:
> For people without bank accounts, their only option for paying taxes shouldn’t require paying fees to credit card processors or retailers—especially since they are likely among the poorest taxpayers.
> IRS easily has the information available to estimate and deduct taxes as they are due automatically or via an easy online form. Turbotax and other providers lobby against this for good reason
It's funny how people accept this lowered quality of life despite it being common knowledge that the IRS is purposely worsened to benefit private corporations.
>It's funny how people accept this lowered quality of life despite it being common knowledge that the IRS is purposely worsened to benefit private corporations.
You can apply that to education, healthcare, public transport, security.
Virtually every aspect of life in the US right now is made worse than it would otherwise be so that private corporations can extract profit.
"Whimsical" now means "making pointless work for yourself and everyone else" and seems rather close to "speed-running" ("slow-running"?) a bureaucracy for social media clout. Really, really pitiful social media clout.
> If the government wants everyone to pay their taxes, why doesn’t it make it as easy as possible?
Various people in congress want it to be complicated so that people will be even more unhappy about paying taxes.* This is the same reason states require sales taxes to be specified separately and one reason VAT/GST has been repeatedly rejected in the US.
* I am not unhappy about paying taxes. I get a lot of services more cheaply than I would through the private sector (and some that make no sense to be privatized)
That and massive lobbying from TurboTax and similar companies. There is also concern that millions or at least hundreds of thousands of accountants would be out of work.
that would not make any sense. a VAT of the same % value would lower the total tax paid because in a resale only the increase in price is taxed not the whole price.
I really want to see what would happen if the "taxes are theft" crowd actually lived in a society without taxes.
I suspect they'd go maybe a couple months before they were like "hey we should pool money together to fix the potholes in the roads". And eventually they're going to form something that looks a hell of a lot like a government, and they're going to have to collect something that looks a hell of a lot like taxes. And then give it a couple of generations and you'll have a brand new bunch of human house cats crying "taxation is theft".
Which is why the only practical thing to do with libertarians is to ignore them.
I've heard about that, it went about as well as one might expect.
I find it really bizarre because it's like they didn't even try. They really just thought that they could completely gut all of the government services, replace them with nothing and the wonders of magical capitalism would just handle everything.
There is the concept of economic externalities[1] that drive costs up in ways that people don't even think about.
Like mail delivery. If you didn't have paved roads and police then all of your deliveries would have to be, essentially, in armored cars with good shocks (i.e. almost off-roading capabilities). The cost of operating those vehicles is high, and the costs to you to ship a parcel would also be absurd. FedEx can get a shipment to you in 3 days because there is a robust infrastructure that isn't besieged daily by robbers
This isn't an abstraction: Wells Fargo got its start moving money across the "wild west" in armored transports. There was a reason for that, and they were often the only (expensive) option for shipping if there wasn't a train or regular trade route though rural towns. They even had custom shotguns (the original "coach guns" made for that specific purpose.[2]
It makes perfect sense when you realize their world view was based in naivety and ignorance and belief. They quite literally believe that capitalism magically fixes everything.
The sane reaction to that is "hey our government kinda sucks, we should change it via (voting/protesting/a coup/a revolution)" or if you're a bit more cynical "hey our government kinda sucks, I'ma start working on getting citizenship/a visa somewhere else".
Not "hey we should live in magical fairyland where nobody collectively organizes anything but I still get to live almost exactly as I do now".
(Also potentially workable: "hey our government kinda sucks, I'm going to go and live on a commune with a small enough number of people that we can actually coexist based on general kindness and goodwill")
>The sane reaction to that is "hey our government kinda sucks, we should change it via (voting/protesting/a coup/a revolution
That's not a sane reaction; insanity is doing the same thing over and over again and expecting a different result. The military industrial complex is not going to be killed through the democratic process, because it owns both sides.
The underlying philosophy embedded in your statement is part of the issue in America in recent years: people have become apathetic. A representative government isn't a one time and you're done deal. It requires lots of people to genuinely put time and effort into it.
Multiple times in the US'es history we've had even more greed, corruption, poverty, etc, but protests and social movements helped reset the needle. Things like normalizing 8 hour work shifts had to be fought for.
Currently both major parties get away with a lot of what they do because most of us don't participate and force both sides to answer questions and be accountable. Like, I think pushing for non-winner takes all voting at some levels would be good. But I don't goto local party events or involve myself, so I can't complain too much.
If you're referring to the F35, I encourage you to look at the evidence about it. LazerPig [1] does a great job in presenting some of the hair brained ideas of reformers [2]. I used to be firmly in the reformist camp until I actually examined the evidence. The A-10C for example, has one of the highest rates of friendly fire, affecting both US [3] and British [4] servicemen. Using binoculars is not a great way of navigating an aircraft.
I'd also ask you to consider: Is it better to make an affordable aircraft, if it means the pilots flying it are more likely to die?
There's more than enough avenues which can be done to reign in Military overspending. No one is denying that the Military overspends on many things. It's a serious problem. Generally though, targeting the machines keeping people from crashing into the ground is not the one to aim at.
Do you think there’s a threshold at which point non libertarians would agree taxation is theft? Perhaps when gov spending is 80% of gdp ? 90%. 100%? 110%?
We’re already now at 44% here in the US. And if you’re in the Bay Area or tech, almost certainly your paying a lot more if you count all the downstream taxes like property taxes permitting sales tax, and all taxes you pay when you buy stuff.
> Do you think there’s a threshold at which point non libertarians would agree taxation is theft?
No. Including interest to banks, most Western nations are already way beyond 110% taxation on private individuals. Meaning if you work hard in a normal job your whole life, you should expect to be heavily indebted when you die, without any personal property except for a few trinkets.
It's the same in Germany, the only difference is that the government made a deal with major banks so you can pay your taxes at their ATMs. Actually paying your taxes in cash at your government tax office practically never happens.
Is it "a deal" or just the ordinary banking system?
In Britain it looks like you can pay at your bank or Barclay's Bank (where the government's account for this purpose is), but the process is the same as paying an electric bill or rent in cash at a bank.
> Various people in congress want it to be complicated so that people will be even more unhappy about paying taxes.
I am like this. I am not opposed to taxation generally, it is necessary for society—but I want to be reminded how much I am paying, and what I am getting in exchange for that
Oh man, my comment came out totally wrong. I meant to endorse listing sales tax seperately, I have no objection with the IRS pre-preparing taxes as long as I review them
Although now a semi privatized corporate, the Australian Post Office remains a licenced receiver of debts to the government and will accept cash over the counter toward a payment for tax. The clearing mechanism is pretty good here.
I cannot help wondering if the pretty ludicrous inter-bank processes of the USA are the anomoly which causes a lot of this. The whole situation around bank cheques, moving money between institutions remained (I cannot say it remains, it may have been fixed now) far long than in other economies.
We all wear 3 days clearing for historical reasons, even though you can do most funds transfer in under a minute (transferwise does international in under 5) but I continued to hear about people walking into small local financial institutions with a bank cheque from inter-state and having to deal with major "you aren't from round here" creaking door, stunned silence banjo sound-track localisms.
The last time I had one of those experiences was in 1982 in the UK when I mistook an islamic bank in Manchester for a classical british bank and tried to cash a cheque on sunday. I really should have thought why that door was open when everyone else was closed (they are banks, licenced financial institutions, but they are emphatically NOT banks as we think of them, especially around interest debt, and a cheque is a kind of promissory note, a debt instrument)
The Federal Reserve is rolling out FedNow in July[0], which should enable instant payments, so instant transfers between accounts will be possible as more banks adopt it and more systems prefer it over ACH / wire. It still requires exchanging ACH credentials (routing and account number) so you won't see things like card terminal payments using it anytime soon.
The Australian Banking sector went with a thing badged dually as both "OSKO" and "PayID" which recognises phone numbers and email addresses for person-to-person and was sold as lightweight person-to-person, probably the space Venmo is in.
Out of the blue I now see the same payment vehicle when I ostensibly use another pre-existing mechanism we have here called BPay: you identify you want to use some prior clearing framework with ID "a" and it internally has mapped it to ID "b" in the other (presumably cheaper) payment framework.
Sold as p2p and being used for bill paying to institutions. But like your one, not card level: account level, app driven, I think at this point given I'd say "meh" because its my money, no matter which card or account its from.
For P2P the US has Zelle which does email and phone number identification, but people usually stick to Apple Pay (Messages app) and Venmo/Cashapp otherwise.
FedNow is the equivalent to EU SEPA Instant Payments yet when you search for it on YouTube you get to see people trapped in weird conspiracy theories about CDBCs.
For small payments, the IRS accepts cash via Dollar General, Family Dollar, CVS Pharmacy, Walgreens, Pilot Travel Centers, 7-Eleven, Speedway, Kum & Go, Royal Farms, Go Mart, and Kwik Trip. That's their solution for people with no bank accounts.
They talk about this in the article. There's a fee that you pay, and apparently it isn't as simple a process as depositing cash into your fintech bank account via CVS/Walgreens/etc.
As a person, it’s super easy to pay your taxes: download the government app, double check the data and send it (it’s more complex to a few people, of course).
Out of curiosity, who's excluded? I have several close personal friends who are not in the country legally (not US citizens, no SSN, no US state issued driver's license), and banks bend over backwards for them - they have fewer KYC requirements to open accounts than I do, I'd be lying if I said I wasn't a little jealous about that.
Never heard of this before, sounds like it's a real PITA for those who get caught up in it through no fault of their own or from a mistake they made long ago. Thanks for the reading resources!
If you've ever done something to get yourself added to the unholy nightmare that is Chexsystems, you're either excluded (if you are in a metro with a small number of financial institutions) or you have a lot of hoops to go through to get an account. There's no requirement to open a basic functionality demand deposit account, like found in the Eurozone, so it's up to financial institutions to decide who they will and won't accept.
For example, there's a credit union near me that advertises second-chance checking accounts. The account costs $7 per month and you have to take a $25 personal finance literacy course (that wasn't offered during the pandemic).
It might actually be easier for recent immigrants to get an account, because they have no history with ChexSystems, the _de facto_ credit bureau analogue for banking history.
When working for a technology company offering retail banking services (in a past life) the #1 reason for denying an account was a negative ChexSystems report. That means the applicant has had checks bounce, held a negative balance for too long, or was suspected of identity theft/fraud (often they were victims, sometimes unknowingly).
The author mentions the possibility of retail banks filling this role, and they already do the reverse—if you have a paper US Savings Bond, it can be redeemed for cash at almost any full-service bank branch. They are already deeply-involved in FedWire, the ACH Clearinghouse, and other payments rails. There’s also one in almost every neighborhood across the US.
> If the government wants everyone to pay their taxes, why doesn’t it make it as easy as possible?
Uh, they do make it as easy as possible, as long as you aren’t trying to pay in cash. Even the description of how to pay with cash sounded as easy as could be expected.
Writing a book on the advantages of using cash is like writing a book on the advantages of using human waste as fertilizer. Even if there is some advantage, I'm pretty sure everyone would just rather not.
A LONG time ago, I was at a (small) company that shared a building with a phone company office. I was amazed at how many people paid their phone bills in cash.
Yep. Middle class people don't really get all the ways that being poor is a detriment. You often don't have credit, and you may not have a bank account, so you get paid in cash, or at the last minute by check, forcing you to use a check cashing store, which will rape you on unnecessary fees, siphoning any cash you might have saved, keeping you poor.
Look at how much money is made in industries like Check Cashing, debt "recovery", payday loans, and prepay debit cards and you might start to understand what it means when people say "being poor is expensive".
Really? Multiple appointments and different people refusing to take the payment isn't onerous?
Sure, it's fine for an economics professor who has lots of time and can take off in the middle of the day to schedule and then drive and then get rescheduled and then ...
This is hell on Earth for someone who works hourly from 9 to 5.
And it's absolutely stupid. Either banks should be authorized to take such payments or the post office should be authorized to take such payments.
… especially because of the reason given. If your rules stipulate that on days upon which you accept money, you require a courier, and you schedule a meeting to accept money on that day … then you should have a courier on that day. It's not rocket science.
Others have already mentioned cheques, and those were standard for most non-urgent matters. But in a loose sense, electronic payment has been around for quite a while. 50 or 100 years ago, a business with a large, outstanding tax debt might well pay it by wire transfer. Basically a cheque done quickly by telegram, later telex, then computerized. And it's still around apparently -- the Canada Revenue Agency says I can pay my taxes from abroad by wire transfer.
Maybe the answer is more interesting in Europe, where electronic payment systems existed long before smartphones and the WWW.
You would probably pay by giro, very commonly used to pay utility bills etc. The tax office provides a pre-printed machine-readable giro slip, which looks similar to a cheque but includes your tax number and amount owed (or electric company account number etc). You take that to your own bank, and they transfer the money from your account to the tax office's account -- originally this might be partly by post, but at least the printed slip is much more machine-readable than a cheque. I think by the 1980s the slips were no longer posted around, the payment was electronic. Of course, you could take cash to pay in to your account at the same time.
You could also take the giro to a post office, and pay in cash.
Or you could write a cheque and post both the cheque and the giro to the giro processing centre. I think postage was free.
The in-person parts of the system still exists, though I think the post-a-cheque bit has gone. It remains the default way to pay a bill (including a tax bill) with cash or without using a computer.
Before that, I don't know, since before the giro system most people in the UK didn't have bank accounts.
The MP proposing the system in Parliament in 1965, noting it already existed in most western European countries: https://api.parliament.uk/historic-hansard/commons/1965/jul/... -- "this is a simple system of credit transfer which can be operated through our network of 23,000 post offices throughout the country ... All these giro clearing houses are linked together by Telex machine".
And that is how I still do it to avoid paying processing fees and giving up my tax information to some third party who uses dark patterns to try to get you to share your private tax information with marketers.
"Whimsical" now means "making pointless work for yourself and everyone else" and seems rather close to "speed-running" ("slow-running"?) a bureaucracy for social media clout. Really, really pitiful social media clout.
Also the conclusion is discouraging: rather than make self payment easier, the IRS easily has the information available to estimate and deduct taxes as they are due automatically or via an easy online form. Turbotax and other providers lobby against this for good reason, because with TurboTax you still have to input information and calculate taxes whereas with the IRS they have the data available already.
The conclusion I drew from this article is the most annoying and tedious part of this process was manually calculating taxes well in advance, which I’d be willing to bet took significantly longer than the commute to the IRS office + 30 minute wait.