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Direct File officially opens in 12 pilot states (irs.gov)
290 points by lykahb 11 months ago | hide | past | favorite | 190 comments



So apparently using this thing requires people to sign up and interview through ID.me, a private company with some controversy around facial recognition stuff and a non-governmental domain in Montenegro.

There's a certain flavor of very banal insanity here, as the US government (A) tries to outsource a core competency of identifying taxpayers in its jurisdiction and (B) promotes a domain name that should instead be a bad-answer in anti-phishing security training.


I have a couple of years of emails from the SBA which are, effectively, completely indistinguishable from phishing attacks. They use URL shorteners with weird (unrelated to .gov) domains, they never reference anything that demonstrates familiarity with my actual identity, every single URL passes through a tracker (again unrelated to .gov), etc.

It's all just broken.


I hate Id.me. I had an interview with them and their hr reps conducting were the most egregious power tripping fools I've met in my career. In their hubris they demanded several hours of psychology testing for a basic, mid level tech role, paying right below market average. They harrased me for two weeks after I had the audacity to tell them "no thank you, I'm not wasting my time."


It also seems weird since the US government runs login.gov


Apparently login.gov doesn't have the right security process in place to meet the right CISA standard (paraphrasing).

So instead of funding it, we continue issuing 95% of maintenance funding each boxing round between showboating legislators issuing continuing resolutions.


Login.gov does not provide a sufficient level of identity assurance (IAL2 [1]) to serve as the IDP for this pilot and IRS functions in general (ID.me liveness check and facial recognition). IRS is working with Login.gov to upgrade Login.gov to deprecate ID.me for this purpose [2] [3].

Would it make sense to not proceed with this pilot until this was ready? Certainly not; Login.gov will catch up and meet IRS in the future as Direct File expands next filing season. Very similar to when Social Security Administration (ssa.gov) transitioned from ID.me and their internal IDP to Login.gov on September 18, 2021 [4].

(Login.gov partners with USPS to perform in person identity proofing for those who cannot perform remote proofing via a mobile device; a bar code is generated, which you print out or display on a mobile device for presentation to a USPS clerk with a government credential)

[1] https://pages.nist.gov/800-63-3-Implementation-Resources/63A...

[2] https://news.ycombinator.com/item?id=30430851

[3] https://fedscoop.com/irs-to-adopt-login-gov-as-user-authenti...

[4] https://faq.ssa.gov/en-US/Topic/article/KA-03217


>Would it make sense to not proceed with this pilot until this was ready? Certainly not

Absolutely, yes.


Why? Iteration is something to be embraced rather than stigmatized in moving towards a more responsive set of government services. Login.gov is the future of government identity in the United States, but IAL2 is a higher bar than most government services need; waiting for IAL2 implementation is a tradeoff in favor of understandable-but-abstract risks against addressing a concrete harm that exists now.

You have an opt-out (use the existing methods of filing, including mail), and you're not harmed or even treated less preferentially by the existence of the ID.me option.


Because a US government service should not be outsourcing to a .me domain. I don't really care whether their internal service has IAL2, but it should be on .gov.


It’s just a domain name? It resolves to US based nameservers, the company is US based, with offices in the US, the founders are US citizens.

Would idme.com make you happy?

As much as I dislike Id.me, the domain name isn’t something to get upset at, it’s just branding…


I think parent comment assumes the DNS mapping is owned by the `.me` TLD owner, setting up an external contact that may or may not be hostile to owners of `.gov` TLD owner (the US), setting up a potential for nefarious activity.

"just a domain name" but MITM DNS attacks exist.


The government is putting citizens at risk by allowing a bad solution (ID.me) and wasting time supporting it that could be spent working on login.gov.


ID.me is already plugged in to IRS' platform, and is used today for all IRS account services to prevent fraud (return fraud being previously very prevalent [1], but there are other threat actor concerns with regards to IRS and identity). Throwing more people at Login.gov will not cause a solution to be arrived at tomorrow [2] [3]. It's suboptimal, but the world runs on duct tape, and a fix is underway. There is always risk, it is about managing that risk effectively.

Personally, I believe saving tens of billions of dollars in potential fraud costs every tax filing season buys a lot of tolerance to people complaining about the interim solution. The complaints are valid, but so are the attempts at fraud. And so, we balance the risk of the implementation.

[1] https://www.justice.gov/tax/stolen-identity-refund-fraud ("The IRS estimated that during the 2013 filing season alone, over 5 million tax returns were filed using stolen identities, claiming approximately $30 billion in refunds. The IRS was able to stop or recover over $24 billion of that total, or approximately 81% of the fraudulent claims.")

[2] https://en.wikipedia.org/wiki/The_Mythical_Man-Month

[3] https://en.wikipedia.org/wiki/Brooks%27s_law

(interviewed with a team that worked on fraud prevention at IRS as part of a US Digital Service interview)


Are they though (that much plugged in)? I have done quite a few iterations of IRS contacts, checking on returns, paying fees online, paying taxes online, etc over the past few years. Without yet having to deal with ID.me. Enough that at this point I would definitely do some work before giving in. So are they that prevalent really? Certainly NOT used for all account services.


ID.me is currently the only login/identity mechanism that can be used for handling business with the IRS online, although it is possible to file a return without an ID.me account. Paper filings, of course, require no online account.

https://cyberscoop.com/irs-facial-recognition-identity-priva...

https://www.cbsnews.com/news/irs-id-me-tax-file-2022/

https://www.irs.gov/newsroom/new-identity-verification-proce...


Oh I had heard of it, of course. And heard that it was being replaced / phased out - quite a while back. For a few years now. And still haven't had to deal with it once (for contacts, for filings other than tax returns, for fee and tax payments.) So I was only questioning "that much plugged in".


Federal workers are not project-fungible in such a way as to make what you suggest possible. And it's not just the federal government, either; ask any large corporation. There is no path to "well the IRS's developers should just go make Login.gov happen faster", even if you get a hall pass from the mythical man-month.

So, now that we've acknowledged reality--what now? Do nothing, while the active harm continues, because of fear of a hypothetical future (but with a limited time horizon) one?


Because if this works, the process of moving to login.gov might stall or be canceled altogether; there's nothing as permanent as a temporary solution.


Thank you, thank you, thank you for the info update! My understanding was clearly incomplete.


I think the IRS should use login.gov, but there is a legitimate argument for them not doing so (not that I consider their choice responsible).

The argument is that for the tax system to work, collection should live in a silo: drug dealers should pay tax without fear of prosecution (except for tax evasion), etc. This is the same reason TSA (if its mission were to keep people safe) should not look for anything but threats: we don’t want drug smugglers to invest in concealment technology when they fly.

The downside of the IRS using login.gov is that it theoretically could make interagency data sharing easier. In practice, though, it would probably makes things more secure.


> In practice, though, it would probably makes things more secure.

Given the third-party doctrine, a third party commercial entity provides no additional checks or balances under current legal frameworks or theoretical future ones.


So how many drug dealers actually pay tax in the US?


This is essentially the purpose of money laundering, so a lot.


No, money laundering exists largely because we don't have that. They're talking about just declaring the income from selling drugs on tax filings.


jwie has the argument slightly wrong. Taxes are a side benefit of money laundering, which makes it unnecessary to report drug income directly for taxes. Money laundering's purpose is to fabricate proof of legal income, to divert suspicion from the observable existence of wealth that has no legal explanation.


Non-IRS authorities (e.g. FINCEN) can also track the flow so in the US money laundering is more to thwart them, though lower taxes is a bonus.


Sales tax, gas tax, etc. Just not income tax.

The entire US tax system is broken. I'm sure we'll get a VAT or something worse.

So much is broken I doubt we'll see a fix in our lifetime.


The IRS being accused of being criminal all the time doesn't gain any confidence running it's own user authentication through a foreign country instead of login.gov.


That's a problem of Republicans making things up, though. Criminal accusations are apparently free speech.


That's not a problem of one party making things up. It's the fallacy of defective induction, aka. faulty generalization.

Are there cases where state institutions infringe on peoples' rights? Yes. Do they do it all the time? No.

Is Donald Trump a selfish liar? Yes. Are all Republicans selfish liars? No.

It's making me sad to see it here on HN so often.


The Biden admin literally sent an IRS agent to the house of a journalist at the same time he was testifying on capitol hill about government censorship online. The IRS has guns and police power. It wasn't a coincidence. They use it to intimidate people they don't like.

https://www.msn.com/en-us/news/us/irs-committed-alarming-civ...


Original publisher of article, not MSN cloakspam site:

https://www.nationalreview.com/news/irs-committed-alarming-c...

The Taibbi visit is certainly fishy. But knocking on his door to intimidate him when he's not there is weird tactic to be intentional.


> The IRS being accused of being criminal all the time

What?? I read the news a lot and don’t see this.

I doubt login.me has any connection to Montenegro except for which registrars manage the domain name itself. This is not a defense of their choice of vendor.



Ah yes, the “subcommittee on weaponizing government”, a credible, neutral group.

I do believe this was an issue (in fact suborned by FBI practices) in the 1960s against civil rights targets, but I haven’t seen any credible accusations since the Nixon era.


I can forgive you for not reading the article on the MSN spam site. Here's the original: https://www.nationalreview.com/news/irs-committed-alarming-c...

It's literally an investigation into the government weopanizing the IRS.

The IRS published documents you can view yourself to see their misdeeds. The IRS has since apologized and updated policy to curtail (but not eliminate) the authoritarian behavior.

You don't give yourself credibility by making up names.


> You don't give yourself credibility by making up names.

"Subcommittee on the Weaponization of the Federal Government", according to the article at your link, is literally the source. I made no name up.


My guess is they are incorporated there as a preemptive move against an "Experian hack" level event. Then all you have to sue is an offshore PO box.


> My guess is they are incorporated there

I don't think the correlation between domain-choice and legal-incorporation is strong enough to support that guess, much like how bit.ly probably isn't incorporated in Libya.

AFAICT ID.me is incorporated in the US state of Delaware, a popular choice due to its local laws.


This isn't a US Government problem though, it's an "average voter" problem. The US Government implementing an actual form of secure ID for government use would be treated a gigantic conspiracy to do <insert already possible thing here>.

But they still actually need to be able to securely identify residents, so here we are (well, and there is the victims of identity fraud due to the use of social security numbers as unique resident identifiers, a role they were never intended for).


Counterpoint: https://login.gov/


That’s a federated IDP which can be used to access your identity instead of using your social security number. It doesn’t replace the fact that your social security number is still your username and password in the canonical identity system, which is the problem GP is talking about.

Edit: or if you prefer, your SSN is both your user record locator and user secret.


The cause of identity fraud is lack of authentication, not existence of SSN. It's equivalent to going to a bank and telling "I'm Elon Musk, give me my money" and then complain that we must eliminate names to prevent this kind of fraud.


That’s what I said, just less precisely. The system is as secure as the least secure auth mechanism, the existence of better ones is irrelevant.


Which actually has an identity verification component: https://login.gov/partners/our-services/#verified-identity-a...


That political concern is real, but it wouldn't block them from at least white-labeling the private service though an *.irs.gov domain.


But does the *Federal* gov have to ID citizens? Why can't that be the responsiblity of the states? We keep assuming that a massive top-heavy and easily corruptable Fed gov is the only option. It's not.

We're getting what we're getting becuase we're keep buying the ruse, the status quo, instead of insisting on a system that protects us in the way the founding documents intend.


I've never understood the US belief that the states are less corruptible than the Federal government when the opposite seems to prevail in many places, and local government seems to be even worse.


It's a lot easier to escape state corruption than federal corruption.

If I don't like how my state maintains its affairs, I can move to one of the other 49 states (or territories) with relative ease. If I don't like how the US maintains its affairs, I have to convince another country to accept me, and as a US citizen, I've still got a US paperwork burden unless I renounce citizenship (which isn't easy either).


No one said the odds of corruption are less. But when everything is top heavy and centralized, the economies of scale for corruption are much better.

That is, for example, buy off a single Fed official vs buy off 50 similar officials at the state level.

And if someone tries that and one state gets exposed that's a red flag for all the other states to check their shit.

States are the equivalent of a diversified stock portfolio. The Fed gov is like betting it all on Enron.


We certainly could run Federal taxes through States (mandate states to assess and tax income, use the Feds only to investigate states, not investigate individuals), but that requires an attitude of anti-Federalism that is too pedantic for the average government official or citizen who only has headspace for or "government", and is opposed by the modern Federalists who favor a stronger union (intentional power, less civil war) over general independence and local control.

anti-Federalists lose because the governments they build are structurally weaker than Federalist. Similar to how the extreme end of Anti-Federalism, "we don't need laws; everyone should just be nice" is a failed model for practical government.


Yes. It does. It can choose to outsource some of the verification pieces to the several states (e.g the REAL ID act) but the government needs a way to uniquely identify residents that it interacts with.

The founding documents make this very clear, I recommend giving them a read.


> Why can't that be the responsiblity of the states?

Why not the other way around? Abolish states. This is one country.

Considering I can drive from San Francisco to New York without passport checks, I shouldn't have to pay different taxes depending on where along that route I decide to set up a home.


You musta missed the hint in the name. United...STATES. smh


I don't understand how the domain name has any relevance here. Are you worried that Montenegro will somehow MITM this company's credentials to steal a bunch of passport photos, or just "foreign bad"?


Neither of those, although since you bring it up I'm curious how much a rogue ccTLD could substitute DNS records and produce alternate certificates to take over a domain beneath it.

Rather it's about end-user security habits, their credulity of arbitrary domains, and the mental load of noticing risks.

Imagine the IRS had an online payment portal, do you believe it should it be advertised as pay.irs.gov or as paymytaxes.com? (Or perhaps pay-my-taxes.com or pay.taxes.com is the real one?)


> Neither of those, although since you bring it up I'm curious how much a rogue ccTLD could substitute DNS records and produce alternate certificates to take over a domain beneath it.

The TLD can change domain records at will. Change the NS and DS records, and you control the domain. Control the domain, and you can get a certificate.

If the ccTLD is sophisticated, they might carefully target the changes, but maybe not.

It would be bad for business, for a TLD to become known to hijack customers' domains. But, maybe its worth it, if you can steal a bunch of US identities?


> foreign bad Sort off.

The `.gov` tld is explicitly for US gov tasks. Whether the service is trustworthy or not is a different question. Whether it makes sense to use an external service for identification is another.

But if it's used for official means, they should at least get a branding contract and brand and host it properly. If only because the governance of `.gov` can and should be used to mark things official.


You should not have to send your personal data to foreign services in order to use government services. You don't know the retention policy, or data storage policy. Your elected representatives (supposedly) have no control over it.


While there is little reason to assume the company is based in Montenegro, the shadiest thing is that a government is using a third party to verify identities instead of fixing the compliance issues of login.gov.


You have to give up your privacy to even login to IRS.gov because to use ID.me one must:

* Consent to the collection, use, and sharing of their personal information to third parties (i.e. data brokers).

* Agree to binding arbitration and a waiver of class action rights.

* Agree to limits on liability for any indirect, punitive, special, exemplary, incidental, or consequential damages.

* Consent to arbitrary termination of the account at any time for any reason.

Login.gov (https://login.gov/) is the obvious choice for a login service. Enough excuses.


I know this isn't unique (as USPS is heavily funded via marketing spam), but it feels very dystopian that the identity service that government programs are using is also a discount site.


USPS is extra weird, because the recipient pays (via ad exposure) for the benefit of the sender (low postage). Of course, some mail I receive is for my benefit, but receiver can pay the sender for that (or they can put ads in the package).

USPS could offer to charge me for ad-free delivery, but they don't.

USPS pressures recipients to fetch and sift and dispose junk mail because there might be a critically important package. That's abusive. It's extortionate.


> USPS is extra weird, because the recipient pays (via ad exposure) for the benefit of the sender (low postage).

No this is 100% wrong.

We do not subsidize bulk mail, the rates we pay are a penalty for the difficulty of processing our mail.

Bulk senders only receive preferred rates if they conform to very specific specifications about presorting, proper labeling, where the mail is dropped off, how far it's traveling, quantity, size, and weight. All of these factors and more impact the cost of the USPS to process a single piece of mail. The business doing some of that preprocessing saves the USPS money and they pass the savings on to the business.

USPS offers flat rate, media mail, and priority options that have dimensional and weight restrictions because those allow them to more cheaply and efficiently process those packages.


I don't see where GP claimed that we subsidized bulk mail. My reading is that the complaint is that ads (which are by far the largest component of bulk mail) are subsidizing everything else, which leads to us paying in time and attention for the benefit of whoever wants to send us mail. It also benefits us when we send mail, but most people don't send very much mail these days.


"join the dark side of the force, and get a free cookie"


2 years ago they announced plans to introduce login.gov as an option (to introduce sometime after 4/15/23); looks like they still haven't done it:

https://www.irs.gov/newsroom/irs-statement-new-features-put-...


> Consent to arbitrary termination of the account at any time for any reason.

Imagine having your digital identity for interacting with the government terminated arbitrarily.


As a bonus, filing your taxes via USPS (postal mail) is free and available in all fifty states.


isn't requiring a waiver for your rights just illegal? I mean, you can sign it, but it does not bind?


What is the right in this case? You have to sign a waiver to drive on the highways.


> You have to sign a waiver to drive on the highways.

Are you in the U.S.? I've never been required to sign a waiver to drive or get my driver license. I'm very curious what you were asked or told to sign.



Thank you for clarifying that no waiver was in fact signed.


You don't have to drive, but you have to pay taxes, no?


Dealing with the IRS is never fun because it normally means you owe money but I have to say they’re quite competent (once you get a hold of them) and their digital services seem to be improving constantly.

Nice to see a branch of government actively trying to be user friendly (in the ways they can control). The IRS can’t do much about our insanely complex tax laws but they can make it easier to file.


The IRS helpline was much better back in 2009 when I needed some advice on a special case that the average tax preparer didn't understand. They forwarded me to a IRS specialist that knew how to handle it and went step my step in filling out the form and saving me $5k compared to what two tax preparers did. I think the Republicans back then gutted the IRS so they wouldn't audit the wealthy.


It's literally explicit Republican policy to make filing taxes difficult and unpleasant, so that people hate the government more.


Can we aspire to some baseline level of truth seeking where a phrase like “literally explicit” requires even the slightest bit of evidence?

In this case, it wouldn’t have even been hard to find that evidence, though you are assertion is oversimplified:

“ for the vast majority of the population, most of the pain of tax compliance could be eliminated by a few keystrokes at IRS headquarters. So why don’t we do it? Two reasons. One is lobbying by the tax preparation industry to discourage states and the feds from developing easier tax-paying systems, as California recently did. The second is lobbying by anti-tax conservatives. When the Golden State implemented its ReadyReturn system, it did so over the objections of Grover Norquist and his anti-tax pressure group Americans for Tax Reform, which fears that if taxes become less annoying voters might be less unhappy about paying them.” https://slate.com/business/2012/04/grover-norquist-and-h-r-b...

All of this took me 120 seconds with Perplexity AI. As we strive towards being a better nation, or at least a better community, I beg that future micro-polemicists invest that much time before hitting “post”


I think aspiring to a baseline level of truth seeking is harder than initially thought. Watchdogs like allsides.com consider slate a pretty left-leaning publication[1], especially in 2012[2] when this article was published. At least they were aware of it though.

What has changed in the republican party's stance on taxes in the last 22 years? Maybe nothing, but the point is that it actually is hard to assume that it's an explicit part of the Republican platform to make taxes difficult to file by referencing an old article from a left-leaning magazine that actually doesn't mention the word "republican" once.

[1] https://www.allsides.com/media-bias/media-bias-chart [2] https://slate.com/news-and-politics/2015/05/is-slate-magazin...


I'd argue most folks that pay attention to the space know this, and the ones that don't would nod in agreement as it conforms to biases. Do you agree?


Explicit policy stances like this should be well known by most adult Americans, but this is an international forum so people are going to mention such basic differences without citations.

I don’t think anyone should need to give sources for such basic political stances as where each party takes on Abortion etc. This isn’t controversial, the parties are trying to get their message out so people will vote accordingly.


This case is a bit different, because it's not merely a policy preference, but an accusation of a bad faith metagame strategy of "intentionally breaking government and wile complaining that it's broken".


You may disagree with a policy, but that doesn’t mean the party isn’t completely upfront about it.

Meta game stuff does well in fundraising and the primaries even if not the general election because everyone already shares most of the party’s core beliefs. It’s all about convincing people your strategy will get those core ideas in place. Voter disenfranchisement being a popular example.

Also, many positions seemed stupid to many voters. That doesn’t make them useless as long as there is some perceived net benefit.


That's the entire game of the GOP. Well, that and catering directly to funders. It's obvious.


To be fair I think the conservative objection is not quite that filing taxes needs to be annoying. The concern is more that automated tax calculation makes it easier for people to be blissfully unaware of how much of their money is going to taxes. Even now most people have minimal awareness of their tax burden thanks to automated tax withholding.


This conservative’s objection is to building the IRS data collection and analysis infrastructure needed to support “one click” tax returns for even just the most important parts of our absurdly complex tax code. Many here seem to think this is only constrained by tax software lobbying, and I think that’s naive.

Take the EITC: It’s one of the most important redistributive/anti-poverty components of the tax code. It’s also a massive source of fraud, much of which is potentially unintentional, as the eligibility requirements are complex.

Do we want the IRS tracking whether a supermarket cashier living with her boyfriend and her child is contributing more than 50% to the household’s total income? What if they break up 9 months into the year and he moves out? Does she need to send the IRS a notice?


One doesn't have to belabor the obvious unless someone asks for a cite. Stating the non-obvious/unintuitive/controversial does requires citations, or you're going to get downvoted.

Some exercises are ok to leave for the reader.


Some might turn to hate but in most cases the ambiguity and intentional half-ass'ery of the process breeds fear. As in, fear Big Brother.

Geez you can get audit for a filing up to 7 years ago (I believe). This is a bipartisan Fed level effort to keep the punters in line and obedient.


It goes both ways though. You can also get something corrected in your favor.


You can. But that's not the way fear has been weaponized.

How do you know that fives years down the road received a cheque from the IRS for a mistake the IRS made?


That has happened to me and my dad in separate cases, but each time it took about a year and a half, not five.


So they refund is 1.5 yrs but threaten audit for seven? And that's not a fear-base paradigm?


Those are apples and oranges. You can submit corrections for much longer than 1.5 years. Why be afraid if you filed correctly? Just have some confidence.


In the context of fear, no they are not apples and oranges.

"Why be afraid if you filed correctly? Just have some confidence."

LOL. Or seven years down the road...get audited? Why can't the IRS have some confidence in its collection process? Why can't the window close are two or three year?

If you think confidence is what gets you through an IRS audit, you're a fool.


Huh? I very clearly said what would get you through the audit is not breaking the law. Are you ok?


I think if this is the case one should hate the Republicans (policies) more, as being the ones explicitly breaking stuff, but yeah it's easier to generalize.


Some governments will offer an "official opinion". Basically you explain your situation to one of their members of staff, who will then reply with how to declare it on the tax form.

If you declare what they say, and it turns out to be wrong, they won't punish you for it.


There is something similar in the US called (iirc) an "IRS Letter" - which is basically the IRS saying how they interpret the law.

It is not binding, because they may be wrong. As long as you act in good faith, you can disagree and could end up in tax court or in real court, and the IRS could lose.

If you're not in the "make wage, pay tax" basic group, you will want to seriously investigate the tax advantages available to you, and how to take advantage of them.


Unfortunately many of our politicians actively try to sabotage the IRS based on some fantasy about making them unable to collect income tax, or the very real problem of not giving them enough funding to go after rich tax dodgers.


Yeah, everyone complains about the IRS, but when I've had issues and contacted a human, they've been extremely polite and helpful. I got audited [1] a few years ago, which I was expecting to be a nightmare, but I was able to call an office, chatted with a human for a bit, and they walked me through what I had to do to fix it. A few e-faxes later, everything was resolved.

People love to complain about government incompetence, but I think it's easy to forget that fundamentally it's "just humans" behind the scenes, and most humans aren't sociopaths.

[1] Forgot to add a document for a deduction I did, totally my fault.


You can’t report a good number of forms with this thing that I would have liked to see for those who work gig jobs and then get stuck having to pay Intuit money: 1099-K, 1099-NEC, 1099-MISC, Tips etc —

That being said! This is just a pilot and I’m super excited to see it, anything that distances us from things like TurboTax is progress.


Can't you still use "Free File" for doing those forms on the cheap?

https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...


Yep! The Free Fillable Forms thing is roughly equivalent to printing out all the forms and filling them in by hand, but you're just doing it with forms on the internet instead of mailing them in. Most peoples' taxes aren't rocket science, you definitely don't have to pay for tax prep software if you're capable of following instructions and doing middle school level math.


I can do those two things (mostly) but the slightly tricky bit is when the form requirements change e.g. you need to suddenly provide a new form because the guy in charge said so. I'm guessing the software handles that for you.


It seems a little ambiguous whether 1095-A (health insurance through a state marketplace) is a hard blocker and or just non-optimal.


You don’t have to file that form anymore (for years now…)


Don't confuse 1095-A (ACA marketplace health plans) with 1095-B or 1095-C (employer and other health coverage). Also don't confuse the premium tax credit with the individual mandate.

Because of the premium tax credit, most taxpayers that receive Form 1095-A are required to file Form 8962.

https://www.irs.gov/forms-pubs/about-form-8962

IRS Direct File doesn't let you file if you have marketplace insurance, presumably because it's not supporting this form.

https://directfile.irs.gov/insurance


In particular, I mean this page [0] where the IRS flat-out says "you can't" use direct-file (for no particular reason) before giving a much weaker statement of "is not a good option."

> You can't use Direct File if you have: [...] Health insurance you bought directly through a marketplace (like HealthCare.gov) [...] Individuals enrolled in a health insurance plan through a marketplace will receive Form 1095-A.

> If you got your health insurance through a marketplace, Direct File is not a good option for you.

[0] https://directfile.irs.gov/insurance


I filed with DirectFile in the pilot and I think might have found an issue during the pilot where NY taxes don’t get fully sent over to the FileYourStateTaxes tool for NY.

I DID have a few day wait while the state tax partner sorted that out (half think they ended up having to roll out a new feature because of me, whoops) but other than that the IRS and state side went smoothly.

I had actually started my return in TaxAct and balked at the price for my simple return but the IRS and state tools all agreed with TaxAct’s own numbers so I’m assuming everything went by the book.

FWIW I’m a simple tax case, one W2, some student loan interest, fairly boring.


> The IRS designed the pilot to follow the best practices for launching a new technology platform by starting small, making sure it works and then building from there.

But they're including the 4 most populous states, which comprise 37% of the population by themselves. lol


There are many different definitions of "small". In this case, number of users probably doesn't make much difference to them, it's more about the number of/complexity of tax laws.


IIRC these states don't have certain types of taxes which would complicate things


I believe it's more the states with no state income tax at all plus those that have a state-provided version of "direct file" already available.


Devil's advocate, but it's not like all 100% of the population in each of these states is going to start using the free file system. It does sound a bit silly though, I agree!


From what I can tell, people new to taxes find the cheapest way presented to them at the time, and then stick with that mainly out of fear

so the old couple with papers strewn out over the table just keep doing that

the turbotax e-filers keep doing that

the “I know a guy” people keep doing that

and people that stop being dependents last year are going to use this

not much objectivity in this


That sounds about right to me. I don’t have any plans to move on from FreeTaxUSA unless this IRS thing blows me away. Not that it’s available in my state yet anyway.

As a counterpoint though, I did move from Turbotax to FreeTaxUSA in my 20s after I started a business, because Turbotax wanted something like $400 just to file my Schedule C; FreeTaxUSA didn't charge anything for that form.


This isn't the first rollout phase, they have been earlier closed pilots [0]

0: https://apnews.com/article/irs-income-taxes-direct-file-prog...


They could literally just copy the uk platform. It’s clear, easy to use, accessible, centralised, non commercial, modern and the UK gov website design teams does a lot of their UI work in the open anyway.

https://design-system.service.gov.uk/


The US design system is not too far from the UK's implementation and documentation https://designsystem.digital.gov/


It'd be interesting to see how much a multi-country effort to make a tool that collects tax information and applies a set of rules to the data to advise the user would be able to share. My impression is that it'd be a lot (the rules, of course, would be specific to the type of entity and local legislation).

As a Brazilian who has been using free government-provided tools to submit my taxes for decades (up to when I moved to Ireland, where I don't even need to do that), this is very interesting to me.


you are linking to a design system, not a taxes tool?


The very country specific tax logic part would by necessity be country specific built.

My point was more that there wasn't really a need to reinvent this wheel in terms of everything else. Not only is there a battle tested production system serving millions already, big chunks of it are in a MIT github repo.

That said I understand why the IRS doesn't just want to copy another country's. Not invented here and all that. But from the various countries systems I've used...the UK one is fantastic. Not just tax...same pretty clean UI and design across all the big gov sites.


a design system is just a design system. you still gotta build everything else.

this would be like saying hey why not just use tailwind? that is like 10% of the equation.

afaik the backend support for filing taxes on gov.org is not open source.


I acknoledged as much already quite explicitly. Yes there are pieces that can't be copied.

>this would be like saying hey why not just use tailwind? that is like 10% of the equation.

No, my point is that they're going "I see there is a perfectly fine tailwinds implementation that would cover 10%"...but fuck that we're just going to reinvent the wheel on that 10% anyway.

Even you - by example - reach for an existing proven solution, tailwind. That's precisely my point...IRS did not reach for tailwind (UK's proven solution)...they decided that's too Not Invented Here...and built it from scratch.


This is awesome! And well overdue.

I'm okay with this working only for the folks whose returns would've been simple / 1040EZ. A huge step in the right direction.


There hasn't been a 1040EZ for a while. That said, I don't really disagree. For people who don't itemize deductions and only have a W-2 and maybe a 1099, filing taxes should be mostly a pre-filled-out no brainer.


This is exciting. I hope Intuit gets what it deserves. Their obstruction of simplifying the tax code has gone on long enough.


So I know intuit is an easy and guilty party in this whole situation, but let’s not pretend it’s all their fault. Plenty of politicians benefit from this mess.

This isn’t meant to pick sides in politics, but if you’re a politician and you’re running a “lower taxes and less government bureaucracy” re-election campaign, it’s in your best interest to make paying your taxes as noticeable and painful as possible. It’s in politicians best interests to make the government as unfriendly and time consuming as possible.

Filing a tax return manually should only be necessary for a small percentage of people with complex situations. Most people’s entire income is a single W2, and their payroll provider should be able to deduct the exact amount down to the penny. No-op for the individual. Everyone else can keep their existing process applying for deductions and breaking out their income streams. Anything else is theater to make you hate taxes.


> Most people’s entire income is a single W2, and their payroll provider should be able to deduct the exact amount down to the penny.

People also like to get steady paychecks. In any progressive tax system, anyone who leaves a job mid-year would either mean everyone would have to have paychecks that varied or job changers would have a discrepancy at the end.

Having paychecks varying due to taxes would no doubt be spun by some as “theater to make you hate you taxes”.

Homeowners with mortgages probably don’t want to share those details with their employer, out of some combination of “it’s none of their business” and “could they use that information against me somehow?”

I get that filing taxes is annoying, but trying to set things up so my payroll department eliminates that seems the wrong path versus making the front door to the filing system easier to use.


> anyone who leaves a job mid-year would either mean everyone would have to have paychecks that varied or job changers would have a discrepancy at the end

The UK "P45" system mostly avoids this? If you go from pay £X to pay £Y it's not impossible to calculate how much you will owe at the end of the year and distribute that over the remaining paycheques.


(It looks like it does/could.) I'd much rather file taxes than give the details down to the penny of my prior pay from employer 1 to my new employer 2 (which is what I think the P45 system does).

But that probably reflects more my own stance on personal and financial privacy than on anything fundamentally negative about the practical value of preserving that privacy.


And in the case where you don't/can't provide a P45 they take an "emergency" high rate of tax instead. Which you can claim back once the information is provided, or at the end of the tax year. I don't know if you can legitimately decide to not provide a P45 for some personal reason, but it could be an expensive decision (in the medium term).

I would say this definitely reflects your personal stance on privacy, I think most people would rather have the money they earned sooner rather than later.


Can you cite the responsible politicians?



Intuit isn't the good guy here, but they get a ridiculous amount of hate proportional to their role in the system, and they did actually make things better. The status quo until consumer tax filing software like TurboTax was people paying accountants and accounting firms hundreds of dollars to prepare their very simple taxes after the rumor mill + accountant ads put the fear of God in them that the IRS would destroy their lives.

Millions of people still do this to this day, and it's very hard to talk them out of it. Of course, if you have a complicated tax situation, hiring an accountant is worth it. But I'm talking about people with a W2 and maybe a few 1099s being convinced that even TurboTax is a bad idea because "my guy can get me so much more" or "the IRS is going to jail me if I make a mistake in the software."


At some point, the ubiquity of shopping mall accountants (e.g. H&R Block) convinced a lot of people that they were idiots to do their own taxes by hand. Personally I piggybacked off my parents' accountant and still use the same firm. At this point, it almost certainly makes sense for me to use an accountant but I could probably have just used tax software for less money at least for a time.


The tax code was complicated long before Intuit existed.


Serious question. I used Turbotax again this year. I want to get off of it next year.

But does Direct File support literally everything? SEP-IRA->Traditional->Roth double rollovers with capital-gains in-between and partially pretax and partially posttax basis, cryptocurrency staking, straddles where you sold one leg before the other, incurred wash sales, sold RSUs but have both capital gains and income taxes associated with them, bought bonds at a market discount, paid estimated taxes, all of that fancy shit?

I hate taxes in this country, why can't they just flat tax all the money I made in the year ...


> Serious question. I used Turbotax again this year. I want to get off of it next year.

If you're doing all that crazy stuff you mentioned, then you're gonna need a tax prep specialist, yeah. But you're in a tiny, tiny minority if you're doing any of that, and you're almost unique if you're doing all of it. So it's OK if the system doesn't optimize for that very special case.

If you're just managing a W-2 and a few 1099s, and maybe one or two of the crazy things you mentioned, then it's easy to just do your own taxes and skip the tax prep scam industry. It takes me about two hours to do mine & my wife's. Most of it is just manually entering data into the IRS's Free Fillable Forms website, and then doing some basic calculator math, then copying most of the same info over to our state taxes. It's not trivial, and it will be a little frustrating your first time doing it, but it's about on the order of middle school math class exam. Not fun, but not graduate level physics or anything.

If you do screw up, the IRS will politely let you know your error and how to fix it. It's not a big deal. (Unless you're intentionally trying to hide something. Don't do that.)


Why would you want a flat tax rate if some of the money you made is not taxable? How is it not worth it if it saves you a thousand dollars?

An efficient economic system is inherently complicated. It should support people who take chances, people who start businesses, and people who innovate. At the same time, the system has to protect itself from people who want to exploit the benefits afforded to people who add value.

Unsuprisingly these constraints will inherently complicate the process.

All these armchair accountants believing they could devise a better tax system shows their ignorance rather than their expertise.

Do you want to see bureaucracy and inefficiency? Go start a business in Germany and compare it to starting a business in the USA.

I think doing taxes in the US can be an enlightening process. It has many benefits, it shows you how much you made, where the taxes go, and that recognition makes politicians less eager to nilly-willy raise taxes.

And with that it does keep your taxes lower, there is no doubt about that.

You spend a few hours and around 50 bucks each year but in return you save thousands. It is a much better deal than the alternative.


> Why would you want a flat tax rate if some of the money you made is not taxable?

The flat tax rate would be much less, of course. Instead of taxing me 50% and a bunch of deductions, tax me a flat 25%. I'll take the deal, and the IRS gets to not have to read five hundred pages of crypto transactions.


Is 25% fair? Why 25%? If you’re a business who spent most of its profits paying others who in turn paid taxes on that, should you pay that much?

What part of your revenue is taxable? Can you defer some of that revenue? Is it revenue?

Are flat taxes fair to all levels of society? Does a billionaire paying 25% hurt just as much as a single mother working minimum wage (the consensus for the longest time has been no, and why we have progressive tax brackets).

I can go on. Current status quo is not great, but it’s the best bad option we have, IMO


At a certain point you just use a CPA or roll your own with the Freefillableforms/literal paper files and I think you are the point where the time/complexity trade offs might warrant a good CPA.

The direct file is just for W-2. I don’t think it can even handle 1099-INT or DIV


I guess, but the point of moving away from Turbotax is to avoid supporting this scammy industry. Using a CPA would be even worse.


At a certain level of complexity you want (need) a certified professional to make sure you are complying within the bounds of tax law and offload some of the audit risk to said professionals.

Is the US Tax Code very complicated? Yes. Is it more so complicated than other nations? I would hazard a “no.” Is that a scam? That’s a question of political philosophy I don’t want to get into here.


If you're running into a healthy combination of those cases, might want to get a CPA.


Turbotax does everything I need.

I already don't want to give $180 to Intuit, why would I give $2000 to a CPA who is also helping propagate an industry that shouldn't have to exist?

However, if I could first do my own taxes, and then the CPA take a percentage cut of whatever tax they save me after that, instead of charging a flat fee, that would be nice.


CPAs main purpose is to be accountants. The tax filing part is a natural output of their other accounting duties.

Large corporations will have CPAs on payroll + contract with big Corporate Accounting firms to process their books for them. Small mom+pops will hire their local CPA to do the same.

Which, leads me to an idea a much smarter friend once gave me: the tax code of the USA is centered around and made for businesses and business owners. And a large portion of the entire tax/accounting industry exists to service this need.

edit: also a CPA should charge roughly around $250 for your level of complexity? $2000 is closer to the fees for a small-medium business


What's the story behind this? In the UK you've been able to file your tax returns online for well over a decade.


Such a system has been in use in Canada too, since... 2001.

https://en.wikipedia.org/wiki/NETFILE


NETFILE doesn't interface directly with end users, it's more like a backend service. Canadians still need to use third-party software to file their taxes.


The government lists certified software, including free applications:

https://www.canada.ca/en/revenue-agency/services/e-services/...


Directly filing your taxes in the US was currently mail-in only until this pilot originated.

Intuit and the likes have lobbied with their millions to make sure the average citizen can only e-file with a few select proprietary options and it has been that way for as long as most anyone remembers.

This opens the gates for what might be (I didn't look much into the site) an easy way to e-file directly with the IRS.


The IRS does have an option for tax payers to electronically fill and file those mail-in forms directly. [0] No printing or mailing required, and there's no income limit. It's called Free File Fillable Forms, and I've used it for the past 4 tax years.

[0] https://www.irs.gov/e-file-providers/free-file-fillable-form...


In Hong Kong and France, the two places I pay taxes in, it's been digital, free and trivial for as long as I've been a taxpayer, a decade+, as well.

It's just weird when you realize the U.S. is so bloated and backward compared to places they criticize constantly like France and HK :D I suppose they don't have ways to pay taxes monthly there either, so it's all a giant lump sum yearly or a tax loan ?

I always wondered why giant tax jurisdictions never try to just do one single non-micro-optimized tax rate ladder across everyone and zero other taxes / deduction / special regimen etc.

I know HK is much smaller, but having only one single tax to collect at a very simple percentage rate, with very few deduction, makes it so cheap and simpler that the government can reduce taxes because it collects them so efficiently. France collects directly from salary, so now there's no tax return for the vast majority of tax payers, it's a bit riskier since you can't escape it, but... can't do much simpler.


> I suppose they don't have ways to pay taxes monthly there either, so it's all a giant lump sum yearly or a tax loan ?

Many (most?) people in the US pay their taxes by withholding, which comes out of each paycheck. But if not, quarterly payments are generally required. You can make payments monthly if you like, but for determining if payments were timely, they'll be aggregated by quarters.

> I always wondered why giant tax jurisdictions never try to just do one single non-micro-optimized tax rate ladder across everyone and zero other taxes / deduction / special regimen etc.

All the wacky deductions and special credits and what not are implementation of economic policies. Credits encourage behavior, and taxes discourage it. For some, a paperwork burden is enough to discourage behaviors.

> France collects directly from salary, so now there's no tax return for the vast majority of tax payers, it's a bit riskier since you can't escape it, but... can't do much simpler.

The US does withholding, but it's not necessarily correct for many reasons; some good, some bad. If income tax was a flat rate with no deductions, withholding would be enough. But other sources of income, such as bank interest or stock sales, usually don't have withholding, so you'd need to pay those taxes separately. And your employer may not know about your spouse's income, etc. And, people like getting a refund, even it doesn't make fiscal sense.


The vast majority of personal tax paid is income tax, which is very adjustable and the most powerful lever the government has to change what people do.

If most tax came from things that aren't "leverable" (everyone pays the same VAT/sales tax on a given item, they don't pay the same income tax) then it is forced to be much simpler.

Also, a decent amount of "social program funding" comes via things like the EIC and other "tax credits" in the US vs direct payments.


>France collects directly from salary

Its the same in the USA for most workers. You file your taxes at the end of each year to confirm all the numbers are correct, and report deductions.


And adjust, in one way or another, the amount of those deductions. Even if you don't itemize, the amount taken out of salaries for most people between Federal and State doesn't align with what was taken out of their salaries. (For a lot of people, they're actually owed a refund though.)


In countries like the UK, the tax code is simple enough that most employees never have to file a tax return. There isn't a long list of deductions and exemptions, so unless your financial affairs are particularly complicated or unusual, everything is handled by your employer.


Is there no tax on non-employment income?


And the IRS has most of those numbers (if not all for most people). The process should start with the IRS saying, "Here's what we have so far...". Not "We know but we won't tell you. Don't fuck it up cause them we'll screw up."

The process is intentionally designed to insight fear.


It’s the way it is due to lobbying by Intuit and friends, and Republicans wanting the process to be annoying.

You may be correct that it causes fear, but the above is the intent behind the state of things.


Intuit? You do realize there's been a Fed income tax and an IRS for a lot longer than there's been Intuit.


What’s your point? The reason it still sucks despite clear, functioning examples of how to do it better isn’t because we had an income tax in the 1930s or whatever. That has nothing to do with decades of our failing to fix it. We very likely would have by now if not for the two reasons I called out. That’s the “intent” behind it sucking—rent seeking, and political expedience.


Nah. What's *your* point? I mentioned taxes as a tool that weaponizes fear and somehow Intuit enters the conversation? Makes no sense. If you're going to change the direction of the sub-thread please use your blinker.


The situation you described in your post, concluding that it’s intentionally designed to cause fear, isn’t that way to cause fear, it’s that way for the reasons I mentioned. That was my point. It’s entirely relevant to all of the post that I responded to.


Again, what does Intuit have to do with it? Intuit is late to the game. It's simply another *symptom*. I don't want to talk about symptoms. Let's talk about root problems, otherwise symptoms are a distraction.


If you want to end the problems you brought up, the two causes I mentioned are what you’ll be working to overcome. “Income tax exists” is not the reason we do it poorly.


Nah. Not really. To solve a problem, you surface and address the root. What you want to do is what politicians do. That is, roll out a symptom. Hack a band aid on it. Smile. Take credit. And then watch the balloon grab pop out somewhere else.

Intuit will come and go and the IRS will still be an agent of fear. Let's stop f'ing around already. Please???!! Not just for this issue, but all issues.

What you're suggesting we do, we ALWAYS do. And it's just one balloon grab after another. Stop the insanity already.


The US is complicated by having multiple independent and sovereign tax authorities (minimally Federal and at least one State). Add on top of this a highly diversified geographic scope that creates regions with unusual realities that encourage quite varied local tax structures. Even though many types of withholding are automatic, you still have to reconcile their complex interactions if your taxes are anything but trivial.


> I suppose they don't have ways to pay taxes monthly there either

They have.

Interestingly, I actually have trouble to do this with my HK job. There is no way to do this in my company. I have to pay the tax every year in "a giant lump sum".


I’m excited for this - even if right now all I get is “There was an error processing your request.”


The journey of a thousand miles starts with a single step. Hopefully this eventually relegates the private tax prep industry to history.


Unfortunately you can't use it if you have a 1099-DIV, i.e. pretty much anyone who owns any stocks not in a tax-advantaged account :(


Also if you have more than $1500 in interest, which at todays’s rates is quite easy to hit.


Load up on GOOG ;)


My state is not in the pilot, so I can't try it myself. Have anyone here used it yet? How was the experience?


Interesting that 8 of the 9 states that have no income tax(no Alaska) are part of the pilot.


Cool. I can't wait until they open up for companies. As much as I enjoy printing, writing and posting, it's a pain and kind of byzantine to mail off 1120 returns.

Maybe that part of the system is too complex tho...:(


Can’t split states when you moved half way in the year


Is there source code available for the system?


Why of all things should simplifying tax filing be means tested?


I hate this solution. Instead of simplifying tax law, the government is just building another layer of crap on top. If this is all they are going to do, why bother at all? Why not instead subsidize tax preparation software for “simple” cases and be done.


But then tax prep software companies will abuse those subsidies to increase their growth targets even further. The middle man needs to go.


Any idea if this will work for expats?


How firm of footing is this program? If there is a change of leadership next year, will this be strangled in the crib?


If there’s a change of leadership next year, Direct File is the least of our problems.


Tldr (pasted):

    Arizona
    California
    Florida
    Massachusetts
    Nevada
    New Hampshire
    New York
    South Dakota
    Tennessee
    Texas
    Washington State
    Wyoming




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