Asking the IRS to pre-fill your taxes is totally reasonable. What's crazy is that they have all this information and have already computed how much tax I owe, but won't tell me what that is, and if I get it wrong or forget something then I'm both legally and financially liable.
You can still get a second opinion with pre-filled taxes.
The liability for making a simple honest mistake is greatly overstated. In most cases the IRS sends you a letter explaining the mistake and asks you to send the additional payment (or sends you the additional refund) and if you address it in a timely manner there’s no penalty or anything.
The meme about “oh I forgot to carry the one now I’m going to jail” is just Internet hyperbole.
Often times you correct it with more paper work. One year, my foreign tax deduction didn’t get filed for some reason (I was doing my own taxes by hand and sending in the forms), so I was hit with a huge tax bill of $30k or so. Then I found out I handled my non-resident wife wrong, so amend 1040X wait for ITIN, etc…it was kind of a mess. I wound up ahead, the IRS owing me instead. They were quite courteous about it on the phone.
This is my experience as well. The IRS generally knows that mistakes happen, and they generally don't really seem interested in criminally punishing small things. Normally they assess a small penalty payment at worst, and set you up with a payment plan if you don't have the money.
I've always wondered if there's some intentional poker going on here: if the IRS shows you your report first, and you realize they've made a mistake to your advantage, you're almost certainly less likely to report it...right?
> What's crazy is that they have all this information and have already computed how much tax I owe
This is not really accurate. If you're a typical employee, IRS has a pretty good idea of your income, which is just one of the many factors that goes into calculating your tax.
In particular, the IRS doesn't independently know most of the things that could cause you to get tax deductions, like whether you got married since last year, or you moved out of your parents' house and started living on your own, or you're taking care of a child, or you had self-employment expenses, or you bought textbooks for your college classes, or you donated to charity, or you paid expensive medical bills, etc.
To be fair, I said "how much tax I owe," not how much tax you (or others) owe.
I don't have any creative deductions. And I expect many others only have one or two "interesting" deductions to add. I haven't actually measured this but I honestly expect >95% of what I enter into my tax return is information they already have.
Do they know how much you'll spend on sales tax for a given tax year? How much you'll pay out of pocket for health expenses? Do you?
These are not "interesting", but nearly everyone has 'em, and the IRS cannot know, without bending space time, how much you'll owe because of those deductions (assuming an itemized deduction, though they're still in play either way because they can help tip the balance between taking a standard or itemized deductions).
Only 13% of all US federal tax filings each year itemize deductions. That means it would help the vast majority of filers and not harm the rest in any way whatsoever. Weird thing to be against if someone isn't misanthropic.
But just imagine if your starting point for your taxes was "here's 95% of your information already filled out, got anything else to add?" Wouldn't that be even easier? Nobody is saying you can't itemize if you want, but for the vast majority of taxpayers the standard deduction is a larger deduction than itemizing and far lower risk of audit.
It'd be fantastic, and I agree. I never said otherwise.
I was simply offering examples of "normal" deductions that can easily change what you owe, and how those deductions aren't as uncommon as the person I was commenting to would have you believe.
Exactly, then I should be able to see that my tax calculations include only my salary and I can fill in rest of the things to get additional deduction.
Infact everyone would be able to see what IRS knows and what it doesn't and deductions taken into account etc. How is it not better?
That's really not true and it's important to understand the distinction.
They know a lower bound on how much income you should be reporting. They have no idea how many dependents you have, houses you sold, charity you donated, foreign income you made, etc etc etc. There are hundreds of other things they don't know which massively affect what you owe.
If they got a W-4 for you and you don't report it, yes you're f'd. But they in no way know how much you owe.
In my experience people really love the "The IRS already knows how much you owe" meme and you'll never get much more than downvotes for clarifying the truth of it.
In a better world our taxes could be simpler, but for now let's do our taxes the way they do need to be done.
Most people have the same filing status and number of dependents as the previous year, just have W2 and 1099 income already reported to the IRS, and take the standard deduction. For most people, they can tell you what you owe. If it's wrong, you can tell them your dependents or filing status changed and get a new form. If you have a weird situation the IRS doesn't know about, you can still do your own taxes, but that's not most people.
> They have no idea how many dependents you have, houses you sold, charity you donated, foreign income you made, etc etc etc.
Generally speaking, the government does in fact know exactly what houses you sold and dependents you have. Those are both matters of public record and registered with the state. How do you think cities assess property taxes? And if you think that charitable donations and foreign income make any kind of dent for 99% of all taxpayers, you're living in a very weird bubble. 87% of all filings take the standard deduction in any given year for a reason.
>In my state (Missouri) house sale prices are not public record.
That's a weird wrong thing you think. Visit https://www.stlouis-mo.gov/data/address-search/index.cfm and put in any address in St Louis MO and you'll see who owns it, when it sold, how much it sold for, how much property tax they owe, the bounds of their lot, and more.
That's tax assessed values, not necessarily the actual sale amounts. The assessed value of my house has never been the same as my actual purchase price.
Tell me more about how having all of the data for most people and almost all of the data for the rest is like having no data at all for anyone. Because I'm struggling to see the connection to that last step.
The fact remains through all of this that the IRS does actually have _all_ of the needed information for the vast majority of tax filings.
It's an extremely bad faith reach to be like "but maybe I sell my house for bags of paper cash (no banks) every year without telling anyone but want the IRS to know about it" and pretend like that's not an absolutely obnoxiously absurd argument against doing something that would help nearly everyone in the country.
Because, let us be absolutely clear, the vast vaaast majority of everyone in the country live in other states, do report sales even if they do live in those states this person is making the claim about, don't sell or buy houses all that often if at all, and especially don't do it without involving a reporting financial institution.
I'm not saying anything about the IRS system, I'm just saying the federal government definitely doesn't have all household sales data for all residential sales. It's not required filing in Missouri and several other states.
The federal government likely has zero clue what I spent to buy my house. They could probably find it if they bothered looking hard enough, but it wasn't directly reported anywhere with the government, especially federally.
I'm totally not against having a simple filing system though and agree for most people for most years it would be way simpler. Just pointing out a spot where you're incorrect on the federal government, especially the IRS, knowing everything. You're getting really angry at me about things I've never said. Probably time to calm down my dude.
I'm not angry at you. Sorry if it came across that way. I was referencing the other comments upthread not made by you that seem like a bad faith troll.
Dunno what to tell you, friend. Take it up with your local office of revenue, I guess. The government website is right there providing all the information I said and more. And if there are ever limitations relating to "the general public", the IRS isn't a member of that category.
AND, your bank and investment agencies definitely report everything you put into them. So now you must also be talking about non-disclosed property sales for _cash_, as in paper bills and coins under the mattress. Doing a lot of that, are you?
But tell me more about what percentage of all federal filings you believe would be affected by undisclosed property sales.
How much did the current owners buy it off the church for?
And sure, some agency might have some notification about some wire transfer that happened. It doesn't mean they know what it related to. It doesn't mean the IRS has any knowledge of it.
The IRS probably didn't know and wouldn't know about the kids I have until I told them about it. Sure the federal government would have theoretically known about it from telling the Social Security Administration (not necessarily a requirement!) and later applying for a passport, but the IRS wouldn't automatically know these things. If I told your cousin something do you instantly know it? Federal agencies suck at sharing information.
I do agree we can simplify filing income taxes for the vast majority of people. I agree most of the US doesn't have a kid every year, isn't in a non-reporting real estate state, don't do a ton of stock day trading, isn't donating half their income to charities, etc. But you shouldn't assume the IRS truly knows all your tax situation, and I'd recommend still looking over that simplified return if you've had an odd year if we ever get there.
Whether or not house sale prices in Missouri are in the public record depends on the county. You picked a county where they are. In some counties they re not.
> Yes I think everyone would be enthusiastic about submitting taxes that are 87% accurate.
This wouldn't change accuracy, if anything it might increase accuracy by simplifying it for the vast majority of filers. Nobody is saying you wouldn't be able to file just like you do today, but being able to just review a card of what the government already knows and OK'ing if right would make it massively simpler for 87% of tax filers. You could still have fun spending hours filling out several forms for your odd tax situation.
I always think the biggest issue to solve, if the IRS were to send you a pre-filled form with all of your information, would be making sure that the correct person receives the form. I don't think a majority of people have online IRS accounts, and older or technology challenged people might be reluctant to have it. So that means that the US Postal Service needs to be completely sure that they send this envelope of sensitive information to the correct person. It seems like the information could end up with the wrong person with mailing mistakes or people who have moved.
It seems like having all the information bundled nicely with your SSN would be a valuable target for someone walking past an old person's mailbox. As it stands now, we only put our SSN on the filing that we are sending to the IRS.
As well as track and list the IP / location and time of when previous accesses occurred. Sign in and see someone not on the list? Have a link that sends to identity fraud at the FBI or whatever's the correct place.
They could also hide the exact details and just name the banks / holdings places and other things involved and you could confirm that there aren't any other details or make corrections.
I'm a little confused about this site. I recently had my mother get access to her IRS information using something called ID.me, which is what the IRS site directs you to. To sign up she needed to have a video conference on her phone with an agent that verified that she was a real person showing her driver's license. Is login.gov an alternate method to ID.me?
""" Login.gov was a General Services Administration 18F innovation project in partnership with the United States Digital Services (USDS). This shared-service, made possible through a Trusted Identities Group (National Strategy for Trusted Identities in Cyberspace) grant, is a result of cross-agency collaboration that sought to develop secure, user-friendly ways for the public to access government websites. """
Though visiting a local police department or staffed USPS office might also be valid initial authentication methods.
This should be easy to solve: don't send it automatically. Require people to: manually log into a website or visit an office, verify their identity, and confirm their address.
There was a time we solved that problem by... Not having taxes be considered sensitive information.
At the inception of the federal tax, the federal government didn't have enough agents to enforce it. So they actually made the filings public so that people could police each other... You'd be able to see your neighbor claiming poverty when you knew they owned twenty acres and sic the fuzz on them.
Something to be said for not letting people do their finances in the dark...
It feels so weird that US doesn't have such system where as Second/Third world country like India excels in some of them.
Online Tax Filing (preloaded with all the tax data, nothing to declare extra, just 5 clicks). In fact there are third party sites/apps (freetaxfiler) which automates the entire process.
1. Politics. Funding the IRS sufficiently is, sadly, controversial. Additionally, tax filing is a multi-billion dollar industry, and they lobby politicians very heavily to make it hard to file taxes.
2. The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Most people could answer about 5-10 simple questions and the IRS would have everything they need (this is basically how tax filing firms/software get it done after you give them all of the information that the IRS already has). A minority have more complex tax situations, but these people likely already have a personal accountant, or are running a business.
> The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes.
Well, not quite. The IRS knows 100% of what the average person is going to put in their tax return. So just automate that.
There is a small percentage of people with more complex tax situations. Yes, they will need to file a tax return. Percentage-wise, it is very few people.
Your tax office wouldn't automatically know about self employment, investment earnings, your private business expenses, collected rent, profit from reselling things, etc, and they'd expect you to declare them via some form of self-assessment.
The US takes one step further by allowing a plethora of non-earning items to be declared as deductions on your return (mortgage interest, healthcare expenses, kids, etc) which the IRS needs to be told about.
They do know your investment earnings (brokerages report that) and your mortgage interest (loan companies report that) and your kids.
That covers, just about everyone.
Sure, a few people have personal businesses and rent incomes and all kinds of complex things. So the rational thing to do is build an automated system that covers the needs of 99+% of people, and for the few ones that it doesn't work, let them opt out and do a traditional tax return filing.
It's not an accident. Lobbyists in the US have spent decades working to hamper the operations of the IRS for a variety of reasons (including limiting their capacity to investigate tax evasion on the part of the people funding the lobbying), and to protect the interests of middlemen like tax services companies.
There's also the side bonus that making filing taxes as painful as possible ratchets up the public's irritation at paying them, thus making tax cuts an even more popular policy goal.
How does cutting taxes make them less irritating? The government can offer you tax rebates or tax credits or deductions that are difficult to obtain. The amount of tax you pay might even go up when the taxes get more complicated.
When I do my tax returns I'm not complaining about the amount at all but about gathering the information. If anything, it distracts from how much I am paying. It's much easier to check how much money you've paid to the government by looking at your monthly salary slip than doing anything tax return related.
They want to make tax filing as painful as possible so that the people associate "taxes => pain" and vote to lower/abolish them. Easy or automatic filing makes people forget about taxes and not care as much about them.
This is also why sales taxes aren't included in item prices, this forces people to be reminded every single day how much they're paying in taxes, motivating them to reduce them.
Yes let's make taxes as automatic and as hidden as possible so that we can keep the enormous government slush funds running as seamlessly as possible without people complaining and questioning things.
The fact that you want to cause extra pain to those who can't pay big money lawyers to simply make a point says more about your political leanings than anything else in this comment.
Not a Republican, but I think it’s a great idea for taxes to have enough friction that voters consider what they’re getting in return for what they pay.
With income taxes being withheld from employees’ paychecks, taxes are already pretty invisible to a lot of people. When you become self-employed and have to hold back xx% of your earnings yourself, it’s an eye-opener!
My argument isn’t that preparing a tax return is informative per se. Rather, it creates a time to reflect on the cost of taxes and their value proposition.
For similar reasons, companies prefer subscription pricing with auto-renewal. If customers had to look at a bill and manually pay it each month, more of them would realize they don’t need a particular service.
Inflicting pain to create reflection? I don't think that's the best way to achieve what you propose.
It just creates a lot of wasted effort across the whole population, people can't decide to stop paying taxes like a subscription if they so want to, the only power they have is to vote some people in that might (or might not) change the taxation based on their platforms, that's basically powerless and you support creating friction and inflicting pain in those individuals every single year with a loft notion that people will stop and reflect about what they are paying.
They won't, they will just hate filing taxes, while being on the hook if they send the IRS the wrong figure (which they already know about), it's simply insane that the USA does not provide pre-filled tax forms like so many other developed economies.
> Sounds like nonsense to me. With sufficient friction, many people pay an accountant or some tax software to maybe do it right or wrong.
Not only that, I can give you a better way to make people conspicuously aware of the amount they're paying in taxes:
1) Stop requiring income tax withholding at all. Instead, require an equivalent amount to be contributed to an IRA and not withdrawn in the same year.
2) No withdrawal penalty for using money in a 401(k) to pay your taxes.
The problem withholding solves is to prevent people from spending the money they would owe in tax by the end of the year, which this also does. But now there is no more "tax refund check" whatsoever, and no confusion that the government is paying you instead of the other way around. Instead you have to write a check against your retirement fund to the IRS, in the full amount of your tax.
No need to make the filing process a bureaucratic mess. Also encourages people to have an IRA, if they don't.
Correct me if I am wrong, but the point of the American obsession on taxes links back to not tolerating bad leaders and the encroachment on freedoms.
In that sense, it seems here the goal is to make people aware of the ‘intrusion’ in their life and naturally will seek to reduce it.
Looking at the political rhetoric for the USA, there are many assumptions and conversations baked into that position.
For example, the assumption being that leaders are very likely corrupt, and the fewer resources they have to squander the better. Extending from this, it would be prudent to not work via government, and do so by private enterprise.
So on and so forth.
Why would people, logical people, continue to frame their RoI from government actions and public resources as a zero sum game?
Yes, There is great space for emotion, team loyalty in our lives, however economics and resource allocation for the betterment of all can be assessed objectively.
I assume that this is the intent of reminding people of how taxes are used.
Having it framed that way - “painful”, “eye-opening”, “taking from paychecks”, puts you actively in opposition to the government.
Isn’t the point to encourage attentive, engaged citizenry, not biased citizenry?
The problem is that it’s a self-fulfilling prophecy either way. The government can’t do anything without money but it can with money.
One of the biggest problems in the US is that federal taxes are so high, that there is barely any room for state and local taxes (where you’d get the most bang for your buck) to do anything useful.
The problem is it doesn't work in a way which is effective to honest ends.
The best theoretical outcome relies on a strange world where people are normal right until a magically-frustrating trigger event remakes them into homo-economicus which read government budgets for fun and spreadsheets out their personalized cost/benefit analyzes.
I don't think that happens. Instead of checking where the money is going--or having a similar epiphany about all the "free" results they take for granted--people just go: "tax too high somebody fix it somehow", opening the door for demagogues.
One could imagine another model, where filing is easy, but the government is required to show you where it all goes... But that's not usually in the interests of the "anti-tax" politicians, since it would highlight deficit-spending or programs they could not cut without putting themselves in an uncomfortable reelection position.
So the IRS mails every person a letter that clearly shows the taxes they have paid. Now they get letter that says “you paid $10,000 in federal taxes this year” and they are informed. Why make everyone miserable just to make that point?
Personally I'd attribute it to lobbyists hitting both parties pretty aggressively, but I'm sure some have this idea. If taxes are complicated then it means it's easy to fit in loopholes (or fair tradeoffs depending on your point of view usually)
The last one though really just seems obvious from a competitive standpoint, you look cheaper if you can say that 5% of the price is not your fault. Didn't this just come up with airline ticket prices recently? Everyone wants to tack on fees and taxes at the end to make their product show up higher in search results.
I doubt that part about sales taxes. Sales taxes are state, not federal. There are states that are solidly under Republican control and there are states that are solidly under Democrat control yet they all handle sales tax the same way. If there was anything political about why sales taxes aren’t included in item prices we’d expect to see differences between states.
The real reason is most likely the large variability of sales tax within most states. If sales tax were included in item prices you could not print the prices on packaging until you knew what place a particular item would be sold. And what price would you put in advertising when the ad will be seen by people in areas with different sales tax rates?
> The real reason is most likely the large variability of sales tax within most states.
There is a much simpler explanation: It would make the prices look higher, which would reduce sales, which isn't to the advantage of the business or the tax collector.
Notice that they also do the equivalent for income tax from the other end -- the advertised salary for the job is the pre-tax number.
possibly misunderstanding, but the border between Oregon and Washington has an immediate sales tax change, and income tax change in teh opposite direction.
Yep, you got to look at what folks do, not what they say. The Republican actions tend to be raise taxes on the middle / lower class, lower taxes for the rich.
Apparently the mechanism is that Americans for Tax Reform, Grover Norquist’s organization, grades politicians on how much they resist tax increases and other tax-related things, and they’re skeptical of public tax software. patio11 goes into it in an aside in one of his articles [1].
> Norquist considers a public filing option a tax increase by stealth and opposes it automatically.
The thought process is that they want to abolish more taxes, so they want complying with taxes to be as complicated as possible so they can get more people pissed off at taxes more generally. Or at least that's the thought process of the Norquist wing of the party.
> they want complying with taxes to be as complicated as possible so they can get more people pissed off at taxes more generally.
There's nothing in that article that says that:
> Grover Norquist, president of Americans for Tax Reform, does not. His presentation at the meeting argued that a return-free system would essentially audit every citizen, help the government increase revenues, and keep taxpayers unaware of their growing tax burden. Uninformed taxpayers might also be wary of challenging government-generated numbers and end up paying too much.
The closest is "keep taxpayers unaware of their growing tax burden" but then you'd have to explain why you think it's the complexity that would increase awareness -- it generally does the opposite. And the first sentence on their website begins with "We believe in a system in which taxes are simpler...":
It seems like their position is that the tax system should actually be made simpler instead of leaving it horrifically complicated and hiding the complexity from people so they're easier to take advantage of. Which isn't really the same thing as wanting it to be complicated.
The rhetoric of the Republican quoted: [the e-filing system was part of the Biden administration's] "goal of inserting the IRS into every aspect of Americans’ lives" is ludicrous. Most people file taxes once a year, and the new e-filing system doesn't change the scope or reach. It's there to make it easier to give the IRS money you're supposed to give them anyway. Republicans want to make government seem bad all the time, that's why they don't like this.
The Republican Party is fine with regulatory capture increasing moats around businesses. They'll scream about it sometimes to try to score political points with voters, but they'll never actually do anything about it, because they know where their campaign funds really come from. And since the Democrats also know where their campaign funds really come from, that explains how we wind up in the situation.
Ummm #2 source, besides thin air? Fiscal conservatives don't want the government involved in anything and we sure as hell don't want to pay taxes for the government to waste our money on entitlements, fake vaccines, wars, and redistribution of wealth. The government can't even protect its own citizens against the border crisis, yet my home cameras have AI people detection and tracking. Absurd. The US has the best engineering and technology in the world, give Palantir and Anduril contracts and problem solved.
"Party A is only pretending to support your interests, so you should instead vote for the party that openly opposes your interests." If that's the best either party can do, I think we should vote for whichever party is most likely to enable armed rebellion.
Neither enables armed rebellion, especially not Republicans (they'd be quick to squash that with maximum force).
I'm not sure where the Democrat party is openly opposing the parent comment's interest of financial success. They're simply following the facts that lead to better economic success, which can include putting tax dollars towards benefit programs with high future returns for society as a whole.
The IRS makes tens of billions in revenue annually from penalties alone for what they deem is an underpayment. If the process were not adversarial, the IRS would not be able to assess penalties for underpayments so this revenue stream would presumably be diminished. Another explanation for the adversarial tax filing process is that it is beneficial to the IRS for it to be this way
Frankly, I thought this was reasonably common knowledge (although Intuit's opposition is better known and gets more press). Some links illustrating this as a partisan issue:
Then people would go like "but IRS told be to pay X, it shows that they don't know about my other source of income, so I better not tell them". In other countries with automatic payment (India, Ukraine) -- people would not disclose _any_ incomes for taxes, if given a chance. So government makes everyone to pay through a monitored taxed account. But people don't even think that if money come on another, non-business, account, they should disclose that as income. It's kinda assumed that if gov doesn't know, then they shouldn't pay.
This should be the topmost comment. By having the government not reveal their information on you, they gain leverage. Just because you think the government might know about that income, you will report it. Tax evasion would be a lot easier without this.
The IRS has the income part of your return, not necessarily the expense part. Most people hit the standard deduction, but to do it right you need to actually do the expense part and compare.
Also they may have problems retrieving data in realtime. The IRS was a batch operation historically, and transitioning to realtime is challenging.
I mean what, are you going to do, put ip a wait cursor while joe bob mounts tape number 2,578,998,321?
Is this still true? After they raised the deduction and capped the sales/local tax deductions (and some others too I thought), I assumed a lot of people that used to hit the standard deduction now didn't.
My understanding is that the IRS internal systems are still some derivative of the 1965 Cobol / IBM mainframe. This is not easy to change, and it is unlikely that anyone actually knows how it all works together.
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[ 5.9 ms ] story [ 186 ms ] threadYou might want a second opinion.
You can still get a second opinion with pre-filled taxes.
The meme about “oh I forgot to carry the one now I’m going to jail” is just Internet hyperbole.
https://www.irs.gov/individuals/get-transcript
This is not really accurate. If you're a typical employee, IRS has a pretty good idea of your income, which is just one of the many factors that goes into calculating your tax.
In particular, the IRS doesn't independently know most of the things that could cause you to get tax deductions, like whether you got married since last year, or you moved out of your parents' house and started living on your own, or you're taking care of a child, or you had self-employment expenses, or you bought textbooks for your college classes, or you donated to charity, or you paid expensive medical bills, etc.
I don't have any creative deductions. And I expect many others only have one or two "interesting" deductions to add. I haven't actually measured this but I honestly expect >95% of what I enter into my tax return is information they already have.
These are not "interesting", but nearly everyone has 'em, and the IRS cannot know, without bending space time, how much you'll owe because of those deductions (assuming an itemized deduction, though they're still in play either way because they can help tip the balance between taking a standard or itemized deductions).
Only 13% of all US federal tax filings each year itemize deductions. That means it would help the vast majority of filers and not harm the rest in any way whatsoever. Weird thing to be against if someone isn't misanthropic.
I wasn't disagreeing with the idea of pre-filling tax return data.
I was simply offering examples of "normal" deductions that can easily change what you owe, and how those deductions aren't as uncommon as the person I was commenting to would have you believe.
The vast majority of taxpayers take the standard deduction and do not itemize, so in real practical terms this is an extremely irrelevant straw man.
(https://www.taxpolicycenter.org/briefing-book/what-standard-....)
(https://www.usatoday.com/story/money/taxes/2023/02/15/itemiz...)
They internally compute what you owe, and if what you submit doesn't add up, they dig deeper.
They know a lower bound on how much income you should be reporting. They have no idea how many dependents you have, houses you sold, charity you donated, foreign income you made, etc etc etc. There are hundreds of other things they don't know which massively affect what you owe.
If they got a W-4 for you and you don't report it, yes you're f'd. But they in no way know how much you owe.
In a better world our taxes could be simpler, but for now let's do our taxes the way they do need to be done.
Generally speaking, the government does in fact know exactly what houses you sold and dependents you have. Those are both matters of public record and registered with the state. How do you think cities assess property taxes? And if you think that charitable donations and foreign income make any kind of dent for 99% of all taxpayers, you're living in a very weird bubble. 87% of all filings take the standard deduction in any given year for a reason.
The government is not a single entity. States do not funnel this information to the IRS.
> Those are both matters of public record
In my state (Missouri) house sale prices are not public record.
> 87% of all filings take the standard deduction in any given year for a reason
Yes I think everyone would be enthusiastic about submitting taxes that are 87% accurate.
That's a weird wrong thing you think. Visit https://www.stlouis-mo.gov/data/address-search/index.cfm and put in any address in St Louis MO and you'll see who owns it, when it sold, how much it sold for, how much property tax they owe, the bounds of their lot, and more.
Here's an example, randomly selected from google maps: https://www.stlouis-mo.gov/data/address-search/index.cfm?par...
This is standard.
> Yes I think everyone would be enthusiastic about submitting taxes that are 87% accurate.
I'm going to ignore this obvious bad faith trolling.
Scroll like 12.5 more pixels. The next section immediately below tax assessed value says "Sales Data" and includes a column for "Sale Price".
The fact remains through all of this that the IRS does actually have _all_ of the needed information for the vast majority of tax filings.
It's an extremely bad faith reach to be like "but maybe I sell my house for bags of paper cash (no banks) every year without telling anyone but want the IRS to know about it" and pretend like that's not an absolutely obnoxiously absurd argument against doing something that would help nearly everyone in the country.
Because, let us be absolutely clear, the vast vaaast majority of everyone in the country live in other states, do report sales even if they do live in those states this person is making the claim about, don't sell or buy houses all that often if at all, and especially don't do it without involving a reporting financial institution.
The federal government likely has zero clue what I spent to buy my house. They could probably find it if they bothered looking hard enough, but it wasn't directly reported anywhere with the government, especially federally.
I'm totally not against having a simple filing system though and agree for most people for most years it would be way simpler. Just pointing out a spot where you're incorrect on the federal government, especially the IRS, knowing everything. You're getting really angry at me about things I've never said. Probably time to calm down my dude.
Here, I have a link of my own: https://www.attomdata.com/news/most-recent/do-you-know-what-...
That site may use voluntary reporting or MLS records, but nobody is under any obligation whatsoever to report the price for private sales.
AND, your bank and investment agencies definitely report everything you put into them. So now you must also be talking about non-disclosed property sales for _cash_, as in paper bills and coins under the mattress. Doing a lot of that, are you?
But tell me more about what percentage of all federal filings you believe would be affected by undisclosed property sales.
The adult thing would be "Wow I guess I had no idea what I was talking about".
https://www.stlouis-mo.gov/data/address-search/index.cfm?par...
How much did the current owners buy it off the church for?
And sure, some agency might have some notification about some wire transfer that happened. It doesn't mean they know what it related to. It doesn't mean the IRS has any knowledge of it.
The IRS probably didn't know and wouldn't know about the kids I have until I told them about it. Sure the federal government would have theoretically known about it from telling the Social Security Administration (not necessarily a requirement!) and later applying for a passport, but the IRS wouldn't automatically know these things. If I told your cousin something do you instantly know it? Federal agencies suck at sharing information.
I do agree we can simplify filing income taxes for the vast majority of people. I agree most of the US doesn't have a kid every year, isn't in a non-reporting real estate state, don't do a ton of stock day trading, isn't donating half their income to charities, etc. But you shouldn't assume the IRS truly knows all your tax situation, and I'd recommend still looking over that simplified return if you've had an odd year if we ever get there.
This wouldn't change accuracy, if anything it might increase accuracy by simplifying it for the vast majority of filers. Nobody is saying you wouldn't be able to file just like you do today, but being able to just review a card of what the government already knows and OK'ing if right would make it massively simpler for 87% of tax filers. You could still have fun spending hours filling out several forms for your odd tax situation.
Remember, the IRS is already computing your taxes behind the scenes based on all the information they have.
If you report an answer different from what they computed, you get audited.
As well as track and list the IP / location and time of when previous accesses occurred. Sign in and see someone not on the list? Have a link that sends to identity fraud at the FBI or whatever's the correct place.
They could also hide the exact details and just name the banks / holdings places and other things involved and you could confirm that there aren't any other details or make corrections.
https://www.login.gov/about-us/
""" Login.gov was a General Services Administration 18F innovation project in partnership with the United States Digital Services (USDS). This shared-service, made possible through a Trusted Identities Group (National Strategy for Trusted Identities in Cyberspace) grant, is a result of cross-agency collaboration that sought to develop secure, user-friendly ways for the public to access government websites. """
Though visiting a local police department or staffed USPS office might also be valid initial authentication methods.
At the inception of the federal tax, the federal government didn't have enough agents to enforce it. So they actually made the filings public so that people could police each other... You'd be able to see your neighbor claiming poverty when you knew they owned twenty acres and sic the fuzz on them.
Something to be said for not letting people do their finances in the dark...
Online Tax Filing (preloaded with all the tax data, nothing to declare extra, just 5 clicks). In fact there are third party sites/apps (freetaxfiler) which automates the entire process.
2. The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Most people could answer about 5-10 simple questions and the IRS would have everything they need (this is basically how tax filing firms/software get it done after you give them all of the information that the IRS already has). A minority have more complex tax situations, but these people likely already have a personal accountant, or are running a business.
Well, not quite. The IRS knows 100% of what the average person is going to put in their tax return. So just automate that.
There is a small percentage of people with more complex tax situations. Yes, they will need to file a tax return. Percentage-wise, it is very few people.
Your tax office wouldn't automatically know about self employment, investment earnings, your private business expenses, collected rent, profit from reselling things, etc, and they'd expect you to declare them via some form of self-assessment.
The US takes one step further by allowing a plethora of non-earning items to be declared as deductions on your return (mortgage interest, healthcare expenses, kids, etc) which the IRS needs to be told about.
For nearly all people, they do.
They do know your investment earnings (brokerages report that) and your mortgage interest (loan companies report that) and your kids.
That covers, just about everyone.
Sure, a few people have personal businesses and rent incomes and all kinds of complex things. So the rational thing to do is build an automated system that covers the needs of 99+% of people, and for the few ones that it doesn't work, let them opt out and do a traditional tax return filing.
When I do my tax returns I'm not complaining about the amount at all but about gathering the information. If anything, it distracts from how much I am paying. It's much easier to check how much money you've paid to the government by looking at your monthly salary slip than doing anything tax return related.
I thought the Republican Party describes itself famously as the anti big government anti governmental complexity party.
Actions speak louder than words.
They want to make tax filing as painful as possible so that the people associate "taxes => pain" and vote to lower/abolish them. Easy or automatic filing makes people forget about taxes and not care as much about them.
This is also why sales taxes aren't included in item prices, this forces people to be reminded every single day how much they're paying in taxes, motivating them to reduce them.
The fact that you want to cause extra pain to those who can't pay big money lawyers to simply make a point says more about your political leanings than anything else in this comment.
With income taxes being withheld from employees’ paychecks, taxes are already pretty invisible to a lot of people. When you become self-employed and have to hold back xx% of your earnings yourself, it’s an eye-opener!
If you want to make tax rates visible, just send a simple statement showing taxes owed divided by the tax basis.
Also, spending hours doing a tax return tells taxpayers nothing about what they get in return.
For similar reasons, companies prefer subscription pricing with auto-renewal. If customers had to look at a bill and manually pay it each month, more of them would realize they don’t need a particular service.
It just creates a lot of wasted effort across the whole population, people can't decide to stop paying taxes like a subscription if they so want to, the only power they have is to vote some people in that might (or might not) change the taxation based on their platforms, that's basically powerless and you support creating friction and inflicting pain in those individuals every single year with a loft notion that people will stop and reflect about what they are paying.
They won't, they will just hate filing taxes, while being on the hook if they send the IRS the wrong figure (which they already know about), it's simply insane that the USA does not provide pre-filled tax forms like so many other developed economies.
Create time? It uses up my time, leaving less time for reflecting on public policy, or anything else.
Not only that, I can give you a better way to make people conspicuously aware of the amount they're paying in taxes:
The problem withholding solves is to prevent people from spending the money they would owe in tax by the end of the year, which this also does. But now there is no more "tax refund check" whatsoever, and no confusion that the government is paying you instead of the other way around. Instead you have to write a check against your retirement fund to the IRS, in the full amount of your tax.No need to make the filing process a bureaucratic mess. Also encourages people to have an IRA, if they don't.
Correct me if I am wrong, but the point of the American obsession on taxes links back to not tolerating bad leaders and the encroachment on freedoms.
In that sense, it seems here the goal is to make people aware of the ‘intrusion’ in their life and naturally will seek to reduce it.
Looking at the political rhetoric for the USA, there are many assumptions and conversations baked into that position.
For example, the assumption being that leaders are very likely corrupt, and the fewer resources they have to squander the better. Extending from this, it would be prudent to not work via government, and do so by private enterprise.
So on and so forth.
Why would people, logical people, continue to frame their RoI from government actions and public resources as a zero sum game? Yes, There is great space for emotion, team loyalty in our lives, however economics and resource allocation for the betterment of all can be assessed objectively.
I assume that this is the intent of reminding people of how taxes are used.
Having it framed that way - “painful”, “eye-opening”, “taking from paychecks”, puts you actively in opposition to the government.
Isn’t the point to encourage attentive, engaged citizenry, not biased citizenry?
This defeats the purpose does it not?
One of the biggest problems in the US is that federal taxes are so high, that there is barely any room for state and local taxes (where you’d get the most bang for your buck) to do anything useful.
The best theoretical outcome relies on a strange world where people are normal right until a magically-frustrating trigger event remakes them into homo-economicus which read government budgets for fun and spreadsheets out their personalized cost/benefit analyzes.
I don't think that happens. Instead of checking where the money is going--or having a similar epiphany about all the "free" results they take for granted--people just go: "tax too high somebody fix it somehow", opening the door for demagogues.
One could imagine another model, where filing is easy, but the government is required to show you where it all goes... But that's not usually in the interests of the "anti-tax" politicians, since it would highlight deficit-spending or programs they could not cut without putting themselves in an uncomfortable reelection position.
The last one though really just seems obvious from a competitive standpoint, you look cheaper if you can say that 5% of the price is not your fault. Didn't this just come up with airline ticket prices recently? Everyone wants to tack on fees and taxes at the end to make their product show up higher in search results.
FWIW, it's the official position of the anti-tax advocacy group "Americans for Tax Reform", whose pledge all but 13 sitting Republicans have signed.
The real reason is most likely the large variability of sales tax within most states. If sales tax were included in item prices you could not print the prices on packaging until you knew what place a particular item would be sold. And what price would you put in advertising when the ad will be seen by people in areas with different sales tax rates?
There is a much simpler explanation: It would make the prices look higher, which would reduce sales, which isn't to the advantage of the business or the tax collector.
Notice that they also do the equivalent for income tax from the other end -- the advertised salary for the job is the pre-tax number.
possibly misunderstanding, but the border between Oregon and Washington has an immediate sales tax change, and income tax change in teh opposite direction.
Describing yourself in a certain way doesn't make it true.
> Norquist considers a public filing option a tax increase by stealth and opposes it automatically.
[1] https://www.bitsaboutmoney.com/archive/payroll-providers-pow...
https://www.nbcnews.com/id/wbna8134597
There's nothing in that article that says that:
> Grover Norquist, president of Americans for Tax Reform, does not. His presentation at the meeting argued that a return-free system would essentially audit every citizen, help the government increase revenues, and keep taxpayers unaware of their growing tax burden. Uninformed taxpayers might also be wary of challenging government-generated numbers and end up paying too much.
The closest is "keep taxpayers unaware of their growing tax burden" but then you'd have to explain why you think it's the complexity that would increase awareness -- it generally does the opposite. And the first sentence on their website begins with "We believe in a system in which taxes are simpler...":
https://www.atr.org/about/
It seems like their position is that the tax system should actually be made simpler instead of leaving it horrifically complicated and hiding the complexity from people so they're easier to take advantage of. Which isn't really the same thing as wanting it to be complicated.
Also, that article is from 2005.
If you're fiscally conscious, the best thing is to vote democrat, based on facts / history.
I'm not sure where the Democrat party is openly opposing the parent comment's interest of financial success. They're simply following the facts that lead to better economic success, which can include putting tax dollars towards benefit programs with high future returns for society as a whole.
https://www.irs.gov/statistics/collections-activities-penalt...
- https://www.accountingtoday.com/news/republican-attorneys-ge...
- https://www.atr.org/conservative-coalition-free-file-solutio...
But patio11 has laid it out in more detail:
https://www.bitsaboutmoney.com/archive/payroll-providers-pow...
Then people would go like "but IRS told be to pay X, it shows that they don't know about my other source of income, so I better not tell them". In other countries with automatic payment (India, Ukraine) -- people would not disclose _any_ incomes for taxes, if given a chance. So government makes everyone to pay through a monitored taxed account. But people don't even think that if money come on another, non-business, account, they should disclose that as income. It's kinda assumed that if gov doesn't know, then they shouldn't pay.
No reason to have middlemen in this space.
Also they may have problems retrieving data in realtime. The IRS was a batch operation historically, and transitioning to realtime is challenging.
I mean what, are you going to do, put ip a wait cursor while joe bob mounts tape number 2,578,998,321?
Is this still true? After they raised the deduction and capped the sales/local tax deductions (and some others too I thought), I assumed a lot of people that used to hit the standard deduction now didn't.
That said, the vast majority of tax is paid by people who don't take the SD.
https://en.wikipedia.org/wiki/Once-only_principle#Estonia