It's really too bad, their basic product - turbo tax free file uses the 1040 EZ form and can be confusing.
My gf who is a student was told by turbotax she owed over $300, after doing it on paper, the old fashioned way, the tax liability was 0. Why? The tuition deduction didn't apply on the EZ version of the form.
Ultimately turbo tax takes a conservative, strict and rigid approach to taxes, but as anyone knows this isn't the reality of doing taxes. For anyone with a moderately complex return, I think it's better to hire a tax professional, then at least you'll LEARN something for your money (which can be about the same amount!).
That seems unfair to TurboTax. I have found it to ask you about things that are beyond the form it is filling out (and then upsell you on upgrading to the other version) and I think it does a great job with educating you about how you can lower your taxes. If you want, you can avoid their fees by filling everything out through the program and remembering the relevant information when filling out the form manually.
I also file my taxes on paper and I do all the calculations manually (well, in a spreadsheet). Even though my tax situation is far from the most complex, it is more complex than TurboTax can handle. Also I like to keep tax preparation painful as a reminder of the burden that the ridiculous complexity of the tax code places on me.
That said, I do agree with Intuit here. I don't think there's any evidence whatsoever that the government is capable of making software to either provide a service similar to TurboTax or to correctly pre-calculate your taxes. They don't have the technical expertise so they'd have to contract it out. We saw how well that worked with healthcare.gov. They are not incented to "find every deduction" like a private tax preparer is, quite the opposite in fact. They also simply don't know enough in many cases. They don't know what my self employment income and expenses are, for example, until I tell them.
The only way that government can make taxes easier is to simplify the tax code itself.
But why restrict the gov't ability to provide free online filing. If TurboTax can provide an alternative that is better then they can still make money by providing value.
I'm not sure you actually agree with Intuit. They're saying that the IRS and state-level agencies should not provide free online filing services--even though they already provide free paper filing systems.
As far as I've seen, no one has done a movement to ban tax paperers (either online or in person). If Intuit or H&R Block can provide a better website for $39 or whatever, they can. The question is if the agencies in question shouldn't develop their own replacements to paper tax forms.
Can you imagine it was 30 years ago and if, instead of getting tax forms mailed to you every year (or photocopies from the local library for a pittance 5 years ago), you had to walk down to the local H&R Block or other private company and pay them $40 to get the forms they wrote based on the tax code to file your taxes? It's pretty much the same thing.
From a pragmatic standpoint, the forms already exist. They have to be updated, but the changes from year to year are not huge. Governments have a lot of experience creating forms. We don't hear about massive budget overruns and failed government projects creating forms. We do hear this about almost every software project they undertake.
Nothing the government does is free, and implemnenting online filing services would be something they (and by that I mean we) would pay billions of dollars for, and it would be poorly implemented, insecure, and it would crash constantly from overload during the month of April and especially on April 15th. I'd rather let Intuit do it for 1/1000 of the cost, and even at that, a cost that I would only pay voluntarily.
If Intuit can do it for 1/1000th of the cost, they could bid for the contracts at extortionate markups to cover their lost future revenue and still likely win them. Especially given that they apparently know the lobbying game quite well.
"I don't think there's any evidence whatsoever that the government is capable of making software to either provide a service similar to TurboTax or to correctly pre-calculate your taxes."
Yes and no. When the government wants to get quality software that solves real problems and saves taxpayer money, it manages to do so:
"We saw how well that worked with healthcare.gov."
Keep in mind that healthcare.gov was overburdened with moronic, ideologically driven requirements that were still being finalized a week before it was supposed to go live. It was being set up for failure from step one.
TurboTax Free did a 1040A for me this year. It's not limited just to 1040EZ.
I think they may have adjusted things compared to last year; it imported my data from last year (a new feature), and I thought there used to be a "Basic" product between "Free" and "Deluxe".
Virginia's Department of Taxation used to have a pretty decent online tax website. It was shutdown because of lobbying such as this. There was a year when no free online filing so I took the extra effort to do a paper return that year. Even FreeFilableForms are run by the Free File Alliance which is part of the group that lobbies against the IRS and state taxation departments from doing their own filing websites for personal profit. So they make sure that their own free filing options are just good enough to be barely acceptable while making their paid (for filers with income over ~$58k) options seem much more attractive.
Between this and intentional complexity of the tax system that hinders making the IRS more efficient and hides true tax rates that corporations and higher income people... I dunno, it's one of the blacker marks against America in this aspect of policy.
But I've without doubt decide I'll try as hard as possible to never, ever pay a company like that to file tax returns.
One of the craziest things is, it save their tax department money for every single tax filing done online vs paper.
Paper takes an obscene amount of human hours to process in comparison. Online tax filings should at the very least be free, or even give you an extra tax deduction.
Do you know of actual/estimated numbers for human/computer processed tax filings? It would be interesting to see how many minutes of human time are needed for the average paper return. I have a sneaking suspicion that the "human touch time" is not "obscenely high."
The other thing to know is that e-filed tax returns are subject to an immediate sanity check (i.e., has this ssn already been used?, is this a valid zip code?), which doesn't exist for paper forms.
For me, personally, it was 7 business days this year, and I did the filing in all of an hour and a half, in an afternoon. And that includes the time spent trying out two other free apps to decide which ones I liked better.
I appreciate the reply but I think time-to-refund is a terrible metric for estimating how much human touch time is involved in processing a return. What more do we know about human paper processing time per return than before?
How much would your answer change if you found out that there are only two people processing paper returns? 2^32 people? What if you found out that the types of returns that are mailed in are 10x more complicated/detailed than e-filed returns? Would it change if you knew there was an intentional processing delay on paper returns to increase e-file adoption?
I think it's a decent metric, and I'm surprised you don't agree. If we forget the "human time" part, it's a clear indicator of which method is more efficient.
Given that you want to "forget the 'human time' part" I am curious what you think the metric is for. Maybe you meant to respond to a different comment. In this thread I had asked if anyone had any numbers/estimates for processing time. I wanted these numbers because "It would be interesting to see how many minutes of human time are needed for the average paper return."
> One of the craziest things is, it save their tax department money for every single tax filing done online vs paper
One of the HUGE benefits of e-file for them is that there are sanity checks that happen almost immediately and if they fail the IRS completely rejects the return. This does two things:
1. ensures accepted returns look much closer to accurate
2. places the burden of rejection notification on the e-file transmitter. For example, if I transmit a tax return that the IRS rejects due to a re-used SSN, the onus is now on me to notify that filer that their SSN has likely been stolen and provide customer service on what they should do next. From the IRS perspective this is a huge win. For e-file transmitters and tax software providers this is an un-fun problem to deal with.
Would they really do that? It seems like that would give you two problems. Your SSN was stolen and now you can't file your taxes too.
The proper response would probably be to notify you, accept your documents (and the other documents presumably submitted by somebody else) tentatively, then do some investigation to determine which one is authentic.
Yes, indeed, they really do that. The person who has had their e-file reject must submit a paper return and call a special 800 number dedicated to this issue. It's a total double-whammy for the user. IRS tries to resolve these issues within 180 days... and if that delay of their return causes a financial burden they can file a petition. The wheels of progress turn slowly.
This is how a colleague of mine caught identity fraud. Someone had filed several fake tax returns with his information, called to have all of them invalidated as fake before submitting the "real" fake return, collecting the payment, and thus making it yet-harder for the real guy to claim the fake-but-not-fake was a false return.
Hmm. Canadian here, our SSN is called an SIN. NETFILE, which I didn't think was that innovative, matches SIN number to date of birth on file (which can be changed by phone call) and regardless, sends a refund to the address on file (which, like Direct Deposit settings, can be changed through a web interface). That said, I've never heard of someone committing tax fraud electronically, given the barrier to change an address. Google revealed no reported incidents, not even on forums. And if I had to submit on paper, as only 25% or so of Canadians do now, the software will let me print out all the forms I need, and if necessary, the PDFs from the CRA have fillable fields, IIRC. That said, there are still too many form types, even though most don't apply to me.
OTOH, with this system, once you file you are protected from future identity theft. Since most people will file by the deadline, that limits the potential exposure.
Not that crazy. This is seen and encouraged in startups all the time: Companies should charge for the value they provide, not for the man-hours they're spending.
Additionally, anything that makes things significantly easier probably requires a large up-front investment of man-hours and/or money. If you've ever dealt with government software projects, you can imagine how large of a project this must have been. That money has to be recouped somehow, and that won't happen by giving things away for free.
(Note: I'm not advocating for the sleazy behavior of lobbying against easier/cheap tax filing. I'm just making the case that there's business reasoning behind this, other than plain spite for the common folk.)
But surely the purpose of the tax system isn't just to collect taxes but also to create employment. Intentional complexity keeps programmers employed, I mean the sort who aren't "developers" but the sort who instead work in firms whose business model is their computer system such as banks and insurance companies.
> Between this and intentional complexity of the tax system that hinders
Can you give me an example of this "intentional complexity?"
The income tax is complex for two reasons: 1) it's inherently difficult to define "income" in a practical way; 2) it's a tool used to further all sorts of economic and political policies.
The best class I took in law school was Federal Income Tax (I'm not a tax lawyer). It really showed me that things which seem unnecessarily complex, like depreciation schedules or the treatment of capital assets, exist to solve theoretical problems that can be analyzed mathematically.
Finally, it's not like accounting, pursuant to GAAP, is simple. And it seems obvious, to me anyway, that tax law must be at least as complex as accounting.
Surely we can define what is income, what is not, and how its treated for taxation purposes in less than seventy thousand pages?
It is complex and it is intentional, this is how politicians reward those whom they appreciate and "punish" those who they do not appreciate. You can move from the non appreciated column through proper donations either directly or through advocacy groups or lobbying firms hiring the correct people. No, I am not being cynical, I wish I were
An example of the problem: Describe in appropriate level of detail what a "royalty" is and where it originates. Please note that you must be as robust against edge cases as a login form or you will cost the country hundreds of billions of dollars.
If you can do this in under 100 pages, you're doing really well.
For those of us that don't know much about royalties, can you explain why is it any harder (accounting/tax-wise) than a variable-rate monthly subscription?
It doesn't matter what a royalty is or how it works, any more than it matters what any other income source is; it's a payment you receive. Why distinguish between royalties and other forms of income?
The problem only gets complicated when you try to set policies using the tax code, to incent or discourage specific behaviors by making them more or less beneficial. A tax code that treated all sources of income as identical would get far simpler.
Say I'm a shopkeeper. I sell you a candy bar for $2.00, and receive a payment for that amount? Is that my income? No. The credit card processing fee, the cost of getting the candy bar delivered from the wholesaler, and the cost of the candy bar itself must be paid out of that $2.00, but do not represent changes to my own wealth. Deductions exist to go from "gross income" (the payments you receive), and "taxable income" (the amount that your wealth actually increases).
Now, say I'm a farmer. I buy a new tractor. I should be able to deduct the cost of that tractor from what I make selling my crops. But should I get to take the deduction for the full value immediately? No! Unlike a candy bar, which is gone as soon as the customer purchases it, the tractor is a capital asset (an asset that is used to produce income). When I buy a tractor, my wealth just changes form: I have less cash, but I have a tractor. Over time, the value of the tractor will decrease. Eventually, the full cost of the tractor should be deductible, but because the tractor will help produce income over many years, the deductions should be taken over many years. Otherwise, because of the time value of money, the taxes paid will understate my actual increase in wealth. This is what "depreciation" is all about. Because it's impractical to actually sample the change in value of the tractor each year, it happens according to fixed "depreciation schedules." And when you sell the tractor, the difference between its market value and its value according to the depreciation schedule generates income or loss that must be accounted for.
Now, say I own a house (or stock). It's value goes up every year, which represents an increase in my wealth. Should I pay the IRS a tax each year based on an estimated amount? That would be very inconvenient, so we have a whole system of "realization events" that define when continuous changes in wealth must be "sampled" and tax paid.
As I noted in my post, a lot of this complexity just falls out of accounting. You're right that the various measures to use the tax code to create incentives/disincentives also complicates the situation, on top of the inherent complexity. But it's not a given that the value of these incentives/disincentives is less than the burden of the additional complexity.
> The income tax is complex for two reasons: 1) it's inherently difficult to define "income" in a practical way; 2) it's a tool used to further all sorts of economic and political policies.
3) It's probably the top target law for being gamed/interpreted in a creative way. The more loopholes are patched the more patches there are to find loopholes in.
The complexity for income tax law stems from tax breaks. There are all these different ways for people to pay less in taxes, but each rule for paying less has its own set of instructions and there are criminal and monetary liabilities for filing incorrectly. So it can be said that if you just pay your income taxes as they come and don't claim any deductions, you are essentially over paying in taxes. Another problem problem that arises from this system of tax breaks is that it allows people receive more or less in deductions based on their life situation which is inherently inequitable.
Tax law doesn't have to be so complex though. For example, you could just have a simple income-bracketed flat tax that is just at a lower rate than current taxes without any deductions possibly. Or possibly better yet, you could get rid of the income tax all together and just use a federal tax on sales, real estate and money transfers out of the country. Granted, this would give the government more direct control over how much money is being collected on a daily basis and could result in some people feeling like they need to have a party with tea, but assuming we do live in a democratic society, something like a sales tax would be more understandable and visible to everyone (as the rate would be printed on all of their receipts) and it would probably lead to more oversight of the tax by the taxpayers rather than everyone just being concerned with paying less than they are asked to each year without getting audited.
I'd say there's two types of "intentional" complexity. There's the complexity that comes about because we feel like some actions should receive preferred tax treatment over others. So, tax expenditures like student loan and mortgage interest deductions and so on. They had some complexity because "we", as a government, decide to do that.
But the darker side is the complexity that exists to let people with enough income and the means to obfuscate their true tax rate. We may have a top marginal rate of 39.6%, but even people who have a huge income pay nothing close to that. And it's in high income people's interest to keep it that way. It's also in the interest of the companies we're talking about to keep the tax code complex both because they're run by high income people and if the general population has a sense that the tax code is super complex for themselves, they're more likely to use tax preparers even if they actually have very simple taxes or just mildly complex.
So, yes, with a huge economy the tax code is going to be very complex. That's just politics and the nature of the beast, but there's more complexity than there needs to be because of interests who drive it to complexity for their deadweight gain and strive to keep it complex.
The Free File Alliance has certainly improved over the past year.
Previously, their system used Flash or Silverlight, and had horrible ui around tabbing between fields and copy/pasting. (Especially on the cap gains form).
This year, they're running jquery, bootstrap, and a whole host of other html5 javascripty goodness. The usability went up for me.
I used to boycott TurboTax because of this. But then I realized that Intuit is just playing the game. Why wouldn't they do everything they can to sustain their business (well, a sense of moral decency, I guess, but that's a big ask)?
The real root of the problem is of course our broken political process.
That depends on how good you are at filing your tax returns. Intuit is lobbying for a complex tax code because that reduces the likelihood that you can actually do your taxes on your own without losing lots of money or getting in trouble with the IRS.
And out broken political process remains because of everyone in the government doing everything they can to sustain their own livelihood. Reality is a result of human action; to change reality you pretty much have to convince people to act differently in some fashion.
I'm sure that their lobbying helps a little but that's not really what keeps our taxes complicated.
Lots of conservative/anti-tax/right-wing/libertarian types see the difficulty of doing taxes as a feature, not a bug because it makes people hate taxes in general and more likely to vote for Republicans/fiscally conservative politicians.
That is mostly true. So they oppose most things that make our current style of taxation--mildly progressive with a lot of deductions. So they want to make it as painful as possible for Americans so they can try to get what they want.
A "flat tax" means moving from the current 10%, 15%, ..., 39.6% rates to a single tax bracket. Tax brackets are one section out of thousands in the Internal Revenue Code and one line on the 1040. We could move to a flat tax and still have the current overcomplicated mess of deductions, credits and penalties in place, and that's what takes up most of the time and effort.
There are different types of flat tax[http://en.wikipedia.org/wiki/Flat_tax]. With true rate flat tax there are no deductions. I believe when most people talks about flat tax, they think of true flat rate.
> huge numbers of conservatives (everyone i know) want the irs gone and a flat tax.
Yes - because filing is so complex. If filing were simple, people probably wouldn't mind. So a complex tax filing system makes people lean conservative, and therefore vote conservative. So it's in the interests of conservative politicians for the tax filing process to be complex.
Just moved to the US last year, and used Turbo Tax to file my tax returns. It was alright, but in New Zealand, we don't generally have to jump through all these hoops.
I guess it would be nice if there were a free alternative to TurboTax, but at the same time, I kind of don't really care, so I'm happy to let them get away with whatever they're doing. I know Lobbying isn't illegal in the U.S., and I don't think it's all that immoral either.
> I know Lobbying isn't illegal in the U.S., and I don't think it's all that immoral either.
I guess maybe Intuit is just "playing the game" but the fact that our government is being made purposefully obtuse and inefficient should make anyone mad.
If you think "The government is purposefully obtuse and inefficient all over the place", I agree. I'm just trying to fight the good fight one thing at a time.
The problem is that this shouldn't be there to begin with.
It has no reason to be.
If you accept that it should be there, then you can pile up a zillion other similar services, middle men, etc that have no reason to be but collect yearly money (and thats billions).
Just think about the amount of human time wasted if money doesn't talk to you. When you multiply it by more than your own wealthy self, it's scary.
Disclaimer: I used to work for Intuit/TurboTax and am now building a product in the same space. On topic: They rightly get beat up for this, and get beat up for their lack of pricing transparency, but somehow manage to always receive a pass on the software itself. IMHO it's pretty atrocious... Sure, the math is almost always right but the math is a commodity. The experience itself is overly-verbose and littered with repeat questions, confusing questions, open-ended questions.
I don't know anyone who genuinely enjoys using TurboTax. I'm surprised there isn't more legitimate competition in this space.
Both of those comments seem to come from call center workers (i.e., they mention clocking in, etc).
Each site has it's own culture (and each site has cultures within cultures). Like any mid-sized company, Intuit has a broad mix of personalities and talent levels. If I had to put them on the couch and nail down the core problem it's that they haven't really done anything groundbreaking lately. All the weird management issues you're reading about in those comments are because they're trying to hang on to what they have without moving the ball forward. All IMO of course.
I don't particularly enjoy using TurboTax, but hey, who enjoys doing their taxes. However, after using it for 10 years, I'm pretty used to it. When I have a question about how to do something, I can just look a a previous year's return and find a similar situation. While it isn't the most straightforward, at least it's relatively consistent.
I've been told by friends that there are less expensive programs out there, but the ~$80 that it cost me to do my taxes on TurboTax (Deluxe + State eFile fee) doesn't seem horrible (ie it isn't worth it to switch to something else to save an insignificant amount of money).
It does seem a bit backwards to have to pay to eFile in CA - I used to mail in my returns to get around this. But, at the end of the day, it's easier to just pay to eFile, and it only costs me maybe $20 more (plus I save a trip to the post office).
Overall, I've optimized to just using TurboTax, and I'm sure there is some laziness involved in that decision, but overall, unless something else is much much better, there isn't too much impetus to switch.
> Overall, I've optimized to just using TurboTax, and I'm sure there is some laziness involved in that decision, but overall, unless something else is much much better, there isn't too much impetus to switch.
And in fairness, there's benefit to sticking with them year over year: that's a lot of data that gets transferred automatically. Most of the less expensive alternatives are horrid (I've used almost all of them). There's a good reason they're the king of their market. My point is simply that no one's giving them legitimate competition in the space and that surprises me. My evidence was only to point out the low-hanging fruit to go after (and while that low hanging fruit wouldn't be enough to sway a 10-year user, it's potentially enough to sway earlier users)
I went from doing my taxes by hand to using TurboTax. The comparison is like night and day; I get a more complicated return done way faster using TurboTax than when I did things by hand.
The verbosity of TurboTax seems like a feature to me, not a bug, in that it pre-answers many obvious questions.
I don't enjoy using TurboTax because I don't enjoy doing my taxes no matter how good the software. But I certainly don't blame TurboTax for that.
Oh FOR SURE. It's leaps and bounds better than paper forms... IRS says average time to prepare a 1040EZ(!) by hand is over 3.5 hours. Only ~5% of filers use paper forms anymore though.
Maybe "enjoy" is a high bar? But surely there's room for improvement.
Just used their web interface to file last minute today and it was actually amazing. I do think you're right about the confusing questions still, but the web version seems to have solved all of the form input problems and "correction" problems from last year.
(Of course, I'd much rather have what other developed countries have and make TurboTax obsolete.)
The experience of actually using TurboTax is horrible, saved only by the frightening alternative that would be the experience of filling things out manually.
I'd expect that the reason why Intuit refuses to change things (clarifying and streamlining questions, better navigation between forms, etc. etc.) is a fear of risking that which "already works." Unless something significant changes in the market, I don't see Intuit re-envisioning TurboTax anytime soon.
Every year they try to force me to pay to file online for state taxes... but it's free online in my state. It's just painfully obvious they're trying to rip me off on the state return.
I've been using H&R Block's "At Home" software (the product previously known as "TaxCut") for over a decade without major complaints. ~$50 (the "Deluxe" edition + State + State filing fee) and about two hours of my time for a moderately complex joint return seems fair to me.
How realistic would it be to produce an open source replacement? (Maybe a Kickstarter-funded one, to speed things up, given the fact it concerns every US household?)
Uggh, from what I've heard IRS makes time management look like a simpleton banging toy trains and making "wuwu" sounds.
And time management is notoriously hard. Not to mention this will need security up the bum.
How much would it cost just to read all the documentation and have the program certified, so it can do what it's supposed to do without writers getting sued?
It's pretty difficult. E-Filing isn't as simple as a web service.
I believe that if it were to actually do the e-filing, the people who ran the e-filing would have to submit to federal background and clearance checks at those people's expense and the servers it ran on would have to probably get FISMA High certification, provided it actually posted to the Efiling API.
That's just my speculation, fwiw. But I think that's true.
You're solving the wrong problem. The issue isn't that tax prep people are making an easy problem seem hard (and are thus ripe for an open source disruption). Intuit (and others) have a vested interested in making it actually hard.
Filing taxes correctly while maximizing benefits is incredibly difficult. There are tons of ambiguous rules and loopholes and fuzzy boundaries and it changes all the time.
If you were running Intiut, would you do anything differently? The TurboTax product is built on the fact that the Tax code is complicated. Of course they're going to lobby against tax reform.
According to Intuit's 2013 Annual Report page 41 [1] , they had $1.5B in Consumer Tax product revenue, which is primarily derived from TurboTax Online. That is 35% of their $4.2B total revenue in 2013.
They're creating a lot of ill-will for 35% of their business.
Many foreigners are puzzled about why we Americans complain so much about our taxes, when they aren't particularly high by global standards. A major reason is that our taxes are particularly intrusive and annoying by global standards.
This also goes for consumption taxes - a 9% sales tax added at the register feels more intrusive than a 20% VAT included in the price tag, even though the VAT is much higher.
I've been to the US a few times, and it puzzles me why you don't add the sales tax into the price. I mean, it's a certainty it will need to be added, you can't not pay it, so it's a sane default for 99% of cases (if you have some sort of reason not to pay, you can just think of it as a discount on price).
Why waste all this time from millions of people tens of times a day just to add 9% to a price?
Hmm, you mean it's easier for inter-state businesses to have unified catalogs? I think local businesses wouldn't care much about that, since they're located in one state, no?
Or do you pay different amounts of tax based on where you live, rather than where the business is?
I believe that if you buy in tax-free (Salem) New Hamsphire but bring the goods back into Massachusetts, you are supposed to fill out a MA tax form. Assuming you are a Mass resident
Yes, that's called a Use Tax, and it applies to things like Amazon purchases as well if they cross state lines and you weren't charged sales tax on the purchase.
Just the opposite is probably more important. Since sales taxes can vary locally (city, county, state) hiding the real price prevents people from noticing they can get cheaper goods by driving across an imaginary line.
Example: There is a walmart in both Cityville and its suburb Township. Cityville has a 9% sales tax but Township has a 7% tax rate. Both stores can advertise that they're selling a tv for $500, even though it costs $545 in Cityville but $535 in Township.
This helps prevent people from driving to the Township store to save money, because the advertised price is the same and most people won't think about the tax rate difference.
Where is the wasted time? I think foreign tourists get hung up on calculating the tax themselves, so they know how much the bill will be, while most Americans just pay the total that gets rung up.
One big reason why the sales tax is NOT included in the price of the item, is that the sales tax you pay is deductible from your federal taxes. To prove the amount of sales tax you pay, should you choose to itemize deductions, you must have itemized receipts.
With itemized receipts, you have a line for the sales tax which serves as proof, if the tax were included in the price, you'd then have to have special indicators for which items are taxable on the receipt, and then calculate for each item on each receipt.
When I just did my taxes, it was sales tax or state + local income tax. Given that I live in NYC, state+local was higher than any reasonable esitamtion of sales tax.
Including the tax in the advertised price doesn't prevent it from being separately listed on the receipt. It'll say something like "Total $120, Included Tax $20" instead of "Subtotal $100, Tax $20, Total $120".
This is probably better left for "Idea Sunday", but I keep coming back to the fact that:
* We have languages for defining business processes & workflows (e.g. BPMN/BPML);
* We have open-source workflow engines (such as Activiti in Java and others all over the language spectrum) that utilize BPMN and terms;
* We have open-source ways of maintaining changes to these things over time.
I know it would be a monumental task, but why not start an open-source org to tackle Tax visibility at Federal and State levels?
With enough civic-minded hackers and accountants (both of which I believe exist), we could begin the process of transcribing the tax code into an interchange format. Then as we begin to see the updates each year, we can track the changes via source control.
Does anybody know if efforts like this have been undertaken anywhere else? Otherwise, I may have found my passion project.
Furthermore, does anyone know anything about the process by which Intuit makes this happen? They clearly have workflows and inputs into them; they had to get there somehow. I'd be interested in any/all knowledge that could be opened up on this.
it's a great idea, but there's a slight catch. in theory if this were to get so successful it drives TurboTax et al out of business, then the lobbying dollars evaporate, and suddenly we get legislation to simplify the tax code rendering your project unnecessary. (though I suppose there will always be some advantages to software to prepare taxes, regardless of how simple the tax code is.)
then again, it could depressingly turn out this is the only viable strategy to actually get the desired outcome of a simpler tax code.
But my god, if you pulled that off, it would be a HUGE success! You would be the catalyst that helped our nation get to a streamlined, efficient tax system.
There seems to be a misconception that intuit is lobbying to keep the tax code complicated. In fact all they're lobbying against is federally-funded e-filing systems.
The tax code is complicated because of all the other lobbying by every interest group in the U.S. For example, banks and realtors lobby super hard to keep the mortgage interest deduction.
Tax simplification is politically hard because any change creates winners and losers, and they all fight hard one way or the other. One man's loophole is another's reasonable exemption, deduction, or credit.
Maybe you could sell it to a smaller/medium player who does mostly corporate work as a way of undercutting his larger competitors who do consumer and corporate taxes. Plus it'd be a heck of a branding opportunity.
I have been thinking about this for a long time. It would be a great open source project. If you want to do it, I would be willing to work with you on it.
I don't have experience with BPMN/BPML but I'd still be interested in helping out if you get something started.
I'd recommend targeting the folks with relatively simple taxes (salaried/wage employees with limited and structured investments, nothing super fancy) who make more than the Free-File cutoff, and then work your way out from there. The "I own 4 businesses and have 17 different investments all structured differently with various business expenses that are different degrees of write-off-able" group isn't your target, and there's already FreeFile options for folks making poverty-level wages.
The toughest part here business-wise is probably the liability - TurboTax and HR Block and whoever have armies of lawyers and PR and insurance to handle cases like a user getting audited and blaming them or catching flak for clients over-paying. Those armies are there to protect Intuit, not the end user, but they're fairly important nonetheless.
Recently sitting down and manually preparing my taxes for the 9th year in a row now... I am not surprised.
This type of tax-code-manipulation must certainly have been happening since the dawn of time. That, or it was written to confuse the public on purpose.
Finding, reading, learning and understanding the tax code is no mean feat for a layman that was told nothing of it in school (none of us Canadians were taught taxes in public school). And this is coming from a relatively smart person who willingly reads cryptography papers and learns new programming languages for fun.
How much more difficult does TurboTax propose that the IRS make filing? Should we get individually filed returns notarized by our deceased relatives as well?
It usually takes me about 12-24 straight hours of work, and this is for a simple sole-proprietorship that just tallies up income and deducts expenses.
I manage to get it done properly and on time every year, but realizing so many schortcuts along the way that "they" could be making for us yet fail to year after year... it's really quite infuriating.
That, and the fact that I have to do the work to figure out how much I owe them. :/
I am proud to have completed my taxes myself and will strongly urge everybody I know not to vote for TurboTax with their wallets and why.
Intuit's argument generally is that if the government was allowed to create their own online filing system then that would create an imbalance of incentives, since the incentive of the people setting up the tax form would be to try to screw people into paying more if possible. Keeping it to a pure private market of tax preparation companies ensures that companies compete to make their returns as favorable to you as possible, thereby counterbalancing the IRS.
I still think the lack of easy government-provided online tax systems is insane, but that's how the other side justifies itself.
I question the idea that the government could build better tax prep software than Intuit or other private companies. I don't think the Feds are known these days for performant, efficient, easy-to-use large scale consumer web applications. At a minimum I think discussion along those lines should wait until federal IT procurement is reformed.
It's also worth noting that the article is not talking about the actual complexity of the tax code itself. As far as I know, Intuit is lobbying on the subject of tax preparation technologies, not lobbying against tax simplification in general. (As some comments seemed to imply.)
A lot of the comments here are not talking about return-free filing; for example the top comment mentions the Virginia state form, which was a simple web form that replicated the fields of the paper form.
California is still offering ReadyReturn but it only covers the simplest cases. Likewise a federal return-free system would only cover a fairly small portion of taxpayers unless there were significant changes to tax law and/or IRS operations.
So pathetic to have to even have to debate the benefit of IRS providing a website to file taxes. The free filing for income lower than $58K is a scam. If you have a 1099 for $1000 or capital gains of $500 you are out of luck, it is impossible to know what they will charge until after you enter the data. That's what this assholes call innovation. The only explanation is that Intuit is influencing members of congress with money, that's a crime. There is no possible argument to justify forcing 100 million people to waste time on something that should be trivial for most people.
This should not come as any surprise, really. This is what mature companies do once they achieve any level of monopoly that could be threatened with new legislation that benefits the public (and other businesses) but could hurt the monopoly. This is what the auto dealers are doing: after enjoying decades of control and a cozy relationship with legislators, they're threatened by upstarts like Tesla. But then at some point, if and when Tesla wins, it'll have to deploy its own army of lobbyists to keep the new status quo going.
It is what every web and mobile startup, it seems to me, deep down aims for: a monopoly, an unfair advantage. It is what, between the lines, you are taught at YC and what every VC expects of the "unicorn" portfolio companies that strike it rich. Fight to get to #1, wipe out the competition, reap the winnings, and, oh yeah, strike down any threats from, you know, up-and-coming competitors. So it goes.
It's business. It's ugly. If you don't like it, why are you doing a startup? If your startup is wildly successful and IPO's and turns into a giant, you don't think you will have to pay a lot of lobbyists to control the legislators?
> If your startup is wildly successful and IPO's and turns into a giant, you don't think you will have to pay a lot of lobbyists to control the legislators?
It seems weak to beg the government to protect your precious company. It also smacks of hubris to believe your business is somehow so special that it needs to always be raking in cash despite 'progress.'
> If your startup is wildly successful and IPO's and turns into a giant, you don't think you will have to pay a lot of lobbyists to control the legislators?
No, I think I'd be sipping cocktails on the beach. (This is probably why I'm an employee rather than a founder)
While doing my taxes I was wondering why there isn't a startup in this space.
Turbotax:
- Has a terrible UX/UI
- It has to update itself with a 100mb payload every time you open it from Jan 1 - Apr 15
- Doesn't actually advise you how to plan for your taxes. It's reactive to what you did.
- Uses shady pricing and lots of versions to get you to spend more instead of just being straightforward.
- Works hard to make you dependent on them
When you hear about the rich only paying 10%, 15% or whatever low bracket; they did it by putting their money in the right places and sometimes investing or spending it at the right time.
Where is the startup that is basically my accountant without the cost? Can we really not programmatically understand tax code and financial strategy?
> Can we really not programmatically understand tax code
Isn't that what TurboTax does? I don't know about a bunch of different versions, but the online version works just fine for me, and is pretty snappy. Sure, they upsell you to file your state taxes, but the $30 or whatever is worth it to me to avoid the duplicate work.
Their lobbying is a separate issue, but I have no problems with the actual product.
It walks you through filling out your tax lodgement step-by-step and even calculates your expected return. It's not the nicest piece of software, but after having read this article, I am greatly appreciative that it exists at all.
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[ 95.1 ms ] story [ 859 ms ] threadMy gf who is a student was told by turbotax she owed over $300, after doing it on paper, the old fashioned way, the tax liability was 0. Why? The tuition deduction didn't apply on the EZ version of the form.
Ultimately turbo tax takes a conservative, strict and rigid approach to taxes, but as anyone knows this isn't the reality of doing taxes. For anyone with a moderately complex return, I think it's better to hire a tax professional, then at least you'll LEARN something for your money (which can be about the same amount!).
That said, I do agree with Intuit here. I don't think there's any evidence whatsoever that the government is capable of making software to either provide a service similar to TurboTax or to correctly pre-calculate your taxes. They don't have the technical expertise so they'd have to contract it out. We saw how well that worked with healthcare.gov. They are not incented to "find every deduction" like a private tax preparer is, quite the opposite in fact. They also simply don't know enough in many cases. They don't know what my self employment income and expenses are, for example, until I tell them.
The only way that government can make taxes easier is to simplify the tax code itself.
As far as I've seen, no one has done a movement to ban tax paperers (either online or in person). If Intuit or H&R Block can provide a better website for $39 or whatever, they can. The question is if the agencies in question shouldn't develop their own replacements to paper tax forms.
Can you imagine it was 30 years ago and if, instead of getting tax forms mailed to you every year (or photocopies from the local library for a pittance 5 years ago), you had to walk down to the local H&R Block or other private company and pay them $40 to get the forms they wrote based on the tax code to file your taxes? It's pretty much the same thing.
Nothing the government does is free, and implemnenting online filing services would be something they (and by that I mean we) would pay billions of dollars for, and it would be poorly implemented, insecure, and it would crash constantly from overload during the month of April and especially on April 15th. I'd rather let Intuit do it for 1/1000 of the cost, and even at that, a cost that I would only pay voluntarily.
Yes and no. When the government wants to get quality software that solves real problems and saves taxpayer money, it manages to do so:
https://en.wikipedia.org/wiki/Dynamic_Analysis_and_Replannin...
"We saw how well that worked with healthcare.gov."
Keep in mind that healthcare.gov was overburdened with moronic, ideologically driven requirements that were still being finalized a week before it was supposed to go live. It was being set up for failure from step one.
I think they may have adjusted things compared to last year; it imported my data from last year (a new feature), and I thought there used to be a "Basic" product between "Free" and "Deluxe".
There is, but it seems like they're not pushing it as hard this year: https://turbotax.intuit.com/personal-taxes/online/basic.jsp
Maybe its also an indictment of the tax code, but I don't see why I should give turbo tax a break.
Between this and intentional complexity of the tax system that hinders making the IRS more efficient and hides true tax rates that corporations and higher income people... I dunno, it's one of the blacker marks against America in this aspect of policy.
But I've without doubt decide I'll try as hard as possible to never, ever pay a company like that to file tax returns.
Paper takes an obscene amount of human hours to process in comparison. Online tax filings should at the very least be free, or even give you an extra tax deduction.
Source: http://www.irs.gov/taxtopics/tc152.html
The other thing to know is that e-filed tax returns are subject to an immediate sanity check (i.e., has this ssn already been used?, is this a valid zip code?), which doesn't exist for paper forms.
For me, personally, it was 7 business days this year, and I did the filing in all of an hour and a half, in an afternoon. And that includes the time spent trying out two other free apps to decide which ones I liked better.
How much would your answer change if you found out that there are only two people processing paper returns? 2^32 people? What if you found out that the types of returns that are mailed in are 10x more complicated/detailed than e-filed returns? Would it change if you knew there was an intentional processing delay on paper returns to increase e-file adoption?
One of the HUGE benefits of e-file for them is that there are sanity checks that happen almost immediately and if they fail the IRS completely rejects the return. This does two things:
1. ensures accepted returns look much closer to accurate
2. places the burden of rejection notification on the e-file transmitter. For example, if I transmit a tax return that the IRS rejects due to a re-used SSN, the onus is now on me to notify that filer that their SSN has likely been stolen and provide customer service on what they should do next. From the IRS perspective this is a huge win. For e-file transmitters and tax software providers this is an un-fun problem to deal with.
Would they really do that? It seems like that would give you two problems. Your SSN was stolen and now you can't file your taxes too.
The proper response would probably be to notify you, accept your documents (and the other documents presumably submitted by somebody else) tentatively, then do some investigation to determine which one is authentic.
I think the temporary phone shut down during the last debt ceiling government shutdown saga is now permanent.
Additionally, anything that makes things significantly easier probably requires a large up-front investment of man-hours and/or money. If you've ever dealt with government software projects, you can imagine how large of a project this must have been. That money has to be recouped somehow, and that won't happen by giving things away for free.
(Note: I'm not advocating for the sleazy behavior of lobbying against easier/cheap tax filing. I'm just making the case that there's business reasoning behind this, other than plain spite for the common folk.)
But surely the purpose of the tax system isn't just to collect taxes but also to create employment. Intentional complexity keeps programmers employed, I mean the sort who aren't "developers" but the sort who instead work in firms whose business model is their computer system such as banks and insurance companies.
Can you give me an example of this "intentional complexity?"
The income tax is complex for two reasons: 1) it's inherently difficult to define "income" in a practical way; 2) it's a tool used to further all sorts of economic and political policies.
The best class I took in law school was Federal Income Tax (I'm not a tax lawyer). It really showed me that things which seem unnecessarily complex, like depreciation schedules or the treatment of capital assets, exist to solve theoretical problems that can be analyzed mathematically.
Finally, it's not like accounting, pursuant to GAAP, is simple. And it seems obvious, to me anyway, that tax law must be at least as complex as accounting.
It is complex and it is intentional, this is how politicians reward those whom they appreciate and "punish" those who they do not appreciate. You can move from the non appreciated column through proper donations either directly or through advocacy groups or lobbying firms hiring the correct people. No, I am not being cynical, I wish I were
If you can do this in under 100 pages, you're doing really well.
The problem only gets complicated when you try to set policies using the tax code, to incent or discourage specific behaviors by making them more or less beneficial. A tax code that treated all sources of income as identical would get far simpler.
Say I'm a shopkeeper. I sell you a candy bar for $2.00, and receive a payment for that amount? Is that my income? No. The credit card processing fee, the cost of getting the candy bar delivered from the wholesaler, and the cost of the candy bar itself must be paid out of that $2.00, but do not represent changes to my own wealth. Deductions exist to go from "gross income" (the payments you receive), and "taxable income" (the amount that your wealth actually increases).
Now, say I'm a farmer. I buy a new tractor. I should be able to deduct the cost of that tractor from what I make selling my crops. But should I get to take the deduction for the full value immediately? No! Unlike a candy bar, which is gone as soon as the customer purchases it, the tractor is a capital asset (an asset that is used to produce income). When I buy a tractor, my wealth just changes form: I have less cash, but I have a tractor. Over time, the value of the tractor will decrease. Eventually, the full cost of the tractor should be deductible, but because the tractor will help produce income over many years, the deductions should be taken over many years. Otherwise, because of the time value of money, the taxes paid will understate my actual increase in wealth. This is what "depreciation" is all about. Because it's impractical to actually sample the change in value of the tractor each year, it happens according to fixed "depreciation schedules." And when you sell the tractor, the difference between its market value and its value according to the depreciation schedule generates income or loss that must be accounted for.
Now, say I own a house (or stock). It's value goes up every year, which represents an increase in my wealth. Should I pay the IRS a tax each year based on an estimated amount? That would be very inconvenient, so we have a whole system of "realization events" that define when continuous changes in wealth must be "sampled" and tax paid.
As I noted in my post, a lot of this complexity just falls out of accounting. You're right that the various measures to use the tax code to create incentives/disincentives also complicates the situation, on top of the inherent complexity. But it's not a given that the value of these incentives/disincentives is less than the burden of the additional complexity.
3) It's probably the top target law for being gamed/interpreted in a creative way. The more loopholes are patched the more patches there are to find loopholes in.
Tax law doesn't have to be so complex though. For example, you could just have a simple income-bracketed flat tax that is just at a lower rate than current taxes without any deductions possibly. Or possibly better yet, you could get rid of the income tax all together and just use a federal tax on sales, real estate and money transfers out of the country. Granted, this would give the government more direct control over how much money is being collected on a daily basis and could result in some people feeling like they need to have a party with tea, but assuming we do live in a democratic society, something like a sales tax would be more understandable and visible to everyone (as the rate would be printed on all of their receipts) and it would probably lead to more oversight of the tax by the taxpayers rather than everyone just being concerned with paying less than they are asked to each year without getting audited.
But the darker side is the complexity that exists to let people with enough income and the means to obfuscate their true tax rate. We may have a top marginal rate of 39.6%, but even people who have a huge income pay nothing close to that. And it's in high income people's interest to keep it that way. It's also in the interest of the companies we're talking about to keep the tax code complex both because they're run by high income people and if the general population has a sense that the tax code is super complex for themselves, they're more likely to use tax preparers even if they actually have very simple taxes or just mildly complex.
So, yes, with a huge economy the tax code is going to be very complex. That's just politics and the nature of the beast, but there's more complexity than there needs to be because of interests who drive it to complexity for their deadweight gain and strive to keep it complex.
Previously, their system used Flash or Silverlight, and had horrible ui around tabbing between fields and copy/pasting. (Especially on the cap gains form).
This year, they're running jquery, bootstrap, and a whole host of other html5 javascripty goodness. The usability went up for me.
The real root of the problem is of course our broken political process.
$10MM seems like a pittance. That's like what...2 minutes of superbowl ads? Can you really buy legislation for this cheap?
Lots of conservative/anti-tax/right-wing/libertarian types see the difficulty of doing taxes as a feature, not a bug because it makes people hate taxes in general and more likely to vote for Republicans/fiscally conservative politicians.
Yes - because filing is so complex. If filing were simple, people probably wouldn't mind. So a complex tax filing system makes people lean conservative, and therefore vote conservative. So it's in the interests of conservative politicians for the tax filing process to be complex.
I guess it would be nice if there were a free alternative to TurboTax, but at the same time, I kind of don't really care, so I'm happy to let them get away with whatever they're doing. I know Lobbying isn't illegal in the U.S., and I don't think it's all that immoral either.
In Canada the BS is similar however I'll make sure to never buy the software from TurboTax.
I guess maybe Intuit is just "playing the game" but the fact that our government is being made purposefully obtuse and inefficient should make anyone mad.
If you think "The government is purposefully obtuse and inefficient all over the place", I agree. I'm just trying to fight the good fight one thing at a time.
If you accept that it should be there, then you can pile up a zillion other similar services, middle men, etc that have no reason to be but collect yearly money (and thats billions).
Just think about the amount of human time wasted if money doesn't talk to you. When you multiply it by more than your own wealthy self, it's scary.
I don't know anyone who genuinely enjoys using TurboTax. I'm surprised there isn't more legitimate competition in this space.
http://arstechnica.com/tech-policy/2014/04/turbotax-maker-li...
http://arstechnica.com/tech-policy/2014/04/turbotax-maker-li...
Each site has it's own culture (and each site has cultures within cultures). Like any mid-sized company, Intuit has a broad mix of personalities and talent levels. If I had to put them on the couch and nail down the core problem it's that they haven't really done anything groundbreaking lately. All the weird management issues you're reading about in those comments are because they're trying to hang on to what they have without moving the ball forward. All IMO of course.
I've been told by friends that there are less expensive programs out there, but the ~$80 that it cost me to do my taxes on TurboTax (Deluxe + State eFile fee) doesn't seem horrible (ie it isn't worth it to switch to something else to save an insignificant amount of money).
It does seem a bit backwards to have to pay to eFile in CA - I used to mail in my returns to get around this. But, at the end of the day, it's easier to just pay to eFile, and it only costs me maybe $20 more (plus I save a trip to the post office).
Overall, I've optimized to just using TurboTax, and I'm sure there is some laziness involved in that decision, but overall, unless something else is much much better, there isn't too much impetus to switch.
And in fairness, there's benefit to sticking with them year over year: that's a lot of data that gets transferred automatically. Most of the less expensive alternatives are horrid (I've used almost all of them). There's a good reason they're the king of their market. My point is simply that no one's giving them legitimate competition in the space and that surprises me. My evidence was only to point out the low-hanging fruit to go after (and while that low hanging fruit wouldn't be enough to sway a 10-year user, it's potentially enough to sway earlier users)
The verbosity of TurboTax seems like a feature to me, not a bug, in that it pre-answers many obvious questions.
I don't enjoy using TurboTax because I don't enjoy doing my taxes no matter how good the software. But I certainly don't blame TurboTax for that.
Maybe "enjoy" is a high bar? But surely there's room for improvement.
(Of course, I'd much rather have what other developed countries have and make TurboTax obsolete.)
I've never used their native application; maybe it has worse usability than the website?
I'd expect that the reason why Intuit refuses to change things (clarifying and streamlining questions, better navigation between forms, etc. etc.) is a fear of risking that which "already works." Unless something significant changes in the market, I don't see Intuit re-envisioning TurboTax anytime soon.
Might as well at least mention this year's revelation, which is that they fund fake Grassroots campaigns against tax reform: http://www.propublica.org/article/turbotax-maker-linked-to-g...
And time management is notoriously hard. Not to mention this will need security up the bum.
How much would it cost just to read all the documentation and have the program certified, so it can do what it's supposed to do without writers getting sued?
I believe that if it were to actually do the e-filing, the people who ran the e-filing would have to submit to federal background and clearance checks at those people's expense and the servers it ran on would have to probably get FISMA High certification, provided it actually posted to the Efiling API.
That's just my speculation, fwiw. But I think that's true.
Filing taxes correctly while maximizing benefits is incredibly difficult. There are tons of ambiguous rules and loopholes and fuzzy boundaries and it changes all the time.
They're creating a lot of ill-will for 35% of their business.
[1] http://investors.intuit.com/files/Intuit%20FY13%20Form%2010-...
This also goes for consumption taxes - a 9% sales tax added at the register feels more intrusive than a 20% VAT included in the price tag, even though the VAT is much higher.
Why waste all this time from millions of people tens of times a day just to add 9% to a price?
For example, in Massachusetts we pay a 6.25% sales tax. Though across the border in New Hampshire, there isn't a sales tax at all.
Or do you pay different amounts of tax based on where you live, rather than where the business is?
Example: There is a walmart in both Cityville and its suburb Township. Cityville has a 9% sales tax but Township has a 7% tax rate. Both stores can advertise that they're selling a tv for $500, even though it costs $545 in Cityville but $535 in Township.
This helps prevent people from driving to the Township store to save money, because the advertised price is the same and most people won't think about the tax rate difference.
With itemized receipts, you have a line for the sales tax which serves as proof, if the tax were included in the price, you'd then have to have special indicators for which items are taxable on the receipt, and then calculate for each item on each receipt.
* We have languages for defining business processes & workflows (e.g. BPMN/BPML);
* We have open-source workflow engines (such as Activiti in Java and others all over the language spectrum) that utilize BPMN and terms;
* We have open-source ways of maintaining changes to these things over time.
I know it would be a monumental task, but why not start an open-source org to tackle Tax visibility at Federal and State levels?
With enough civic-minded hackers and accountants (both of which I believe exist), we could begin the process of transcribing the tax code into an interchange format. Then as we begin to see the updates each year, we can track the changes via source control.
Does anybody know if efforts like this have been undertaken anywhere else? Otherwise, I may have found my passion project.
Furthermore, does anyone know anything about the process by which Intuit makes this happen? They clearly have workflows and inputs into them; they had to get there somehow. I'd be interested in any/all knowledge that could be opened up on this.
then again, it could depressingly turn out this is the only viable strategy to actually get the desired outcome of a simpler tax code.
The tax code is complicated because of all the other lobbying by every interest group in the U.S. For example, banks and realtors lobby super hard to keep the mortgage interest deduction.
Tax simplification is politically hard because any change creates winners and losers, and they all fight hard one way or the other. One man's loophole is another's reasonable exemption, deduction, or credit.
I'd recommend targeting the folks with relatively simple taxes (salaried/wage employees with limited and structured investments, nothing super fancy) who make more than the Free-File cutoff, and then work your way out from there. The "I own 4 businesses and have 17 different investments all structured differently with various business expenses that are different degrees of write-off-able" group isn't your target, and there's already FreeFile options for folks making poverty-level wages.
The toughest part here business-wise is probably the liability - TurboTax and HR Block and whoever have armies of lawyers and PR and insurance to handle cases like a user getting audited and blaming them or catching flak for clients over-paying. Those armies are there to protect Intuit, not the end user, but they're fairly important nonetheless.
https://www.indiegogo.com/projects/tax-compactor-free-income...
http://taxcompactor.com
The cost is mostly tax analysis, but those labor prices are much cheaper than developers (which we could do easily).
This type of tax-code-manipulation must certainly have been happening since the dawn of time. That, or it was written to confuse the public on purpose.
Finding, reading, learning and understanding the tax code is no mean feat for a layman that was told nothing of it in school (none of us Canadians were taught taxes in public school). And this is coming from a relatively smart person who willingly reads cryptography papers and learns new programming languages for fun.
How much more difficult does TurboTax propose that the IRS make filing? Should we get individually filed returns notarized by our deceased relatives as well?
It usually takes me about 12-24 straight hours of work, and this is for a simple sole-proprietorship that just tallies up income and deducts expenses.
I manage to get it done properly and on time every year, but realizing so many schortcuts along the way that "they" could be making for us yet fail to year after year... it's really quite infuriating.
That, and the fact that I have to do the work to figure out how much I owe them. :/
I am proud to have completed my taxes myself and will strongly urge everybody I know not to vote for TurboTax with their wallets and why.
I still think the lack of easy government-provided online tax systems is insane, but that's how the other side justifies itself.
It's also worth noting that the article is not talking about the actual complexity of the tax code itself. As far as I know, Intuit is lobbying on the subject of tax preparation technologies, not lobbying against tax simplification in general. (As some comments seemed to imply.)
The government already has the information to do most people's taxes for them. They don't need end-user web based tax prep software.
California is still offering ReadyReturn but it only covers the simplest cases. Likewise a federal return-free system would only cover a fairly small portion of taxpayers unless there were significant changes to tax law and/or IRS operations.
It is what every web and mobile startup, it seems to me, deep down aims for: a monopoly, an unfair advantage. It is what, between the lines, you are taught at YC and what every VC expects of the "unicorn" portfolio companies that strike it rich. Fight to get to #1, wipe out the competition, reap the winnings, and, oh yeah, strike down any threats from, you know, up-and-coming competitors. So it goes.
It's business. It's ugly. If you don't like it, why are you doing a startup? If your startup is wildly successful and IPO's and turns into a giant, you don't think you will have to pay a lot of lobbyists to control the legislators?
It seems weak to beg the government to protect your precious company. It also smacks of hubris to believe your business is somehow so special that it needs to always be raking in cash despite 'progress.'
Disclaimer: I don't understand business.
No, I think I'd be sipping cocktails on the beach. (This is probably why I'm an employee rather than a founder)
Turbotax: - Has a terrible UX/UI - It has to update itself with a 100mb payload every time you open it from Jan 1 - Apr 15 - Doesn't actually advise you how to plan for your taxes. It's reactive to what you did. - Uses shady pricing and lots of versions to get you to spend more instead of just being straightforward. - Works hard to make you dependent on them
When you hear about the rich only paying 10%, 15% or whatever low bracket; they did it by putting their money in the right places and sometimes investing or spending it at the right time.
Where is the startup that is basically my accountant without the cost? Can we really not programmatically understand tax code and financial strategy?
Isn't that what TurboTax does? I don't know about a bunch of different versions, but the online version works just fine for me, and is pretty snappy. Sure, they upsell you to file your state taxes, but the $30 or whatever is worth it to me to avoid the duplicate work.
Their lobbying is a separate issue, but I have no problems with the actual product.
It walks you through filling out your tax lodgement step-by-step and even calculates your expected return. It's not the nicest piece of software, but after having read this article, I am greatly appreciative that it exists at all.
No come on you guys, April first was two weeks ago.