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The problem with pre-populated online forms is that if there are issues with the data that the tax authority receives from third parties, proving it wrong is di
by buyx 11y ago
The problem with pre-populated online forms is that if there are issues with the data that the tax authority receives from third parties, proving it wrong is difficult, and the burden of proof shifts to the taxpayer.
A few years ago, I resigned my job and I transferred my pension to what's called a Preservation Fund. In South Africa, you can get your pension paid out when you leave a job. Getting a pension paid out incurs tax, while transferring to a preservation fund is tax free.
However, the company that administered the pension fund screwed up, and issued a tax certificate that treated the pension transfer as a taxable payout, and submitted it to the South African Revenue Service (SARS). The pension administrators proved to be incompetent, and were incapable of fixing the issue.
After months of battling, I managed to get the issue sorted out, and I got a refund from the taxman, rather than the hefty payment that was initially assessed. Other colleagues who also left had less energy than me simply paid the tax caused by the pension company's administrative error. I'm sure there were hundreds of people around the country affected by the error, and most must have rolled over and paid.
I've read that one of the objections to having a pre-populated system in the US is that people are less likely to object if the forms are pre-filled. My experience would seem to confirm that view.
- evanpw 11y agoIn the US system, the IRS still has all of that third-party data. If it's a significant amount of money, you'll just find out that something was wrong after you submit your tax return (when you get audited) rather than before.
- semi-extrinsic 11y agoNorway has been on a pre-populated system for all tax returns for a few years now, and last year transitioned to "silent consent", i.e. if you don't register any changes before the deadline, it means you accept the prepopulated values. From the statistics I've seen, ~60% don't register any changes, while ~20% register additional information, ~10% correct errors and ~10% register both additional information and correct errors. A lot of the additional info and corrections is stuff like kindergarten expenses (which are tax exempt up to a limit of $3000/year) or donations to charities, since it's up to the kindergarten or charity to register these, and they often forget or get things wrong.
- mixmastamyk 11y agoThis doesn't seem to be a problem with online-forms, rather a problem with policies, procedures, and not handling edge cases.