4 ms·

Why We Fear the IRS

4 points by acheron 11y ago

PaulHoule 11y ago
People don't realize that the U.S. has the most efficient tax system in the world in terms of what we spend to get a dollar of revenue and that means there is a very low amount of bullshit per mile. I have gotten just about every kind of income there is at some time in the last 30 years and been self-employed and also made mistakes, or had documents be disappeared by the maid, had customers and publishers make mistakes on 1099s, etc. I'm actually better than average at dealing with paperwork but sometimes when I am stressed I get in a funk where I don't open my mail for a month. Thus I have gotten real scary letters about how I owe $40,000 (the IRS didn't correctly process the decimal point on a 1099 I got from Wrox press) or I owe $351.82 (just got that one right after Christmas, despite the fact that I paid them $350.82 out of my bank account on Dec 5) I even was late to file my taxes for one year by a year and a half and have sometimes completely screwed up estimated tax payments. Practically though I have dealt with all these situations and the IRS people have been very nice to deal with on the phone and via mail. Every time I have had much more apprehension of how bad it is going to be it turns out to be no big deal. I have paid fines but these are not at all punitive and if you are in some situation where you really can't pay you can negotiate a payment plan with some write-off of the debt with help from a tax lawyer or enrolled agent. Back in the 1970s the IRS was awful and there would be horror stories like what happened to R. Crumb, but both Reagan and Clinton introduced major reforms in how the tax system works that greatly improve the "customer experience." I have seen how they have integrated with the IRS with Obamacare and they have done this in a way that addresses the issue of people having unpredictable income that is actually simple and practical for everyone concerned. So don't believe the right wing propaganda. The worst administrative problem the IRS has is that they still have a shocking number of people filing fake tax returns, collecting the money, and running. My uncle was working for the IRS and flabbergasted about this in the first few years of e-file and I don't think it has gotten any better.
- xlm1717 11y ago
  You don't have to believe right-wing propaganda to see it's a mess. You even provided many examples. Like the author says, you can either try your taxes yourself, or dump hours into working with a tax accountant going through every possible thing you could pay or deduct. And people do realize how efficient and machine-precise the tax machine is when they come after you for every last penny if you got it wrong or didn't do it. Even if you don't get the police knocking on your door, it's a huge hassle that everyone has to go through every year, and why April 15th is an unofficial, tongue-in-cheek "holiday". There's still a lot of room for improvement on the "customer experience".
  - PaulHoule 11y ago
    I see the glass as half full. You are right it is complex, but some of that complexity is inherent to the problem of determine what the income of a self employed person actually is. When I started my taxpaying career I would fill out the 1040EZ in 15 minutes, that was one of Reagan's best things. A lot of people only get W-2 income for them and the experience is streamlined. The key thing is emotional. If you have a complex life over a long period of time you will have trouble with your taxes but you also will have trouble with your bank, phone company, airlines, and many other public and private organizations. The people at the IRS are not ogres who want to wreck your life but who want to orderly keep the lights on. Don't get me started about how they'll (almost) stick probes in to your orifices in Japan or how people in Italy pay a fraction of what they should. VAT taxes work a lot like the "Flat Tax" some people like, and the administration of those is far worse than the administration of income and payroll in a small biz, I funded one that had a near death experience. If a small business has to pay it in multiple jurisidictions, such as US states, it's maddeningly hard. A central VAT could help with that though. (For instance, you have to pay a few $100 in NYS just for the privilege to file your sales tax. You can get started quickly making and selling a few widgets that cost, say $50 and thus learn something about product-market fit with a tiny investment. It's a great way to make money and have fun and maybe you can scale it up. No way are you going to pay that fee before you start doing such a little thing and practically you won't later. You think you got away with it because it takes a long time for the government to scan all the paperwork for problems. Get up to having a storefront with a corporate registration and you will likely get caught and then you owe something like $5K of sales taxes so if you are not good with paperwork you'll find the corporate veil works against you and not with you this time and you could end up with no corporation in weeks unless you pay up the cash and all of it. A photo of our shop that was barred by the state was in the local newspaper If it wasn't for the faith and good will of our customers, who bought into the company, it would have been done for. )

4 points by acheron 11y ago

People don't realize that the U.S. has the most efficient tax system in the world in terms of what we spend to get a dollar of revenue and that means there is a very low amount of bullshit per mile. I have gotten just about every kind of income there is at some time in the last 30 years and been self-employed and also made mistakes, or had documents be disappeared by the maid, had customers and publishers make mistakes on 1099s, etc. I'm actually better than average at dealing with paperwork but sometimes when I am stressed I get in a funk where I don't open my mail for a month. Thus I have gotten real scary letters about how I owe $40,000 (the IRS didn't correctly process the decimal point on a 1099 I got from Wrox press) or I owe $351.82 (just got that one right after Christmas, despite the fact that I paid them $350.82 out of my bank account on Dec 5) I even was late to file my taxes for one year by a year and a half and have sometimes completely screwed up estimated tax payments. Practically though I have dealt with all these situations and the IRS people have been very nice to deal with on the phone and via mail. Every time I have had much more apprehension of how bad it is going to be it turns out to be no big deal. I have paid fines but these are not at all punitive and if you are in some situation where you really can't pay you can negotiate a payment plan with some write-off of the debt with help from a tax lawyer or enrolled agent. Back in the 1970s the IRS was awful and there would be horror stories like what happened to R. Crumb, but both Reagan and Clinton introduced major reforms in how the tax system works that greatly improve the "customer experience." I have seen how they have integrated with the IRS with Obamacare and they have done this in a way that addresses the issue of people having unpredictable income that is actually simple and practical for everyone concerned. So don't believe the right wing propaganda. The worst administrative problem the IRS has is that they still have a shocking number of people filing fake tax returns, collecting the money, and running. My uncle was working for the IRS and flabbergasted about this in the first few years of e-file and I don't think it has gotten any better.

xlm1717 11y ago
You don't have to believe right-wing propaganda to see it's a mess. You even provided many examples. Like the author says, you can either try your taxes yourself, or dump hours into working with a tax accountant going through every possible thing you could pay or deduct. And people do realize how efficient and machine-precise the tax machine is when they come after you for every last penny if you got it wrong or didn't do it. Even if you don't get the police knocking on your door, it's a huge hassle that everyone has to go through every year, and why April 15th is an unofficial, tongue-in-cheek "holiday". There's still a lot of room for improvement on the "customer experience".
- PaulHoule 11y ago
  I see the glass as half full. You are right it is complex, but some of that complexity is inherent to the problem of determine what the income of a self employed person actually is. When I started my taxpaying career I would fill out the 1040EZ in 15 minutes, that was one of Reagan's best things. A lot of people only get W-2 income for them and the experience is streamlined. The key thing is emotional. If you have a complex life over a long period of time you will have trouble with your taxes but you also will have trouble with your bank, phone company, airlines, and many other public and private organizations. The people at the IRS are not ogres who want to wreck your life but who want to orderly keep the lights on. Don't get me started about how they'll (almost) stick probes in to your orifices in Japan or how people in Italy pay a fraction of what they should. VAT taxes work a lot like the "Flat Tax" some people like, and the administration of those is far worse than the administration of income and payroll in a small biz, I funded one that had a near death experience. If a small business has to pay it in multiple jurisidictions, such as US states, it's maddeningly hard. A central VAT could help with that though. (For instance, you have to pay a few $100 in NYS just for the privilege to file your sales tax. You can get started quickly making and selling a few widgets that cost, say $50 and thus learn something about product-market fit with a tiny investment. It's a great way to make money and have fun and maybe you can scale it up. No way are you going to pay that fee before you start doing such a little thing and practically you won't later. You think you got away with it because it takes a long time for the government to scan all the paperwork for problems. Get up to having a storefront with a corporate registration and you will likely get caught and then you owe something like $5K of sales taxes so if you are not good with paperwork you'll find the corporate veil works against you and not with you this time and you could end up with no corporation in weeks unless you pay up the cash and all of it. A photo of our shop that was barred by the state was in the local newspaper If it wasn't for the faith and good will of our customers, who bought into the company, it would have been done for. )