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IRS Tried to Hide Emails That Show Tax Industry Influence over Free File Program
- magashna 7y ago>“The notion that the Free File Alliance ‘dictated’ the terms ... to the IRS is absolutely false,” the spokesman said. “When IRS decides on any issue, the agency gets what it desires. No one dictates to IRS.” So what does the IRS get out of this?
- ceejayoz 7y agoThey get to eventually jump ship to go work in Intuit's lobbying arm. https://en.wikipedia.org/wiki/Revolving_door_(politics) https://en.wikipedia.org/wiki/Revolving_door_(politics) https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture
- tlb 7y agoNot having to do the hard work of making a usable tax filing system and providing phone support for users. Tax filing might be a 10x harder problem than health insurance signup, and healthcare.gov left a bad odor all around Washington. A good theory for government is to always do the minimum -- do only the part that can only be done by the government and let private companies compete to do everything else. The IRS is doing roughly this, by providing the e-filing API. The surprising thing is that TurboTax has so few competitors.
- hyperbovine 7y agoHealth care signup was fixed and now works well. I suppose your theory of government is great if the thought of companies like Intuit gouging private citizens to the tune of billion$ a year until the end of time gives you warm fuzzies. This canard that the government is congenitally incompetent and can never ever do anything as well as the sainted Private Sector needs to end.
- ultrarunner 7y ago> This canard that the government is congenitally incompetent and can never ever do anything as well as the sainted Private Sector needs to end It will end when it ceases to be true, and reliably so.
- vkou 7y agoThe private sector's profit margin, marketing budget, and executive compensation are incompetence that I, as a consumer of its services, pay for.
- ultrarunner 7y agoI've been working 16 hour days for a stretch here on a big project, so maybe this is just escaping me, but how is that different from stating that your savings account is incompetence? Honest question.
- vkou 7y agoMy savings account doesn't come from me getting in between a citizen, and a vital-for-life service... Intuit's does, and they lobby aggressively to make everyone's lives harder, so that they can keep making millions from selling a glammed-up spreadsheet for $30/taxpayer.
- geogra4 7y agoIt's explicitly designed and funded to be as such. The ENTIRE REST OF THE WORLD does these things, and here in the USA we claim the unique skill of an incompetent government that we somehow hold up to the rest of the world as a beacon of freedom and democracy. Does not compute.
- ultrarunner 7y agoI think the various indices of freedom (press freedom, human rights, etc) show convincingly that the U.S. is not a beacon, in any sense, of freedom. That freedom seems to be a stated goal of the founders in forming their government the way they did seems to be a mark of incompetence even in that regard. My statement should not be construed to imply that Intuit handling it is morally superior (not only because of the incentive for corruption involved), even while the thought of using tax filing software written by government contractors makes me shudder.
- vkou 7y ago> Not having to do the hard work of making a usable tax filing system and providing phone support for users. For 90% of Americans, the IRS could just snail-mail them a pre-filled tax form... That they could dispute, and file manually, if they disagreed with it.
- journalctl 7y agoThey basically already do your taxes anyway, which is why you get a bill in the mail if you screw up.
- mehrdadn 7y agoNot sure how true this is. I know of at least one very simple instance in which they missed a rather significant typo of wages straight from a W-2.
- journalctl 7y agoThe IRS expects payment by Tax Day if you owe, no ifs, ands, or buts about it. This necessarily involves doing the work you’d do anyway, so why not just mail that info and allow you to return it with a box checked saying “I agree that this is correct”?
- mehrdadn 7y agoThey can and should. That has nothing to do with my response to your claim that they currently notice obvious discrepancies.
- vonmoltke 7y agoMonths after the tax was due.
- vonmoltke 7y agoSure, given some structural changes to the filing system like pulling in the deadlines for business filings or pushing the expectation of settling tax bills beyond April 15.
- mehrdadn 7y agoUSDS seems to have pretty good and competent people last I heard. If they were given the support they might be able to do something.
- AdieuToLogic 7y ago> > So what does the IRS get out of this? > Not having to do the hard work of making a usable tax filing system and providing phone support for users. Since the IRS is the Single Point of Truth[0] for federal tax collection, by definition any commercial entity which offers tax preparation must conform to the IRS's tax filing system. Which, BTW, is used by millions of people via paper-based filings. > A good theory for government is to always do the minimum -- do only the part that can only be done by the government and let private companies compete to do everything else. While you may feel this to be a "good theory for government", many do not. Some consider a government's role to also include ensuring equitable treatment of all peoples within their domain. > The IRS is doing roughly this, by providing the e-filing API. The surprising thing is that TurboTax has so few competitors. TurboTax has many competitors[1]. Which may explain why they did their best to help write the rules (per the article): > For a decade and a half, the IRS program to allow most Americans to file their taxes for free has been floundering. > Now, IRS emails obtained by ProPublica help show why: The agency has allowed the tax preparation industry to write the rules. 0 - https://en.wikipedia.org/wiki/Single_source_of_truth https://en.wikipedia.org/wiki/Single_source_of_truth 1 - https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm https://www.bls.gov/ooh/business-and-financial/accountants-a...
- xtian 7y agoIntuit lobbies to keep tax filing over complicated. Look at other countries’ systems for examples of how it could be 100x simpler. Same thing for healthcare. One has to wonder whether the only thing preventing our government from succeeding at providing simple and effective services for everyone is interference from radical capitalists.
- dragonwriter 7y ago> So what does the IRS get out of this? The approval of elected politicians and appointed officeholders in the legislative and executive branches that are paid by—or plan to improve their post-government job prospects by service to—the members of the Free File Alliance.
- shmerl 7y agoIntuit are simply corrupt thugs.
- not2personal 7y agoIntuit is going to try to do what benefits them. The IRS are the corrupt party in this transaction.
- shmerl 7y agoHow does that excuse Intuit? They are still thugs, who are controlling IRS in this case. Corruption is still corruption, on both ends.
- not2personal 7y agoIntuit isn't the one with the guns. The people with the guns are always the thugs.
- deogeo 7y agoAh, a libertarian. Tell me, if it is such a wonderfully efficient system, shouldn't a libertarian country have arisen by now, outcompeting its neighbors, and functioning as a haven for those of your conviction to emigrate to?
- deleted 7y ago[deleted]
- journalctl 7y agoYou don’t need guns when you have money. Money is a lot more effective than guns.
- deogeo 7y ago> Intuit is going to try to do what benefits them. It is telling that you think this is even remotely similar to a justification. And in the case of bribery, both parties are at fault - the one giving, and the one receiving the bribe.
- chmod775 7y ago> The emails are striking for what they lack: no counterproposals or efforts by IRS officials to push for a better deal. This alone should be grounds enough to fire everyone involved for incompetence, even if corruption can't be proven.
- seibelj 7y agoYou do realize this is the government right? No one ever gets fired unless they commit a felony while on the job, and even that is dicey.
- ta0987 7y agoGiven the way Congress treats the Post Office, I wouldn't take it for granted that the IRS has much choice in the matter.
- gigatexal 7y agoI couldn’t agree more. If the TurboTax lobby has bought your vote what are you really going to do...
- bluGill 7y agoVotes are only for sale when voters don't care about the issue. Politicians don't want money - they want power, when voters don't really care money buys ads and the like which translates into votes. Then voters care though no amount of money can buy off a "wrong" vote and they get voted out - lose their power.
- momokoko 7y agoPlease stop with this. Free File is provided free of charge to a massive portion of the population. This is a solved problem. It is significantly more productive to spend your time supporting awareness of Free File. The group that does not qualify for Free File most often requires the services of a tax professional anyway. Not because it is complicated, but because the monetary benefit of a tax professional is going to be more than the cost of their services. These IRS grumpings by fringe libertarians is wildly unproductive and has no place on HN as it does not fall within any of the guidelines for content.
- ceejayoz 7y agoYou should consider reading the article, as it details how the industry manages to prevent free file from being successful, including misleading eligible people into thinking their "free edition" is the same thing.
- momokoko 7y agoI did. I should be extended. It makes sense. There is no reason to waste taxpayer money and risk when this is a solved problem that allows taxpayers to choose from a wide variety of tax preparation services. For free.
- kevhito 7y agoAnd for those of us who do not trust these private, for-profit (and imo corrupt and predatory) companies with our financial data? What then? There is a reason Intuit does not want me to be able to give my tax forms directly to the government. I refuse, even though it is ostensibly "free" (hint: it isn't really "free" at all, and we all know that, because Intuit wouldn't be fighting so hard if it were).
- wallacoloo 7y ago> the monetary benefit of a tax professional is going to be more than the cost of their services. Sure, structuring your spending in advance to optimize taxes is something you might want to ask outside help for. But when it comes to paying your taxes based on how you’ve already used your money, why does it make sense for there to be anything other than one value which both you and the government agree is owed? Why should it be negotiable?
- xenocyon 7y agoKind of a sidenote, but I'm continually surprised that agencies that get hit with an FOIA request are allowed to be the arbiters of whether the request should be granted or not.
- ceejayoz 7y agoWell, that's step one. If there's a disagreement, it can go to the courts. > After ProPublica sued in federal court, the agency dropped that objection and released the records.
- xenocyon 7y agoBut the burden of proof should be the other way around. The agency should have to be the one to go to court for a denial, rather than the burden lying on the citizen to sue to get the request granted.
- torstenvl 7y agoThat's unworkable. The vast majority of records of any given agency are non-releasable. The federal courts would be inundated and/or Congress would have to set up an entire system of administrative courts just to deal with the deluge of every divorcing spouse who wants to know the balance of his or her spouse's Thrift Savings Plan and every request for an internal phone roster or personnel disciplinary files. Your proposal would effectively gut the Privacy Act.
- ceejayoz 7y agoThat's how you get legal DDoSing. 4chan would get a few thousand people to file requests for things like "all CIA agents deployed in Russia" and trigger a billion dollars in legal fees.
- lazyguy2 7y agoThis is normal. The only people who are experts in a particular industry are the people running the businesses that make up that industry. So the government, in order to try to make rules that don't suck, depend on their input when drafting the rules. This, and in combination with significant lobbying, means that given enough time the industry being regulated gets to have significant amount of control over the rules being created. Oil, airflight, cars, steel production, cable television industry, etc etc. Everything that the government tries regulate suffers the same fate to differing degrees. And when it comes to certain industries, like banking or medical industry, and handful of executives of top corporations end up rotating in and out of government. Being a VP one year, a lobbyist for a couple years, and then end up as a higher level bureaucrat on some cabinet or board somewhere. They have a phrase for it: https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture
- whatshisface 7y agoThis sounds like a great application for all of those professors who know a lot but never go to the industry.
- r00fus 7y agoThere are ways to fight this. Controls on corruption (aka lobbying) and removing the revolving door between industry and government would help greatly.
- aksss 7y agoI know I may catch shit for this but lobbying is not synonymous with corruption. Lobbying, lobbying groups and lobbyists actually serve a very valuable role in the interface between the government and the people their rules impact. Like every endeavor, bad actors can give the whole system a negative stereotype but judging anything by its worst examples is not a reasonable way to assess that thing. And no, I’m not in anyway a lobbyist or associated with that industry.
- hanniabu 7y ago
- briandear 7y agoWhy is the free file thing such a big deal? Considering the taxes paid, tax prep software is a tiny expense — and it’s deductible. How about complaining about a tax code that requires accountants and lawyers just to understand? Complaining about tax filing software is like complaining about a paint chip on the Titanic. The tax prep industry is a result of a ridiculously complicated tax code and the ridiculously complicated tax code is the result of politicians that reward or punish people as a means to garner more relevance. See Milton Friedman’s speech on tax code complications and the reasons behind it.
- Stratoscope 7y ago> Considering the taxes paid, tax prep software is a tiny expense — and it’s deductible. It's only deductible if you itemize deductions, which most people don't do. And even then it isn't free. Your tax deduction only means that you don't have to pay taxes on the cost of your tax preparation service or software. That said, I agree with you about everything else!
- ArnoVW 7y agoAnd most importantly, it is not free in the sense that insurance fraud is not a victimless crime. Any money shunted away from the state is money that the state will have to raise additionaly.
- alexmingoia 7y agoAgreed. Tax filing is complicated because taxes are complicated. A flat tax on all personal income from all sources as the sole tax would make tax filing incredibly simple. It’s equal in that everyone pays the same rate, and fair in that the more money people earn the more they pay. It would eliminate double taxation, tax uncertainty, save the economy money by eliminating tax accounting, and eliminate tax loopholes by eliminating different classifications of taxable goods, services, transactions, and events.
- rebuilder 7y agoPaying 20% of income in taxes (for example) is a much heavier burden to bear if you're making 20k a year than it is if you're making 200 000. Which is why progressive taxation exists.
- tempsy 7y agoI'm fairly optimistic that easier tax filing is just a matter of time. Several of the Democratic frontrunners have said they support it. I'm not sure what the Republican stance is but I doubt they would be against it either.
- callalex 7y agoSpoiler: they are. The reason? Blatant corruption from Intuit and H$R Bloc
- themaninthedark 7y agoH&R is from Missouri, which is Republican dominated but Intuit is from Mountain View, CA. I think this is a bi-partisan problem.
- jermaustin1 7y agoWhere giant multi-national corporations the size of Intuit or H&R set up HQs has less to do with their politics, and more to do with their bottom lines and the talent they are trying to aquire. Intuit needs developers, UX/UI designers, entire tech infrastructure as they are a SaaS and Software Business. H&R Block is a franchising company with some enterprisey software (that's a lot more complicated to use than any of the TurboTax editions) that the tax preppers use. A lot less tech goes into H&R Block than Intuit, so H&R Block can be in a lowish-noish tax state like Missouri or Kansas and take the decent developers that they have to maintain and update their backend tax-prep software.
- themaninthedark 7y agoI understand that, my comment was more to my parent that was saying the problem was republicans and corruption. While I do think there is corruption involved; companies their politics and policies are made by people who work in the companies. With Intuit being a company in an area that is overwhelmingly liberal, I would hazard that the majority of the people working there are as well(It is possible that the key positions are occupied by conservatives but over a period of years and consistently makes it less likely.).
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- deleted 7y ago[deleted]
- rebuilder 7y agoWhy is it the default that everyone files their taxes? How long does that take, on average? Here's how it could work, based on a real-world example from another country: Before each tax season begins, the IRS sends each taxpayer an estimate of how much they are expected to earn that year, based on previous years. They are assigned a tax bracket based on this estimate. If they think the estimate is wrong, they send back a new number and their tax bracket is adjusted accordingly. The taxpayer can also give estimates of their deductions at this point, for a more accurate estimate of the tax bracket. Employees withhold taxes from wages before payment, based on the tax bracket each employee is in. They report the wages paid and pay the IRS the withheld amount. Investment funds etc. are required to report gains and losses for each of their clients to the IRS. At the end of the year, the IRS sums up the income they know about from these reports, compare the sum due to the sum already paid from withheld taxes and send the taxpayer a summary. If the taxpayer has no other income to report, and has no complaints about the data the IRS already has, they don't need to file anything further. The report comes with a bill for taxes remaining, or if too much has been paid, a summary of how much will be returned. For the majority of taxpayers, that is, those whose source of income is wages from employment or government benefits, all this takes maybe 10 minutes a year to handle. Some people still need to file, but they're a minority.
- dbdjfjrjvebd 7y agoIn the UK waged and salaried employees need to do nothing.
- pimmen 7y agoSame in Sweden, and I'd imagine the rest of the Nordic countries. If not all of Western Europe.
- gdy 7y agoSame in Russia
- WA 7y agoAnd in Germany. In Germany, if you are an employee and not a freelancer or self-employed, you don’t have to file taxes at all. You can of course, if you think your deductibles are higher than the deductibles that are automatically applied.
- grandinj 7y agoEven third world countries like South Africa can afford free online tax filing for the majority of taxpayers.
- lolsal 7y agoOk, but how does comparing wildly different countries help in any way here?
- etherealG 7y agoTotally agree, it seems crazy that my country of origin can figure out how to have a free online filing system and the US can't. Not sure how to characterise the problem, since corruption isn't a simple enough measure, we have tons of that in South Africa too. It's complicated I guess. Also, please stop using outdated terms like "third world countries". The world hasn't been broken up into 2 different brackets of income for a long time. See https://www.gatesfoundation.org/Who-We-Are/Resources-and-Media/Annual-Letters-List/Annual-Letter-2014#MYTHONE https://www.gatesfoundation.org/Who-We-Are/Resources-and-Med...
- elicash 7y agoAny FOIA experts here? I wonder why FOIAs aren't posted online for all to see and are instead just sent to the requestor? It seems lots of people are interested in the same information -- and once it's been vetted, putting all those (let's say) emails into one giant searchable database seems like it'd be in the public interest. I'm sure there are both legal obstacles and practical ones. I'm just curious what those obstacles are.
- fulldecent2 7y agoThe solution is that you can create a transparency website and file FIOAs to get all the FIOAs and you can post them. This isn't a "why didn't they" problem. It is a "how can I" problem.
- dlgeek 7y agoYou're describing https://www.muckrock.com/ https://www.muckrock.com/
- glofish 7y agoThe strength of the lobby is purely attributable to the policial will that wants to allow that lobbying to be effective. The main argument I heard against simplifying the tax code (and allowing automated free filing) is that it would eventually lead to a slow but steady increase in taxes. Another way of saying this is that: the "pain" of paying taxes makes people scrutinize the tax code and acts as a deterrent. If you were to frame it in that context (and if that statement were indeed true), I am sure more people championing a simple tax code would stop doing so. I would rather pay $100 to Intuit's potentially unneeded service than $1000 as a tax increase. I am not claiming that it is true - I don't have a way of testing this hypothesis - but it is something that is worth musing about. There are always unintended consequences.
- failrate 7y agoThat is the entire Grover Norquist argument in a nutshell, and I call bullshit. Most people are not involved enough in legislature to have any meaningful input into whether taxes will rise or not, so they are eating the complexity cost with no benefit. Sure, people in general should be more involved in their government, bit that is a totally different issue. I think it is more likely that people are confused by the currwnt tax laws and forms, so they aren't clear on what their tax obligations really are.
- glofish 7y agoI think the issues that you mention were overly conflated. People do not need to get "involved" into legislating beyond voting for someone representing them - and choosing the person they believe will do so. People do most certainly are clear what their obligations end up being when they submit their tax return. The question is only whether the process should be easier or is it better if it is tedious and ineffective. The question of whether Intuit also profits along the way is almost marginal here. As much as I wish the world was logical, I came to believe it isn't - it is always full of unintended consequences.
- Discombulator 7y agoThe problem with this argument in general is that there might always be unintended consequences for any change. Hence one should never try to change anything. In this case, the argument about rising taxes seems completely arbitrary. Why couldn’t I likewise argue that they would actually be lower (e.g., by closing loopholes)?
- arminiusreturns 7y agoI love the amount of servile placation for the corruption in the form of normalization that gets touted here... as if we haven't heard the "but congress needs expert input" a thousand times from K-street itself.
- mikelyons 7y agoIf instances of corruption like this are so public, why can't anything be done about them? If something can be done about them why isn't anything being done? If something is being done why is it so ineffective? If it's effective why are instances of corruption like this so public?