10 ms·

The IRS themselves need to provide this "auto tax" service.

by astura 6y ago

bob1029 6y ago
As noted in other comments here, an "auto tax" service only really works on the happy path. There are parts of the tax code which are highly subjective in more complex situations and require explicit elections on part of the filing party. These elections can have consequences far beyond the immediate tax filing transaction.
- astura 6y ago
  No, it can work with the complicated path too, they present you with what they already know about you and give you the opportunity to add more information that they don't yet know. They then calculate what you owe and tell you. At some point they are going to calculate what you owe based on what you provide them and what is reported to them, no matter what. Laws that authorize "auto tax" can also come with extra reporting requirements.
  - dave5104 6y ago
    Not to mention, I'm sure the "happy path" will accommodate a significant number of tax payers.
    - astura 6y ago
      Currently, probably >85%, given that ~90% percent of households took the standard deduction in 2018.
      - ghaff 6y ago
        The standard deduction is pretty high these days. I'll probably be back to not itemizing next year but my taxes are certainly not simple.
  - robert_foss 6y ago
    This is how it is done in Sweden. And after having lived in 2 other countries it is clearly the way to go. The tax authority sends you a summary and you just approve it.
    - sfteus 6y ago
      This always made the most sense to me. You get your return and review it; sign off if it's good, modify and return it if you have more claims, something is wrong / missing. I'd wager the majority of people wouldn't have a reason to submit a revised return. And if the federal government generated your return, hopefully that would give them reason to automatically exclude you from audit, (ideally) reducing the burden of auditors.
    - dtech 6y ago
      Works this way in the Netherlands too, you login on a website and just click through the information they have pre-filled in normal cases.
    - vinkelhake 6y ago
      As a Swedish expat in California I cringe everytime tax season comes. Both because of how annoying it is, and because I know how simple it can be.
      - deleted 6y ago
        [deleted]
  - sokoloff 6y ago
    There is a much greater depth of detail that I provide to my tax preparer than I'd be willing to share with the IRS. I tell my tax preparer everything and have perfect confidence that my taxes will be prepared correctly and in accordance with the tax code and that nothing which is not required to be disclosed will be disclosed. Much of what I provide to my preparer is irrelevant to my tax obligations and anything that's irrelevant I would prefer not be disclosed. I'm mostly a W-2 schmo without any particularly complex business arrangements and with a spouse who employs themself in a consulting capacity, puts the statutory maximum into tax-deferred accounts every year, and we have minor kids who are required to file returns due to kiddie tax laws. I can imagine many people would rather pay a high three or low four-figure per year bill for tax prep and representation rather than give the IRS full access to their financial lives. I do support (and strongly so) the idea that the IRS could provide simple, default tax prep based on the information they receive. Where I break is what escalation path should exist; I think there must remain an effective and private escalation path for more complex scenarios. (In many ways, that makes it even easier to implement. Make the simple case automated-by-default. Punt all the complex cases to the current system.)
    - harperlee 6y ago
      May I ask examples of things that you are not confident sharing with the IRS, that you do not have the obligation to share with the IRS, and that can affect the taxes you owe? In my (foreign) mind, whatever might affect your obligation final number you are legally required to do so (either preemptively or when asked), so I don't fully understand.
      - sokoloff 6y ago
        Many things that I tell my preparer are needed later, but not now. (Tax basis for RSUs that vested. Value of capital improvements to my property.) Other things are needed only if we elect to method A of calculation, but not if we use method B of calculation. So I give him all the data; he computes my obligations using method A and method B, chooses the better option, and reports only the data needed to support that method's calculations. I pay my preparer to be an expert in tax code, to represent me in any audits, and incidentally to prepare my return correctly. Part of that expertise is that I don't have to be an expert, so I tell him everything and he politely rolls his eyes and smiles when I dump irrelevant things on his desk.
  - deleted 6y ago
    [deleted]
- civilized 6y ago
  There is a big gap between what tax software companies charge $$$ for and what is actually complex and subjective. Like, if you have an HSA, that instantly boots you into the Deluxe Edition of H&R Block (about $100 federal+state), even if your HSA situation is very straightforward. Tax prep software is worth every penny IMO, but they do nickel-and-dime you for many pretty simple situations.
- Broken_Hippo 6y ago
  Most folks don't have taxes that are that complicated: most of those are businesses. Most people file somewhat simple returns. We can get most people using "Auto-tax", where basically the IRS sends you some information to check over, including what you are going to get back or owe. We can do this for all of the commonly used forms, not just the EZ forms. Most folks aren't subject to "subjective" taxes. Other places do it, after all. The IRS has the information. And it would probably increase tax revenue since it is easier to collect taxes that are easy to pay. (Sales tax is collected at purchase since few people self-report: Sales tax is even easier on the average person if included in price instead of added at the register). You can require that the IRS err on behalf of the taxpayer and require it to give the maximum refund (or pay the least tax). And it isn't like the auto-file would be final: You still get the option for corrections (because mistakes happen) and can still self file.
peter303 6y ago
The tax prep industry lobbied Congress to prevent the IRS from auto-tax filing. The compromise was "free filing" for those with median incomes and below. For a majority, W2s, 1099s and the previous years return can provide an auto-filing framework. The IRS would send your their draft and you agree or modify. Other countries do this.
- alkonaut 6y ago
  If I saw a proposal to make tax codes simpler, have people file taxes with a good app provided by the IRS etc and then I saw a politician vote against it, while being funded by companies benefiting from the status quo... I'd just not vote for that person again.
  - benmw333 6y ago
    This is 99.9% of politicians.
    - alkonaut 6y ago
      Voters get the politicians they deserve. In some systems it's easier to be corrupt. IIif there are only 2 major parties so you don't need to good just better than the other guy, or if politicians are funding their own campaigns so you are indebted to sponsors and companies before you are even elected. But voters are also responsible for those systems being in place.
  - bobthepanda 6y ago
    Such a proposal can be killed at various steps before it gets to a floor vote. It’s part of why Mitch McConnell was majority leader; he isn’t necessarily well liked, but he is willing to take the heat for not taking up a bill and letting his colleagues avoid awkward votes.
  - Spivak 6y ago
    While many people are "single issue voters" [1] it's not too often that someone would vote for an otherwise worse candidate over $50-100/yr tax prep bill. [1] I hate this term but it's the one that caught on. Almost no one votes positively based on a single issue but many people have disqualifying issues which people treat as the same thing. "Sure they're pro baby eating but their stance on taxes is really quite progressive."
masklinn 6y ago
> The IRS themselves need to provide this "auto tax" service. Interestingly, they now can: under the Free File program, tax prep companies would offer free filing (for taxpayers below 72k AGI) and the IRS would not compete with their service. After a ProPublica investigation in their dark pattern shenanigans (leading to about 3.5% of taxpayers to use the program when 70% are eligible) confirmed by the HSGA Senate Committee and NYS DFS, the IRS both updated its rule to preclude e.g. hiding Free File programs for search engine, and removed the rule which prevented them from competing. Sadly the IRS has been hamstrung time and again by the GOP, both financially and politically. They can't even do their core jobs of collecting tax and auditing the taxpayers they need to, so it's unlikely they'll have the clout and funds to set up a free filing program any time soon, let alone one properly integrated with their likely antiquated and in dire need of updates computer systems.
- kleton 6y ago
  > the GOP We now have an opportunity to test your hypothesis- for at least two years there will be single party rule by the other party.
  - anadem 6y ago
    Single party rule would be true only if the Senate was not encumbered by the filibuster.
    - leereeves 6y ago
      The majority party can remove the filibuster rule anytime it likes, as they have done for several special cases in recent years.
      - kn0where 6y ago
        The current majority party has just enough DINOs to prevent that from happening.
    - AndrewUnmuted 6y ago
executesorder66 6y ago
We have this in South Africa. It was always easy to do your taxes before, but since last year they do what they call an "Auto assessment". The South African Revenue Service collects all the documents they need (payslips, medical aid, pension etc.) from the respective organizations, fills out the tax form for you, and lets you know it's ready. I logged in to check that they did it correctly, which they did, and approved it. Literally took ten minutes. Nine of which were just reviewing all the fields on the form. Obviously this does not work for people who have very complex/unusual tax situations, but for your average person it's great.
- zo1 6y ago
  They don't simply collect all "documents" they need. They hoover up the data directly from various institutions. Your employer being one, your bank another, your medical aid, etc. Not only that, but they're getting involved with the IRS now via FATCA. It's actually awesome that they're probably doing a better job than the government itself when it comes to having an all-encompassing view of the tax-cattle that they oversee.
  - executesorder66 6y ago
    Oh, I am under no illusions that this was not a pursuit of excellence, but rather a way to make sure they get as much tax money as possible. Considering how 90% of all other government services are complete garbage. But I still believe that paying taxes is the right thing to do (how else do you keep a country running, even a corrupt one?). And as someone who really hates doing any kind of admin, this was a breath of fresh air, and highly appreciated, even if their motives are not perfect.
- xtracto 6y ago
  Same here in mexico. Its wonderful to file my taxes because i only login into SAT website, check the prefilled data, click accept and I get my tax refunds due to my mortgage credit. It blows my mind that The USA doesn't have something like this. It's basically taxes at work
SubiculumCode 6y ago
In one sense I totally agree, but in the other sense, it seems like it could be terribly invasive privacy wise.
anoncake 6y ago
Or just make their implementation of the tax code public?
tppiotrowski 6y ago
My employer didn’t send me a W2 this year which caused me to seek another method to access this information. I created an account on irs.gov and was surprised to find a single PDF for each tax year containing W2’s, 1099Ints, 1099Divs that I assume were given to the IRS on my employers/bankers behalf. Now it would be great for a tax program to ingest this PDF and auto-populate your tax return. Unfortunately no PDF for 2020 exists yet and it says it might not be available until October? I don’t know if generating this PDF is a slow process or if this information is intentionally withheld until after the tax filing date to make sure you are “honest” on your taxes.
- rainyMammoth 6y ago
  you made me curious and I logged into the IRS to find those "transcripts". I really cannot tell if they generate that information from your own tax report or if they generate it from what they already got in their own databases.
  - tppiotrowski 6y ago
    > Wage and Income Transcript - shows data from information returns we receive such as Forms W-2, 1099, 1098 and Form 5498, IRA Contribution Information. Current tax year information may not be complete until July. This transcript is available for up to 10 prior years using Get Transcript Online or Form 4506-T. https://www.irs.gov/individuals/transcript-types-and-ways-to-order-them https://www.irs.gov/individuals/transcript-types-and-ways-to...
jonahhorowitz 6y ago
Ideally there would be a "tax dashboard" on the IRS site where you could log in and see your (YTD): - Income reported - Taxes paid - Tax credits and deductions - Expected balance (+/-) Then at the end of the year, you'd log in and click one button to verify the numbers and either pay or get a check.
- djxfade 6y ago
  That is essentially how we file our taxes in Norway. You don't really have to login to verify the numbers, only if the numbers (that the government calculates for you) needs revision
dopidopHN 6y ago
I grew up in France, our bureaucracy is pretty intense and old school. But they send you a nice little note with your W2 and how much you own them. If they missed anything you can amend their draft. Usually it take 15min to complete the whole yearly process. Even with some midly complicated situation like renting and being landlord, living between two countries, cryptos.

The IRS themselves need to provide this "auto tax" service.

by astura 6y ago

The IRS themselves need to provide this "auto tax" service.

As noted in other comments here, an "auto tax" service only really works on the happy path. There are parts of the tax code which are highly subjective in more complex situations and require explicit elections on part of the filing party. These elections can have consequences far beyond the immediate tax filing transaction.

astura 6y ago
No, it can work with the complicated path too, they present you with what they already know about you and give you the opportunity to add more information that they don't yet know. They then calculate what you owe and tell you. At some point they are going to calculate what you owe based on what you provide them and what is reported to them, no matter what. Laws that authorize "auto tax" can also come with extra reporting requirements.
- dave5104 6y ago
  Not to mention, I'm sure the "happy path" will accommodate a significant number of tax payers.
  - astura 6y ago
    Currently, probably >85%, given that ~90% percent of households took the standard deduction in 2018.
    - ghaff 6y ago
      The standard deduction is pretty high these days. I'll probably be back to not itemizing next year but my taxes are certainly not simple.
- robert_foss 6y ago
  This is how it is done in Sweden. And after having lived in 2 other countries it is clearly the way to go. The tax authority sends you a summary and you just approve it.
  - sfteus 6y ago
    This always made the most sense to me. You get your return and review it; sign off if it's good, modify and return it if you have more claims, something is wrong / missing. I'd wager the majority of people wouldn't have a reason to submit a revised return. And if the federal government generated your return, hopefully that would give them reason to automatically exclude you from audit, (ideally) reducing the burden of auditors.
  - dtech 6y ago
    Works this way in the Netherlands too, you login on a website and just click through the information they have pre-filled in normal cases.
  - vinkelhake 6y ago
    As a Swedish expat in California I cringe everytime tax season comes. Both because of how annoying it is, and because I know how simple it can be.
    - deleted 6y ago
      [deleted]
- sokoloff 6y ago
  There is a much greater depth of detail that I provide to my tax preparer than I'd be willing to share with the IRS. I tell my tax preparer everything and have perfect confidence that my taxes will be prepared correctly and in accordance with the tax code and that nothing which is not required to be disclosed will be disclosed. Much of what I provide to my preparer is irrelevant to my tax obligations and anything that's irrelevant I would prefer not be disclosed. I'm mostly a W-2 schmo without any particularly complex business arrangements and with a spouse who employs themself in a consulting capacity, puts the statutory maximum into tax-deferred accounts every year, and we have minor kids who are required to file returns due to kiddie tax laws. I can imagine many people would rather pay a high three or low four-figure per year bill for tax prep and representation rather than give the IRS full access to their financial lives. I do support (and strongly so) the idea that the IRS could provide simple, default tax prep based on the information they receive. Where I break is what escalation path should exist; I think there must remain an effective and private escalation path for more complex scenarios. (In many ways, that makes it even easier to implement. Make the simple case automated-by-default. Punt all the complex cases to the current system.)
  - harperlee 6y ago
    May I ask examples of things that you are not confident sharing with the IRS, that you do not have the obligation to share with the IRS, and that can affect the taxes you owe? In my (foreign) mind, whatever might affect your obligation final number you are legally required to do so (either preemptively or when asked), so I don't fully understand.
    - sokoloff 6y ago
      Many things that I tell my preparer are needed later, but not now. (Tax basis for RSUs that vested. Value of capital improvements to my property.) Other things are needed only if we elect to method A of calculation, but not if we use method B of calculation. So I give him all the data; he computes my obligations using method A and method B, chooses the better option, and reports only the data needed to support that method's calculations. I pay my preparer to be an expert in tax code, to represent me in any audits, and incidentally to prepare my return correctly. Part of that expertise is that I don't have to be an expert, so I tell him everything and he politely rolls his eyes and smiles when I dump irrelevant things on his desk.
- deleted 6y ago
  [deleted]
civilized 6y ago
There is a big gap between what tax software companies charge $$$ for and what is actually complex and subjective. Like, if you have an HSA, that instantly boots you into the Deluxe Edition of H&R Block (about $100 federal+state), even if your HSA situation is very straightforward. Tax prep software is worth every penny IMO, but they do nickel-and-dime you for many pretty simple situations.
Broken_Hippo 6y ago
Most folks don't have taxes that are that complicated: most of those are businesses. Most people file somewhat simple returns. We can get most people using "Auto-tax", where basically the IRS sends you some information to check over, including what you are going to get back or owe. We can do this for all of the commonly used forms, not just the EZ forms. Most folks aren't subject to "subjective" taxes. Other places do it, after all. The IRS has the information. And it would probably increase tax revenue since it is easier to collect taxes that are easy to pay. (Sales tax is collected at purchase since few people self-report: Sales tax is even easier on the average person if included in price instead of added at the register). You can require that the IRS err on behalf of the taxpayer and require it to give the maximum refund (or pay the least tax). And it isn't like the auto-file would be final: You still get the option for corrections (because mistakes happen) and can still self file.

peter303 6y ago

The tax prep industry lobbied Congress to prevent the IRS from auto-tax filing. The compromise was "free filing" for those with median incomes and below. For a majority, W2s, 1099s and the previous years return can provide an auto-filing framework. The IRS would send your their draft and you agree or modify. Other countries do this.

alkonaut 6y ago
If I saw a proposal to make tax codes simpler, have people file taxes with a good app provided by the IRS etc and then I saw a politician vote against it, while being funded by companies benefiting from the status quo... I'd just not vote for that person again.
- benmw333 6y ago
  This is 99.9% of politicians.
  - alkonaut 6y ago
    Voters get the politicians they deserve. In some systems it's easier to be corrupt. IIif there are only 2 major parties so you don't need to good just better than the other guy, or if politicians are funding their own campaigns so you are indebted to sponsors and companies before you are even elected. But voters are also responsible for those systems being in place.
- bobthepanda 6y ago
  Such a proposal can be killed at various steps before it gets to a floor vote. It’s part of why Mitch McConnell was majority leader; he isn’t necessarily well liked, but he is willing to take the heat for not taking up a bill and letting his colleagues avoid awkward votes.
- Spivak 6y ago
  While many people are "single issue voters" [1] it's not too often that someone would vote for an otherwise worse candidate over $50-100/yr tax prep bill. [1] I hate this term but it's the one that caught on. Almost no one votes positively based on a single issue but many people have disqualifying issues which people treat as the same thing. "Sure they're pro baby eating but their stance on taxes is really quite progressive."

masklinn 6y ago

> The IRS themselves need to provide this "auto tax" service. Interestingly, they now can: under the Free File program, tax prep companies would offer free filing (for taxpayers below 72k AGI) and the IRS would not compete with their service. After a ProPublica investigation in their dark pattern shenanigans (leading to about 3.5% of taxpayers to use the program when 70% are eligible) confirmed by the HSGA Senate Committee and NYS DFS, the IRS both updated its rule to preclude e.g. hiding Free File programs for search engine, and removed the rule which prevented them from competing. Sadly the IRS has been hamstrung time and again by the GOP, both financially and politically. They can't even do their core jobs of collecting tax and auditing the taxpayers they need to, so it's unlikely they'll have the clout and funds to set up a free filing program any time soon, let alone one properly integrated with their likely antiquated and in dire need of updates computer systems.

kleton 6y ago
> the GOP We now have an opportunity to test your hypothesis- for at least two years there will be single party rule by the other party.
- anadem 6y ago
  Single party rule would be true only if the Senate was not encumbered by the filibuster.
  - leereeves 6y ago
    The majority party can remove the filibuster rule anytime it likes, as they have done for several special cases in recent years.
    - kn0where 6y ago
      The current majority party has just enough DINOs to prevent that from happening.
  - AndrewUnmuted 6y ago

executesorder66 6y ago

We have this in South Africa. It was always easy to do your taxes before, but since last year they do what they call an "Auto assessment". The South African Revenue Service collects all the documents they need (payslips, medical aid, pension etc.) from the respective organizations, fills out the tax form for you, and lets you know it's ready. I logged in to check that they did it correctly, which they did, and approved it. Literally took ten minutes. Nine of which were just reviewing all the fields on the form. Obviously this does not work for people who have very complex/unusual tax situations, but for your average person it's great.

zo1 6y ago
They don't simply collect all "documents" they need. They hoover up the data directly from various institutions. Your employer being one, your bank another, your medical aid, etc. Not only that, but they're getting involved with the IRS now via FATCA. It's actually awesome that they're probably doing a better job than the government itself when it comes to having an all-encompassing view of the tax-cattle that they oversee.
- executesorder66 6y ago
  Oh, I am under no illusions that this was not a pursuit of excellence, but rather a way to make sure they get as much tax money as possible. Considering how 90% of all other government services are complete garbage. But I still believe that paying taxes is the right thing to do (how else do you keep a country running, even a corrupt one?). And as someone who really hates doing any kind of admin, this was a breath of fresh air, and highly appreciated, even if their motives are not perfect.
xtracto 6y ago
Same here in mexico. Its wonderful to file my taxes because i only login into SAT website, check the prefilled data, click accept and I get my tax refunds due to my mortgage credit. It blows my mind that The USA doesn't have something like this. It's basically taxes at work

SubiculumCode 6y ago

In one sense I totally agree, but in the other sense, it seems like it could be terribly invasive privacy wise.

anoncake 6y ago

Or just make their implementation of the tax code public?

tppiotrowski 6y ago

My employer didn’t send me a W2 this year which caused me to seek another method to access this information. I created an account on irs.gov and was surprised to find a single PDF for each tax year containing W2’s, 1099Ints, 1099Divs that I assume were given to the IRS on my employers/bankers behalf. Now it would be great for a tax program to ingest this PDF and auto-populate your tax return. Unfortunately no PDF for 2020 exists yet and it says it might not be available until October? I don’t know if generating this PDF is a slow process or if this information is intentionally withheld until after the tax filing date to make sure you are “honest” on your taxes.

rainyMammoth 6y ago
you made me curious and I logged into the IRS to find those "transcripts". I really cannot tell if they generate that information from your own tax report or if they generate it from what they already got in their own databases.
- tppiotrowski 6y ago
  > Wage and Income Transcript - shows data from information returns we receive such as Forms W-2, 1099, 1098 and Form 5498, IRA Contribution Information. Current tax year information may not be complete until July. This transcript is available for up to 10 prior years using Get Transcript Online or Form 4506-T. https://www.irs.gov/individuals/transcript-types-and-ways-to-order-them https://www.irs.gov/individuals/transcript-types-and-ways-to...

jonahhorowitz 6y ago

Ideally there would be a "tax dashboard" on the IRS site where you could log in and see your (YTD): - Income reported - Taxes paid - Tax credits and deductions - Expected balance (+/-) Then at the end of the year, you'd log in and click one button to verify the numbers and either pay or get a check.

djxfade 6y ago
That is essentially how we file our taxes in Norway. You don't really have to login to verify the numbers, only if the numbers (that the government calculates for you) needs revision

dopidopHN 6y ago

I grew up in France, our bureaucracy is pretty intense and old school. But they send you a nice little note with your W2 and how much you own them. If they missed anything you can amend their draft. Usually it take 15min to complete the whole yearly process. Even with some midly complicated situation like renting and being landlord, living between two countries, cryptos.