6 ms·

If the IRS knows how much money I owe why dont they just send me a bill?

tialaramex 5y ago
1. There exist politicians who believe that forcing you to fill out the paperwork reminds you that taxes are evil. They're doing it for your own good, see? 2. There exist tax preparation companies which profit enormously from doing the paperwork for you and they'd miss out on that profit if the government just billed you.
- cle 5y ago
  It's because they don't actually know how much taxes you owe. They aren't omniscient (thankfully) so they don't know e.g. how much in deductions you should have. (I agree that #2 is a big problem, but I don't think it's actually the reason we file taxes.)
  - maxerickson 5y ago
    People mostly take the standard deduction. (85-90% of households in recent years)
    - bananabreakfast 5y ago
      It will be far more now after the Trump tax bill as well. You now have to be able to deduct over $24k to not take the standard deduction.
    - jandrese 5y ago
      Yes, but only because I got capped out on deductions before I exceeded what the standard deduction would give me. Increased my tax burden about 1.5% overall that year. Not as much the next year because I had much less charitable giving. Sure am glad I'm getting to pay for all of the stuff those rich people aren't anymore thanks to their massive tax break. Oh, and my taxes are supposed to increase even more once the Trump tax holiday for the middle class expires in 2025. Luckily for corporations it is permanent for them. That tax plan was the most blatant government handout to the 1% and for some reason 40% of Americans think it's the best tax plan ever.
      - maxerickson 5y ago
        A majority of people took the standard deduction prior to the changes too, just not quite such a big majority. In any case, the standard deduction does have the effect of significantly reducing the administrative burden of taxation, and it crosses off one of the arguments used in favor of pointlessly complex tax filing.
- koheripbal 5y ago
  The real reason is that Americans owe money on more income than the gov't is aware of, and if you're going to omit income, they want you to explicitly lie about it so you can be prosecuted for it.
  - symlinkk 5y ago
    They could still send you a bill that lists your income and has a note that says “If you had any income that is not reported here, report it on irs.gov/…. Failure to do so is punishable by …” This would make things significantly easier for 90% of the population.
    - toomanyrichies 5y ago
      This is what I'd think as well. If they wanted to corner someone into explicitly lying in order to allow for prosecution, wouldn't they still be doing so by claiming non-standard deductions which they weren't actually eligible for?
    - cube2222 5y ago
      That's exactly how it looks like in Poland.
  - dragonwriter 5y ago
    > they want you to explicitly lie about it so you can be prosecuted for it. Since “they” also define what you can be prosecuted for, that’s a bit of an odd justification even before considering the fairly strong evidence from both tax prep lobbying and anti-tax candidate behavior (including occasionally saying the quiet part out loud directly about the pain in the process being necessary to keep tax burden front of mind for taxpayers) that the two reasons cited by the grandparent are, in fact, the dominant factors.
  - Ekaros 5y ago
    Now is the punishment important part or eventually reclaiming it? In systems where taxes are done by agency and unreported income is found they still have to pay. Was pretty common with cryptos some time ago here.
- notyourwork 5y ago
  > 1. There exist politicians who believe that forcing you to fill out the paperwork reminds you that taxes are evil. They're doing it for your own good, see? Which ones? I don't agree or disagree, but I think it's a good practice to call out politicians when we make claims they do something. That way it gives a more clear line of sight to your claim.
  - tialaramex 5y ago
    Basically all followers of Grover Norquist. So, almost all Republicans who were around before Donald Trump.
seanp2k2 5y ago
Unsure why this was downvoted as other countries do this and literally TurboTax lobbies against automated filing. Because in America, companies are people, and their free speech rights include the ability to influence legislation + make donations to support that influence.
NovemberWhiskey 5y ago
You proceed from a fallacy. The IRS doesn't know how much tax you owe because Congress has created a massively complex system that includes using deductions to incentivize certain types of behavior, as well as using the tax system as a mechanism to deliver means-tested benefits.
- coderintherye 5y ago
  You assume everyone itemizes deductions. There is a thing called the "standard deduction" which renders your point moot for the people using it which I suspect has a lot of overlap with the people who would like the IRS to do the calculation.
  - NovemberWhiskey 5y ago
    No; I am not assuming that. The standard deduction does cover a lot of people; but a lot of the people that it covers end up filling out other forms as part of their returns for tax credits. For example, the Earned Income Tax Credit is a means-tested benefit program that's delivered through the tax system. This is not a niche program - 25 million families benefit from it. It requires filers to identify how many qualifying children they have, which in turns depends on things like the educational status (is this child in school, college, are they a full-time student) and residency (child must generally live with you, but with exceptions for overseas military service, etc). In cases where multiple filers can claim a qualifying child (e.g. cohabiting single filers), you're required to make an election as to which return will claim the qualifying child. The EITC also encourages reporting of informal income (because it's only available to people who earned an income) which might not be on a W-2 / 1099, e.g. baby sitting, to qualify. None of that stuff is known to the IRS from W-2s, 1099s etc. and they are dependent on the filer to provide it every year, especially as circumstances change; and filers are strongly incentivized to provide it as the credit is refundable.
- AnimalMuppet 5y ago
  Yeah. For example, one year I bought double-pane windows for my house, which were eligible for a tax deduction (on the grounds of promoting energy conservation). Either I have to tell the IRS that I bought those windows, or the IRS has to know that I bought windows. The second option is too close to dystopian nightmares for my taste.
seieste 5y ago
They can and they do if you don't file, and they'll charge you 5%/month for the convenience. The IRS can even file a return on your behalf, which they do to tax protestors. If you don't even have an SSN, they'll conveniently create one for you.
salawat 5y ago
Cash and other transactions without established reporting requirements is why. They only know what gets reported to them as a pre-requisite of being an employer or hiring entity in the United States. The burden is actually on the taxpayer to accurately report the entire detail of their taxable footprint as defined in the tax code, as the IRS would otherwise require a perfect surveillance infrastructure, wherein every movement of money is traceable to assure your tax liability is accurately assessed. The real question, in my mind, is that, knowing John Q. Taxpayer is burdened with understanding the tax code in it's entirety (in the spherical cow, in a vacuum sense), why in heaven's name are things written in such a manner whereby doing everything by the book is so hard? From my experience, most people get the income part, those who have good portfolios get capital gains, but most people don't even know where to start looking if they aren't guided to it by an adversarial audit, which are guaranteed to be counterproductive in fostering the any degree of goodwill between taxpayer and tax service. Obviously, an accountant is capable of learning the corpus of material to be able to work with it, but given both the licensure requirement, and the fact most accounting questions I've heard resulted in a lot of open to interpretation answers, I'm not at all confident saying it is reasonable to expect the taxpayer to accurately report things, and furthermore, to expect some group of experts to handle it for everyone else, we've not done a good job at treating tax expertise as a public good in the accessibility department. In short, at it's core an information propagation problem, suffering from perverse incentives present in private enterprise guarding and perpetuating information asymmetry to create opportunities for profit extraction at the expense of public process being rendered largely ineffectual.
alasdair_ 5y ago
In part, they know a bunch of stuff but not everything, so they want to see if you lie about the stuff they DO know about because that suggests you are also lying about stuff they don’t know about.
- everybodyknows 5y ago
  It’s a good theory, but is there supporting evidence?
refurb 5y ago
Don’t do your own return and they will send you a bill. It probably won’t have the right deductions in it, but you’ll get a bill.
eli 5y ago
Because Intuit/TurboTax have successfully lobbied for decades to prevent the federal government from pre-filling tax forms. https://www.propublica.org/article/filing-taxes-could-be-free-simple-hr-block-intuit-lobbying-against-it https://www.propublica.org/article/filing-taxes-could-be-fre...
michael1999 5y ago
In many countries they do.

1. There exist politicians who believe that forcing you to fill out the paperwork reminds you that taxes are evil. They're doing it for your own good, see? 2. There exist tax preparation companies which profit enormously from doing the paperwork for you and they'd miss out on that profit if the government just billed you.

cle 5y ago
It's because they don't actually know how much taxes you owe. They aren't omniscient (thankfully) so they don't know e.g. how much in deductions you should have. (I agree that #2 is a big problem, but I don't think it's actually the reason we file taxes.)
- maxerickson 5y ago
  People mostly take the standard deduction. (85-90% of households in recent years)
  - bananabreakfast 5y ago
    It will be far more now after the Trump tax bill as well. You now have to be able to deduct over $24k to not take the standard deduction.
  - jandrese 5y ago
    Yes, but only because I got capped out on deductions before I exceeded what the standard deduction would give me. Increased my tax burden about 1.5% overall that year. Not as much the next year because I had much less charitable giving. Sure am glad I'm getting to pay for all of the stuff those rich people aren't anymore thanks to their massive tax break. Oh, and my taxes are supposed to increase even more once the Trump tax holiday for the middle class expires in 2025. Luckily for corporations it is permanent for them. That tax plan was the most blatant government handout to the 1% and for some reason 40% of Americans think it's the best tax plan ever.
    - maxerickson 5y ago
      A majority of people took the standard deduction prior to the changes too, just not quite such a big majority. In any case, the standard deduction does have the effect of significantly reducing the administrative burden of taxation, and it crosses off one of the arguments used in favor of pointlessly complex tax filing.
koheripbal 5y ago
The real reason is that Americans owe money on more income than the gov't is aware of, and if you're going to omit income, they want you to explicitly lie about it so you can be prosecuted for it.
- symlinkk 5y ago
  They could still send you a bill that lists your income and has a note that says “If you had any income that is not reported here, report it on irs.gov/…. Failure to do so is punishable by …” This would make things significantly easier for 90% of the population.
  - toomanyrichies 5y ago
    This is what I'd think as well. If they wanted to corner someone into explicitly lying in order to allow for prosecution, wouldn't they still be doing so by claiming non-standard deductions which they weren't actually eligible for?
  - cube2222 5y ago
    That's exactly how it looks like in Poland.
- dragonwriter 5y ago
  > they want you to explicitly lie about it so you can be prosecuted for it. Since “they” also define what you can be prosecuted for, that’s a bit of an odd justification even before considering the fairly strong evidence from both tax prep lobbying and anti-tax candidate behavior (including occasionally saying the quiet part out loud directly about the pain in the process being necessary to keep tax burden front of mind for taxpayers) that the two reasons cited by the grandparent are, in fact, the dominant factors.
- Ekaros 5y ago
  Now is the punishment important part or eventually reclaiming it? In systems where taxes are done by agency and unreported income is found they still have to pay. Was pretty common with cryptos some time ago here.
notyourwork 5y ago
> 1. There exist politicians who believe that forcing you to fill out the paperwork reminds you that taxes are evil. They're doing it for your own good, see? Which ones? I don't agree or disagree, but I think it's a good practice to call out politicians when we make claims they do something. That way it gives a more clear line of sight to your claim.
- tialaramex 5y ago
  Basically all followers of Grover Norquist. So, almost all Republicans who were around before Donald Trump.

seanp2k2 5y ago

Unsure why this was downvoted as other countries do this and literally TurboTax lobbies against automated filing. Because in America, companies are people, and their free speech rights include the ability to influence legislation + make donations to support that influence.

NovemberWhiskey 5y ago

You proceed from a fallacy. The IRS doesn't know how much tax you owe because Congress has created a massively complex system that includes using deductions to incentivize certain types of behavior, as well as using the tax system as a mechanism to deliver means-tested benefits.

coderintherye 5y ago
You assume everyone itemizes deductions. There is a thing called the "standard deduction" which renders your point moot for the people using it which I suspect has a lot of overlap with the people who would like the IRS to do the calculation.
- NovemberWhiskey 5y ago
  No; I am not assuming that. The standard deduction does cover a lot of people; but a lot of the people that it covers end up filling out other forms as part of their returns for tax credits. For example, the Earned Income Tax Credit is a means-tested benefit program that's delivered through the tax system. This is not a niche program - 25 million families benefit from it. It requires filers to identify how many qualifying children they have, which in turns depends on things like the educational status (is this child in school, college, are they a full-time student) and residency (child must generally live with you, but with exceptions for overseas military service, etc). In cases where multiple filers can claim a qualifying child (e.g. cohabiting single filers), you're required to make an election as to which return will claim the qualifying child. The EITC also encourages reporting of informal income (because it's only available to people who earned an income) which might not be on a W-2 / 1099, e.g. baby sitting, to qualify. None of that stuff is known to the IRS from W-2s, 1099s etc. and they are dependent on the filer to provide it every year, especially as circumstances change; and filers are strongly incentivized to provide it as the credit is refundable.
AnimalMuppet 5y ago
Yeah. For example, one year I bought double-pane windows for my house, which were eligible for a tax deduction (on the grounds of promoting energy conservation). Either I have to tell the IRS that I bought those windows, or the IRS has to know that I bought windows. The second option is too close to dystopian nightmares for my taste.

seieste 5y ago

They can and they do if you don't file, and they'll charge you 5%/month for the convenience. The IRS can even file a return on your behalf, which they do to tax protestors. If you don't even have an SSN, they'll conveniently create one for you.

salawat 5y ago

Cash and other transactions without established reporting requirements is why. They only know what gets reported to them as a pre-requisite of being an employer or hiring entity in the United States. The burden is actually on the taxpayer to accurately report the entire detail of their taxable footprint as defined in the tax code, as the IRS would otherwise require a perfect surveillance infrastructure, wherein every movement of money is traceable to assure your tax liability is accurately assessed. The real question, in my mind, is that, knowing John Q. Taxpayer is burdened with understanding the tax code in it's entirety (in the spherical cow, in a vacuum sense), why in heaven's name are things written in such a manner whereby doing everything by the book is so hard? From my experience, most people get the income part, those who have good portfolios get capital gains, but most people don't even know where to start looking if they aren't guided to it by an adversarial audit, which are guaranteed to be counterproductive in fostering the any degree of goodwill between taxpayer and tax service. Obviously, an accountant is capable of learning the corpus of material to be able to work with it, but given both the licensure requirement, and the fact most accounting questions I've heard resulted in a lot of open to interpretation answers, I'm not at all confident saying it is reasonable to expect the taxpayer to accurately report things, and furthermore, to expect some group of experts to handle it for everyone else, we've not done a good job at treating tax expertise as a public good in the accessibility department. In short, at it's core an information propagation problem, suffering from perverse incentives present in private enterprise guarding and perpetuating information asymmetry to create opportunities for profit extraction at the expense of public process being rendered largely ineffectual.

alasdair_ 5y ago

In part, they know a bunch of stuff but not everything, so they want to see if you lie about the stuff they DO know about because that suggests you are also lying about stuff they don’t know about.

everybodyknows 5y ago
It’s a good theory, but is there supporting evidence?

refurb 5y ago

Don’t do your own return and they will send you a bill. It probably won’t have the right deductions in it, but you’ll get a bill.

eli 5y ago

Because Intuit/TurboTax have successfully lobbied for decades to prevent the federal government from pre-filling tax forms. https://www.propublica.org/article/filing-taxes-could-be-free-simple-hr-block-intuit-lobbying-against-it https://www.propublica.org/article/filing-taxes-could-be-fre...

michael1999 5y ago

In many countries they do.