18 ms·

A few years back I got audited, and it was called an "electronic audit" by the IRS. Which basically meant that they had their computer systems scour a bunch of

A few years back I got audited, and it was called an "electronic audit" by the IRS. Which basically meant that they had their computer systems scour a bunch of the bank records and discovered that I had forgotten to claim a 1099 for some contract work I had. OK, so they sent me a computer print out and they had cross checked everything on my return electronically, my property tax deductions, my stock dividends so on and so on. Ok, so if they can do all that automatically for an "electronic audit" why am I filing a return, just run that thing and send it to me and I can file an exception if there is something on it I disagree with. I think the answer has already been identified in several other comments here, a heavy lobby effort on the part of Intuit, H&R and whoever else to keep it tricky and complex so you have to buy their B.S> software or services.

lawrenceyan 5y ago
It’s absolutely absurd.
downrightmike 5y ago
That's exactly it.
ehsankia 5y ago
It's well known fact that the government can auto-file for most people, it's not really a secret. Many other countries do it, it's been proven to work just fine.
- jazzyjackson 5y ago
  how could America claim to be exceptional if we just did things the same way as every other developed nation? /s
  - zw123456 5y ago
    Exceptional != Best
- gramie 5y ago
  In Canada, when I file my taxes electronically, all my income (salary, interest, etc.) is pre-filled. I basically enter my deductions and hit "Submit".
- KennyBlanken 5y ago
  The IRS can't even handle people e-filing. But don't worry, the project started in 2009 to replace their COBOL mainframe systems is kinda, sorta on track for completion...in 2030.
  - PaulDavisThe1st 5y ago
    I've filed for years using FreeFillableForms. It works. A bit more cumbersome than if some ex-Amazon people had implemented it, but not too bad.
    - gbear605 5y ago
      The funny thing is that Intuit makes FreeFillableForms. It could have a much nicer interface, but they choose not to, so that you go and pay money to use Turbotax.
- Cthulhu_ 5y ago
  That's just it, when I do my annual taxes (I should do that within the next month btw), all the data - from my employer's wages, all assets at banks including checking-, saving- and investment accounts, and things like mortgage interest (which is still partially deductible) etc are all filed. The only thing I need to manually add is the EUR value of crypto assets on Jan 1st of the preceding year (good luck figuring that one out, the exchanges are kinda shit), and any charity donations I may have done. (my dad will pettily write down any speeding ticket cost as charity donations)
nathancahill 5y ago
Government: You owe us money. It’s called taxes. Me: How much do I owe? Gov’t: You have to figure that out. Me: I just pay what I want? Gov’t: Oh, no we know exactly how much you owe. But you have to guess that number too. Me: What if I get it wrong? Gov’t: You go to prison Source: https://twitter.com/jordan_stratton/status/1118141455061671939 https://twitter.com/jordan_stratton/status/11181414550616719... I dig this one up every April.
- singron 5y ago
  Obviously it's a joke, but if you get it wrong, they send you the right amount and then you pay it (or they pay you). As long as you are close with your on-time payment, the interest is very reasonable on small differences. It's probably cheaper than paying for turbotax if you would have to pay for that.
  - deleted 5y ago
    [deleted]
  - taf2 5y ago
    The best is the 50 cent check in the mail… literally the postage cost more to deliver the return check.
    - jahewson 5y ago
      Tax is rounded to the nearest dollar though.
      - tymekpavel 5y ago
        I can confirm I’ve received a check for $0.01 from the IRS. My understanding is it was because of miscalculation of interest owed.
- zw123456 5y ago
  ya, so why not just send me a statement once a month, the power company does that, the cell phone company does that, the city I live in does that, etc. Just send me a statement, you made this, you get this much deduction for the other crap or whatever. No stupid W2, W4 1040, bunch of mumbo jumbo from the 1950's that a few companies are ripping us off over IMO.
Johnny555 5y ago
they had their computer systems scour a bunch of the bank records and discovered that I had forgotten to claim a 1099 I assumed they did that automatically for everyone -- does that mean that if I "forget" to attach a 1099 then they IRS won't know unless they do this special "electronic audit"?
- NovemberWhiskey 5y ago
  I don't think that's actually how this works - most times when you get a 1099, the issuer is also required to file a copy with the IRS. As such - no bank account scanning required.
  - Johnny555 5y ago
    That's what I thought, my SSN is on the 1099, so it should be trivial for the IRS to match them up. That's why I was surprised when he said that they only caught it during an audit.
    - NovemberWhiskey 5y ago
      I suspect the term "audit" is being used loosely here. One man's audit is another man's reconciliation - did they just send you a notice of deficiency?
    - zw123456 5y ago
      Yup, dumb mistake on my part, so I track it better now. The point is, do I really have to do all this work tracking everything to guess which card they are hiding behind their backs. It's kinda dumb IMO.
      - jimmaswell 5y ago
        They probably just sent you a letter asking you to pay it with a smidgen of interest and that was that, right? Probably hardly worth doing extra work to be super thorough unless it was a large amount.
pabs3 5y ago
Are there any folks in congress who are interested in mandating the IRS switch to automatic tax returns or automated tax return form data filling?
- deleted 5y ago
  [deleted]
moduspol 5y ago
I had the same situation once (a missed 1099) and my biggest complaint is that they waited almost a year to let me know. And of course by then it was quite late so I owed them even more money! Even if they can't tell me what numbers they expect when I file, it seems like they could at least let me know within a few weeks if they're pretty sure I missed a 1099. Heck, I typically file at least a month early. They could let me know before April 15 and I could have just fixed it! Ugh.
- zw123456 5y ago
  Exactly my complaint as well! They could send me a monthly statement like my city government does. Instead, they wait a year to let me know I slipped up and then charge me interest. Guys, if you know I slipped up now you could have told me a year ago.
  - KennyBlanken 5y ago
    This is not purposeful but likely a side effect of them still relying on ancient COBOL mainframes that seem unable to keep up with the growing population (and thus growing number of tax filers.)
creakingstairs 5y ago
They've even done a pilot program that literally did what you wanted. [1] And yes, it was much better experience: > Almost all participants said that they would opt to use the service the following year. And yes, as you have said, the answer is lobbying. > Tax preparation services strongly opposed ReadyReturn and have lobbied against its expansion. [1] https://www.taxpolicycenter.org/briefing-book/what-was-experience-return-free-filing-california#:~:text=California%20operated%20a%20pilot%20program,only%20were%20invited%20to%20participate https://www.taxpolicycenter.org/briefing-book/what-was-exper.... EDIT: I can't find the podcast I heard this in, but pretty sure the tax professor that spearheaded this pilot got followed by people hired by Intuit.
- exolymph 5y ago
  The podcast might have been Planet Money: https://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-hero https://www.npr.org/sections/money/2017/03/22/521132960/epis... Priceonomics wrote an accompanying article: https://priceonomics.com/the-stanford-professor-who-fought-the-tax-lobby/ https://priceonomics.com/the-stanford-professor-who-fought-t...
  - creakingstairs 5y ago
    Thank you, it was! The accompany article is really good, but it is also really depressing to read too :(
- Griffinsauce 5y ago
  > EDIT: I can't find the podcast I heard this in, but pretty sure the tax professor that spearheaded this pilot got followed by people hired by Intuit. This feels somehow like it should be illegal to willfully and knowingly make the common good worse in favor of your company. Perhaps via antitrust.
  - dotancohen 5y ago
    Intuit argues that they are working _for_ the common good, not against.
swozey 5y ago
I have a $165k notice of defiecency bill from the IRS due next month that is a complete joke that I have had to spend days figuring out. I almost dropped thousands on a lawyer for it until I understood Tax Court better. Why? They think I sold a house and kept all of the gains. Like I didn't have a mortgage, and like it wasn't my primary residence. It's ridiculous. I can't explain how stressed out getting a $165k bill when that's practically my yearly income made me. I wonder how many wealthy people get these completely incorrect $165k bills and how often they come after the person with $10k in the bank.
- rossjudson 5y ago
  I highly recommend that you keep everything related to this, securely, for several years even after it is resolved. State governments are not necessarily believing the same set of facts that the federal government does. I got caught in a multi-year cycle one time where the state government kept coming after me every year for the same thing, even though I had the federal return and the evidence that it was correct. Each year I'd send that thing in, in response, and I'd never hear from them...until the next year, when they'd do it again. Felt to me like each year somebody would receive my response, decide it was too much work to deal with, and then file it away in the "hit them again next year" pile.
  - swozey 5y ago
    Thanks. Like you, nobody has ever responded to me other than them "upgrading" me from being able to prove my taxes via fax to having to petition the tax court directly. I'm sure this will be a nightmare for the next few years. As if selling that house wasn't a bad enough experience. I shouldn't have to spend $5k or whatever else on a lawyer to deal with this. Insane. I walked away with $13k after paying everyone/mortgage off.
- toast0 5y ago
  Did you report the sale? When I sold my primary residence in 2018, it ended up on Schedule D and Form 8949, and there were no questions asked. The IRS does have a tendency to assume zero basis when there's a capital sale reported to them that doesn't appear in the tax return; which makes for scary bills, but can usually be resolved by reporting the sale and your basis on the appropriate form. (although I see from further replies that you are now having to deal with this in Tax Court, so that sounds like a terrible time, and I'm sorry for your tedium)
jrochkind1 5y ago
That is in fact how it works in many (most?) countries. https://www.pbs.org/newshour/show/dreading-taxes-countries-show-us-theres-another-way https://www.pbs.org/newshour/show/dreading-taxes-countries-s...
JSavageOne 5y ago
Blaming "lobbyists" absolves the politicians of their responsibility. The fault lies with the politicians for creating and perpetuating this broken system.
fnord77 5y ago
> just run that thing and send it to me and I can file an exception if there is something on it I disagree with. basically how it works in Sweden
markdown 5y ago
Most people in my country never have to file tax returns. Their taxes are deducted at source (by their employer).
- masklinn 5y ago
  In every country I know where taxes are collected by the employer you still have to file, to square things up and settle the tax bill (often you’ll get some money back, if you have other sources of income then you may have to pay taxes on those instead).
  - donbrae 5y ago
    Not in the UK. Only those earning self-employed income over a certain threshold (£1,000, I think) need to complete a return.
pc86 5y ago
Lobby certainly doesn't help but "just tell me what I owe" is not practical or possible, and is an overly simplistic view of everything about the system. Most importantly, the 1099 your client filed telling them you got paid more than $600 was due the same time your taxes were due, so they didn't know about it until after the fact. The feds have no idea how your deductions (and to a lesser extent, your income) have changed from the previous year. They don't have a full picture of your finances, but you do. In the abstract, with those constraints, the system of "tell us everything we need to know, pay us, and you get in trouble if you lie so egregiously that you get caught" works pretty well.
- jefftk 5y ago
  This is how taxes work in many other countries, and it's how taxes could work here if we were willing to make minor changes. For example, adjusting the deadlines you mention to be sequential would not be a hard change.
- mlyle 5y ago
  > but "just tell me what I owe" is not practical or possible Note that there's a whole lot of countries that send you a prepared tax return that you adjust if necessary, and most people don't need to. There's no fundamental reason we couldn't do this here. Indeed, California even did it for a couple years: https://www.taxpolicycenter.org/briefing-book/what-was-experience-return-free-filing-california https://www.taxpolicycenter.org/briefing-book/what-was-exper...
- eyelidlessness 5y ago
  How is it not obvious this is a system designed for abuse favoring the most privileged abusers?
  - pc86 5y ago
    Pretend it's not for a moment and make your argument?
- shados 5y ago
  A pretty damn large portion of people claim the standard deduction. They are paid on W2. Their investments are on 1099s. The cost basis are in supplemental documents that could easily be provided to the IRS in a format they can handle. Yeah, it doesn't work for everyone. So they could offer it to you, and you have the choice to click "ok", or to click "add additional income and deduction". If your situation is so crazy that neither of those options work, you can then do it the classic/hard mode way with an accountant. It's how it works in plenty of countries. The US is a bit unique with one of the more complex tax code in the world, but it would still work fine for a large portion of the population.
thehappypm 5y ago
Oddly enough conservatives see that as a problem. They want this to be a big process for two reasons. First, taxpayers understanding the process is a good thing. It means they’re not getting gouged and they’re aware of their taxes. Second, they don’t want taxes to be something we just say “k” to like a cell phone bill. That could lead to it being extremely easy to raise taxes.
- xunn0026 5y ago
  There is a logic here that's visible with salary talks in the EU: people only care about what they receive, not taxes; so all salary talk ignores taxes, all raises ignore taxes, all tax increases are irrelevant as long as they get in-hand the same amount. This is basically a population that sees taxes as magical money only the employer pays. People should definitively understand how much taxes they are paying so that they demand some accountability for their money. How do you accomplish that?
refurb 5y ago
It's impossible to automate the tax filing process unless you simplify the tax code. And I've filed taxes in countries with simple tax codes where the government pre-fills out the forms. Guess what? You still need to go and double check everything because the information comes from your employer. I've found mistakes before. So I pretty much "do my taxes" myself to make sure what the govt sends isn't wrong.
- Spivak 5y ago
  This is a misunderstanding of the actual ask from the federal government and "automating" is a bit of a misnomer. The reason the IRS could theoretically fill out your taxes on your behalf is because someone else already submitted their part of the forms. Your employer reports your income, your broker reports your capital gains and assets, your bank reports interest, etc.. The ask is less about automation more not having to do those parts twice. The IRS could send you everything they've gotten about you and you just fill in the rest and/or dispute -- for normal single income wage earners there would be nothing else to add so it's effectively automated. The gain is that we can make "doing your taxes" a non-issue for most Americans. Sure some people will still need accountants for complicated situations but in one swoop we can eliminate hundreds of millions of hours of useless work every year for basically no downside -- it's pure gravy.
Griffinsauce 5y ago
This is literally how it works here in the Netherlands. Every year I get a reminder, log into an app with my government ID, click "next" a few times while checking the numbers and submit. It literally takes 2 minutes if you don't have anything to adjust. does the US have a thing like DigiD?
- masklinn 5y ago
  > does the US have a thing like DigiD? Gods no, can you imagine the US having a national, universal, secure digital ID?
neilfrndes 5y ago
This NPR planet money episode explains why tax filing is still the way it is: https://www.npr.org/sections/money/2019/04/03/709656642/episode-760-tax-hero https://www.npr.org/sections/money/2019/04/03/709656642/epis...
dguest 5y ago
I know people who have optimized this: - they fill out their taxes with rough estimates, - the IRS helpfully corrects their errors, and sends the form back - they sign the corrected form, send it back - the IRS accepts the second round. This is basically the same "pre-filled" workflow as every other developed country. The difference is that we have a first round where you put in a semi-plausible effort to placate the tax preparation lobby. Has anyone with a normal job (not self-employed, regular paycheck from a company registered with the IRS) ever been fined etc for this?
- legalcorrection 5y ago
  Beware: if you owe the government money due to your mistakes, you will have to pay penalties and interest.
  - kristopolous 5y ago
    If you overpay they'll credit you next year. They're pretty lenient as long as your act promptly in good faith
  - pm90 5y ago
    The main thing in this strategy is that your estimate is pretty close to the amount owed. So you may overshoot or undershoot, but likely by a pretty small amount, which is likely to make the difference owed small. I guess it could be considered a cost of filing taxes.
  - dguest 5y ago
    How much are the penalties? If they are charging some absurd (say 20%) interest and you're off by 10k, you might pay them a few hundred in interest if the process is prolonged a month, which is on par with a tax prep service.
  - deleted 5y ago
    [deleted]
adreamingsoul 5y ago
This happened to me, except the IRS calculated that I owed an additional 5-figure sum. not all information is sent to the IRS and they don’t yet have a way to determine a person’s situation. In my case, a form was missing from my filing that provided that context.
aj7 5y ago
Methodology: 1) Download your income transcript from the IRS using your IRS account. 2) Make sure all claimed income on the transcript is included. 3) Do the puzzle. 4) Print and file. Be sure you have a copy, either scanned or electronic, of all documents on your computer. Ditto all tax return filled in forms. Use the fill-in pdf’s the IRS provides. Do not miss a filing date. File a tax return missing important documentation if necessary, but file. Similarly, pay the tax you owe, or estimate you owe on time. The penalties for late filing and owed taxes are severe. You will not make a serious error if you work from the income transcript.
- ryathal 5y ago
  To add to this even if you can't pay, still file your taxes. It's so much better to only be on the hook for not paying than both not paying and not filing.
Iv 5y ago
> Ok, so if they can do all that automatically for an "electronic audit" why am I filing a return, just run that thing and send it to me and I can file an exception if there is something on it I disagree with. That's how it worked for me in France when I was an employee. As a freelancer there is a bit more work, but nothing like the puzzle that tax declaration seems to be in the US.
AnIdiotOnTheNet 5y ago
It isn't just the lobbyists, certain ideologically anti-tax politicians desperately want their constituents to think of taxes as a Great Evil perpetrated upon them so they can present themselves as the solution. Making the process as much of a pain in the ass as they can is part of their reelection strategy.
cyanydeez 5y ago
Republicans want you to hate paying taxes and tax providers are greedy.
pfundstein 5y ago
> just run that thing and send it to me and I can file an exception if there is something on it I disagree with. This is how it works in Australia. Taxes are filed online with the government authority (ATO), and everything is pre-filled. You just need verify it's correct and make any claims you want.
webinvest 5y ago
The thinking is that the more painful filing your taxes is, the more people will have a negative perception of taxes in general and be opposed to tax increases. There was an interesting Planet Money episode about this [0]. [0] https://www.npr.org/sections/money/2017/03/22/52 https://www.npr.org/sections/money/2017/03/22/52

lawrenceyan 5y ago

It’s absolutely absurd.

downrightmike 5y ago

That's exactly it.

ehsankia 5y ago

It's well known fact that the government can auto-file for most people, it's not really a secret. Many other countries do it, it's been proven to work just fine.

jazzyjackson 5y ago
how could America claim to be exceptional if we just did things the same way as every other developed nation? /s
- zw123456 5y ago
  Exceptional != Best
gramie 5y ago
In Canada, when I file my taxes electronically, all my income (salary, interest, etc.) is pre-filled. I basically enter my deductions and hit "Submit".
KennyBlanken 5y ago
The IRS can't even handle people e-filing. But don't worry, the project started in 2009 to replace their COBOL mainframe systems is kinda, sorta on track for completion...in 2030.
- PaulDavisThe1st 5y ago
  I've filed for years using FreeFillableForms. It works. A bit more cumbersome than if some ex-Amazon people had implemented it, but not too bad.
  - gbear605 5y ago
    The funny thing is that Intuit makes FreeFillableForms. It could have a much nicer interface, but they choose not to, so that you go and pay money to use Turbotax.
Cthulhu_ 5y ago
That's just it, when I do my annual taxes (I should do that within the next month btw), all the data - from my employer's wages, all assets at banks including checking-, saving- and investment accounts, and things like mortgage interest (which is still partially deductible) etc are all filed. The only thing I need to manually add is the EUR value of crypto assets on Jan 1st of the preceding year (good luck figuring that one out, the exchanges are kinda shit), and any charity donations I may have done. (my dad will pettily write down any speeding ticket cost as charity donations)

nathancahill 5y ago

Government: You owe us money. It’s called taxes. Me: How much do I owe? Gov’t: You have to figure that out. Me: I just pay what I want? Gov’t: Oh, no we know exactly how much you owe. But you have to guess that number too. Me: What if I get it wrong? Gov’t: You go to prison Source: https://twitter.com/jordan_stratton/status/1118141455061671939 https://twitter.com/jordan_stratton/status/11181414550616719... I dig this one up every April.

singron 5y ago
Obviously it's a joke, but if you get it wrong, they send you the right amount and then you pay it (or they pay you). As long as you are close with your on-time payment, the interest is very reasonable on small differences. It's probably cheaper than paying for turbotax if you would have to pay for that.
- deleted 5y ago
  [deleted]
- taf2 5y ago
  The best is the 50 cent check in the mail… literally the postage cost more to deliver the return check.
  - jahewson 5y ago
    Tax is rounded to the nearest dollar though.
    - tymekpavel 5y ago
      I can confirm I’ve received a check for $0.01 from the IRS. My understanding is it was because of miscalculation of interest owed.
zw123456 5y ago
ya, so why not just send me a statement once a month, the power company does that, the cell phone company does that, the city I live in does that, etc. Just send me a statement, you made this, you get this much deduction for the other crap or whatever. No stupid W2, W4 1040, bunch of mumbo jumbo from the 1950's that a few companies are ripping us off over IMO.

Johnny555 5y ago

they had their computer systems scour a bunch of the bank records and discovered that I had forgotten to claim a 1099 I assumed they did that automatically for everyone -- does that mean that if I "forget" to attach a 1099 then they IRS won't know unless they do this special "electronic audit"?

NovemberWhiskey 5y ago
I don't think that's actually how this works - most times when you get a 1099, the issuer is also required to file a copy with the IRS. As such - no bank account scanning required.
- Johnny555 5y ago
  That's what I thought, my SSN is on the 1099, so it should be trivial for the IRS to match them up. That's why I was surprised when he said that they only caught it during an audit.
  - NovemberWhiskey 5y ago
    I suspect the term "audit" is being used loosely here. One man's audit is another man's reconciliation - did they just send you a notice of deficiency?
  - zw123456 5y ago
    Yup, dumb mistake on my part, so I track it better now. The point is, do I really have to do all this work tracking everything to guess which card they are hiding behind their backs. It's kinda dumb IMO.
    - jimmaswell 5y ago
      They probably just sent you a letter asking you to pay it with a smidgen of interest and that was that, right? Probably hardly worth doing extra work to be super thorough unless it was a large amount.

pabs3 5y ago

Are there any folks in congress who are interested in mandating the IRS switch to automatic tax returns or automated tax return form data filling?

deleted 5y ago
[deleted]

moduspol 5y ago

I had the same situation once (a missed 1099) and my biggest complaint is that they waited almost a year to let me know. And of course by then it was quite late so I owed them even more money! Even if they can't tell me what numbers they expect when I file, it seems like they could at least let me know within a few weeks if they're pretty sure I missed a 1099. Heck, I typically file at least a month early. They could let me know before April 15 and I could have just fixed it! Ugh.

zw123456 5y ago
Exactly my complaint as well! They could send me a monthly statement like my city government does. Instead, they wait a year to let me know I slipped up and then charge me interest. Guys, if you know I slipped up now you could have told me a year ago.
- KennyBlanken 5y ago
  This is not purposeful but likely a side effect of them still relying on ancient COBOL mainframes that seem unable to keep up with the growing population (and thus growing number of tax filers.)

creakingstairs 5y ago

They've even done a pilot program that literally did what you wanted. [1] And yes, it was much better experience: > Almost all participants said that they would opt to use the service the following year. And yes, as you have said, the answer is lobbying. > Tax preparation services strongly opposed ReadyReturn and have lobbied against its expansion. [1] https://www.taxpolicycenter.org/briefing-book/what-was-experience-return-free-filing-california#:~:text=California%20operated%20a%20pilot%20program,only%20were%20invited%20to%20participate https://www.taxpolicycenter.org/briefing-book/what-was-exper.... EDIT: I can't find the podcast I heard this in, but pretty sure the tax professor that spearheaded this pilot got followed by people hired by Intuit.

exolymph 5y ago
The podcast might have been Planet Money: https://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-hero https://www.npr.org/sections/money/2017/03/22/521132960/epis... Priceonomics wrote an accompanying article: https://priceonomics.com/the-stanford-professor-who-fought-the-tax-lobby/ https://priceonomics.com/the-stanford-professor-who-fought-t...
- creakingstairs 5y ago
  Thank you, it was! The accompany article is really good, but it is also really depressing to read too :(
Griffinsauce 5y ago
> EDIT: I can't find the podcast I heard this in, but pretty sure the tax professor that spearheaded this pilot got followed by people hired by Intuit. This feels somehow like it should be illegal to willfully and knowingly make the common good worse in favor of your company. Perhaps via antitrust.
- dotancohen 5y ago
  Intuit argues that they are working _for_ the common good, not against.

swozey 5y ago

I have a $165k notice of defiecency bill from the IRS due next month that is a complete joke that I have had to spend days figuring out. I almost dropped thousands on a lawyer for it until I understood Tax Court better. Why? They think I sold a house and kept all of the gains. Like I didn't have a mortgage, and like it wasn't my primary residence. It's ridiculous. I can't explain how stressed out getting a $165k bill when that's practically my yearly income made me. I wonder how many wealthy people get these completely incorrect $165k bills and how often they come after the person with $10k in the bank.

rossjudson 5y ago
I highly recommend that you keep everything related to this, securely, for several years even after it is resolved. State governments are not necessarily believing the same set of facts that the federal government does. I got caught in a multi-year cycle one time where the state government kept coming after me every year for the same thing, even though I had the federal return and the evidence that it was correct. Each year I'd send that thing in, in response, and I'd never hear from them...until the next year, when they'd do it again. Felt to me like each year somebody would receive my response, decide it was too much work to deal with, and then file it away in the "hit them again next year" pile.
- swozey 5y ago
  Thanks. Like you, nobody has ever responded to me other than them "upgrading" me from being able to prove my taxes via fax to having to petition the tax court directly. I'm sure this will be a nightmare for the next few years. As if selling that house wasn't a bad enough experience. I shouldn't have to spend $5k or whatever else on a lawyer to deal with this. Insane. I walked away with $13k after paying everyone/mortgage off.
toast0 5y ago
Did you report the sale? When I sold my primary residence in 2018, it ended up on Schedule D and Form 8949, and there were no questions asked. The IRS does have a tendency to assume zero basis when there's a capital sale reported to them that doesn't appear in the tax return; which makes for scary bills, but can usually be resolved by reporting the sale and your basis on the appropriate form. (although I see from further replies that you are now having to deal with this in Tax Court, so that sounds like a terrible time, and I'm sorry for your tedium)

jrochkind1 5y ago

That is in fact how it works in many (most?) countries. https://www.pbs.org/newshour/show/dreading-taxes-countries-show-us-theres-another-way https://www.pbs.org/newshour/show/dreading-taxes-countries-s...

JSavageOne 5y ago

Blaming "lobbyists" absolves the politicians of their responsibility. The fault lies with the politicians for creating and perpetuating this broken system.

fnord77 5y ago

> just run that thing and send it to me and I can file an exception if there is something on it I disagree with. basically how it works in Sweden

markdown 5y ago

Most people in my country never have to file tax returns. Their taxes are deducted at source (by their employer).

masklinn 5y ago
In every country I know where taxes are collected by the employer you still have to file, to square things up and settle the tax bill (often you’ll get some money back, if you have other sources of income then you may have to pay taxes on those instead).
- donbrae 5y ago
  Not in the UK. Only those earning self-employed income over a certain threshold (£1,000, I think) need to complete a return.

pc86 5y ago

Lobby certainly doesn't help but "just tell me what I owe" is not practical or possible, and is an overly simplistic view of everything about the system. Most importantly, the 1099 your client filed telling them you got paid more than $600 was due the same time your taxes were due, so they didn't know about it until after the fact. The feds have no idea how your deductions (and to a lesser extent, your income) have changed from the previous year. They don't have a full picture of your finances, but you do. In the abstract, with those constraints, the system of "tell us everything we need to know, pay us, and you get in trouble if you lie so egregiously that you get caught" works pretty well.

jefftk 5y ago
This is how taxes work in many other countries, and it's how taxes could work here if we were willing to make minor changes. For example, adjusting the deadlines you mention to be sequential would not be a hard change.
mlyle 5y ago
> but "just tell me what I owe" is not practical or possible Note that there's a whole lot of countries that send you a prepared tax return that you adjust if necessary, and most people don't need to. There's no fundamental reason we couldn't do this here. Indeed, California even did it for a couple years: https://www.taxpolicycenter.org/briefing-book/what-was-experience-return-free-filing-california https://www.taxpolicycenter.org/briefing-book/what-was-exper...
eyelidlessness 5y ago
How is it not obvious this is a system designed for abuse favoring the most privileged abusers?
- pc86 5y ago
  Pretend it's not for a moment and make your argument?
shados 5y ago
A pretty damn large portion of people claim the standard deduction. They are paid on W2. Their investments are on 1099s. The cost basis are in supplemental documents that could easily be provided to the IRS in a format they can handle. Yeah, it doesn't work for everyone. So they could offer it to you, and you have the choice to click "ok", or to click "add additional income and deduction". If your situation is so crazy that neither of those options work, you can then do it the classic/hard mode way with an accountant. It's how it works in plenty of countries. The US is a bit unique with one of the more complex tax code in the world, but it would still work fine for a large portion of the population.

thehappypm 5y ago

Oddly enough conservatives see that as a problem. They want this to be a big process for two reasons. First, taxpayers understanding the process is a good thing. It means they’re not getting gouged and they’re aware of their taxes. Second, they don’t want taxes to be something we just say “k” to like a cell phone bill. That could lead to it being extremely easy to raise taxes.

xunn0026 5y ago
There is a logic here that's visible with salary talks in the EU: people only care about what they receive, not taxes; so all salary talk ignores taxes, all raises ignore taxes, all tax increases are irrelevant as long as they get in-hand the same amount. This is basically a population that sees taxes as magical money only the employer pays. People should definitively understand how much taxes they are paying so that they demand some accountability for their money. How do you accomplish that?

refurb 5y ago

It's impossible to automate the tax filing process unless you simplify the tax code. And I've filed taxes in countries with simple tax codes where the government pre-fills out the forms. Guess what? You still need to go and double check everything because the information comes from your employer. I've found mistakes before. So I pretty much "do my taxes" myself to make sure what the govt sends isn't wrong.

Spivak 5y ago
This is a misunderstanding of the actual ask from the federal government and "automating" is a bit of a misnomer. The reason the IRS could theoretically fill out your taxes on your behalf is because someone else already submitted their part of the forms. Your employer reports your income, your broker reports your capital gains and assets, your bank reports interest, etc.. The ask is less about automation more not having to do those parts twice. The IRS could send you everything they've gotten about you and you just fill in the rest and/or dispute -- for normal single income wage earners there would be nothing else to add so it's effectively automated. The gain is that we can make "doing your taxes" a non-issue for most Americans. Sure some people will still need accountants for complicated situations but in one swoop we can eliminate hundreds of millions of hours of useless work every year for basically no downside -- it's pure gravy.

Griffinsauce 5y ago

This is literally how it works here in the Netherlands. Every year I get a reminder, log into an app with my government ID, click "next" a few times while checking the numbers and submit. It literally takes 2 minutes if you don't have anything to adjust. does the US have a thing like DigiD?

masklinn 5y ago
> does the US have a thing like DigiD? Gods no, can you imagine the US having a national, universal, secure digital ID?

neilfrndes 5y ago

This NPR planet money episode explains why tax filing is still the way it is: https://www.npr.org/sections/money/2019/04/03/709656642/episode-760-tax-hero https://www.npr.org/sections/money/2019/04/03/709656642/epis...

dguest 5y ago

I know people who have optimized this: - they fill out their taxes with rough estimates, - the IRS helpfully corrects their errors, and sends the form back - they sign the corrected form, send it back - the IRS accepts the second round. This is basically the same "pre-filled" workflow as every other developed country. The difference is that we have a first round where you put in a semi-plausible effort to placate the tax preparation lobby. Has anyone with a normal job (not self-employed, regular paycheck from a company registered with the IRS) ever been fined etc for this?

legalcorrection 5y ago
Beware: if you owe the government money due to your mistakes, you will have to pay penalties and interest.
- kristopolous 5y ago
  If you overpay they'll credit you next year. They're pretty lenient as long as your act promptly in good faith
- pm90 5y ago
  The main thing in this strategy is that your estimate is pretty close to the amount owed. So you may overshoot or undershoot, but likely by a pretty small amount, which is likely to make the difference owed small. I guess it could be considered a cost of filing taxes.
- dguest 5y ago
  How much are the penalties? If they are charging some absurd (say 20%) interest and you're off by 10k, you might pay them a few hundred in interest if the process is prolonged a month, which is on par with a tax prep service.
- deleted 5y ago
  [deleted]

adreamingsoul 5y ago

This happened to me, except the IRS calculated that I owed an additional 5-figure sum. not all information is sent to the IRS and they don’t yet have a way to determine a person’s situation. In my case, a form was missing from my filing that provided that context.

aj7 5y ago

Methodology: 1) Download your income transcript from the IRS using your IRS account. 2) Make sure all claimed income on the transcript is included. 3) Do the puzzle. 4) Print and file. Be sure you have a copy, either scanned or electronic, of all documents on your computer. Ditto all tax return filled in forms. Use the fill-in pdf’s the IRS provides. Do not miss a filing date. File a tax return missing important documentation if necessary, but file. Similarly, pay the tax you owe, or estimate you owe on time. The penalties for late filing and owed taxes are severe. You will not make a serious error if you work from the income transcript.

ryathal 5y ago
To add to this even if you can't pay, still file your taxes. It's so much better to only be on the hook for not paying than both not paying and not filing.

Iv 5y ago

> Ok, so if they can do all that automatically for an "electronic audit" why am I filing a return, just run that thing and send it to me and I can file an exception if there is something on it I disagree with. That's how it worked for me in France when I was an employee. As a freelancer there is a bit more work, but nothing like the puzzle that tax declaration seems to be in the US.

AnIdiotOnTheNet 5y ago

It isn't just the lobbyists, certain ideologically anti-tax politicians desperately want their constituents to think of taxes as a Great Evil perpetrated upon them so they can present themselves as the solution. Making the process as much of a pain in the ass as they can is part of their reelection strategy.

cyanydeez 5y ago

Republicans want you to hate paying taxes and tax providers are greedy.

pfundstein 5y ago

> just run that thing and send it to me and I can file an exception if there is something on it I disagree with. This is how it works in Australia. Taxes are filed online with the government authority (ATO), and everything is pre-filled. You just need verify it's correct and make any claims you want.

webinvest 5y ago

The thinking is that the more painful filing your taxes is, the more people will have a negative perception of taxes in general and be opposed to tax increases. There was an interesting Planet Money episode about this [0]. [0] https://www.npr.org/sections/money/2017/03/22/52 https://www.npr.org/sections/money/2017/03/22/52