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> “An IRS direct-to-e-file system is redundant and will not be free – not free to build, not free to operate, and not free for taxpayers,” Plummer said, adding

> “An IRS direct-to-e-file system is redundant and will not be free – not free to build, not free to operate, and not free for taxpayers,” Plummer said, adding that it “will unnecessarily cost taxpayers billions of dollars.” There's no reason why this has to be true. It might be true, but only due to inefficiencies. The IRS already has code to calculate and validate everything. That's how they know if you make an error on your taxes or failed to report something. All they need to do is refactor it and turn it into an application. That's not a trivial effort, but all the functional code has already been written by the IRS. My impression is that most of the cost of development for Intuit and H&R is keeping up to date with changes in the tax code (and possibly updating data import methods, since those are controlled by 3rd parties and may change). The IRS already has to do the same data checking and cross-checking and import. Therefore, keeping tax prep privatized is a massive duplication of effort.

sokoloff 3y ago
> All they need to do is refactor it and turn it into an application. That's not a trivial effort, but all the functional code has already been written by the IRS. That "not trivial effort" sure sounds like "will not be free – not free to build, not free to operate, and not free for taxpayers" to me. Don't get me wrong; I'm entirely in favor of this action, but I have no illusion that it will be free to build, nor free to operate, nor free for taxpayers.
- harshreality 3y ago
  The point is that the bulk of the cost is already duplicated. When was the last time Turbotax's UI had a major revamp? The conservative narrative is, "Intuit and H&R do this so IRS doesn't have to. Isn't it nice that you don't have to pay more for your tax prep software because the private sector is so efficient?" No, we pay Intuit (or H&R or an actual accountant), and the federal government also spends money so the IRS can develop essentially the same functional code to check tax returns that the third party is preparing according to the same rules. In 2006 during the primaries, one of Obama's operatives floated $2 Bn as the cost of tax prep. Not all of that would be avoided by an IRS "free" e-filing app, but even if e-filing apps only represent 25%, it wouldn't take that long at $500 million per year to pay for the development of an app and refactoring IRS's existing code to be used in the app, even if it turns into a horribly inefficient project. How many billions can IRS spend on a turbotax killer without producing a turbotax killer?
- squeaky-clean 3y ago
  It won't be free, but the only way it could cost the tax payers billions is massive inefficiency or corruption.
Izkata 3y ago
> The IRS already has code to calculate and validate everything. They don't have everything, it's not all automatically reported to the IRS. Having you report it, instead of the IRS reporting it to you, means you can't be completely certain what they do and don't know, and have to report everything to be on the safe side. On the other hand if they just billed you and left something out, you could just keep it a secret and not correct them.
- harshreality 3y ago
  IRS e-file software would not have to pre-fill every source of data they have, making them vulnerable to fraud if a taxpayer notices some income wasn't reported and realizes they can get away with "forgetting" to report it. All they need to do is offer free e-file software and fill in W-2, 1099, and any other standard information that everyone knows is going to be reported anyway because it comes from employers or financial institutions. IRS could still leave it up to individuals to self-report any other sources of income, even income the IRS knows about through other data sources. They don't have to show all their cards. Other countries already have systems like this. How do they handle it? Do they tell taxpayers what their tax bill is based on all data sources, or just the standard ones (incorporated employers, financial institutions) and expect taxpayers to fill in the rest even if the government already knows about them? I think it's more a theoretical problem than an actual problem. Getting away with not reporting income at the time of filing because the government doesn't know about it sounds fun, until the government discovers that income later through updated or alternate sources, and then you have to pay that plus penalties. Betting that the government won't know about it ever because they don't know about it now seems like a bad strategy. Any income the government very likely doesn't know about, like cash transactions, is already reported on the honor system, and only because of personal ethics or fear of audits or employees whistle-blowing on their employers' tax fraud. None of that would change.

sokoloff 3y ago

> All they need to do is refactor it and turn it into an application. That's not a trivial effort, but all the functional code has already been written by the IRS. That "not trivial effort" sure sounds like "will not be free – not free to build, not free to operate, and not free for taxpayers" to me. Don't get me wrong; I'm entirely in favor of this action, but I have no illusion that it will be free to build, nor free to operate, nor free for taxpayers.

harshreality 3y ago
The point is that the bulk of the cost is already duplicated. When was the last time Turbotax's UI had a major revamp? The conservative narrative is, "Intuit and H&R do this so IRS doesn't have to. Isn't it nice that you don't have to pay more for your tax prep software because the private sector is so efficient?" No, we pay Intuit (or H&R or an actual accountant), and the federal government also spends money so the IRS can develop essentially the same functional code to check tax returns that the third party is preparing according to the same rules. In 2006 during the primaries, one of Obama's operatives floated $2 Bn as the cost of tax prep. Not all of that would be avoided by an IRS "free" e-filing app, but even if e-filing apps only represent 25%, it wouldn't take that long at $500 million per year to pay for the development of an app and refactoring IRS's existing code to be used in the app, even if it turns into a horribly inefficient project. How many billions can IRS spend on a turbotax killer without producing a turbotax killer?
squeaky-clean 3y ago
It won't be free, but the only way it could cost the tax payers billions is massive inefficiency or corruption.

Izkata 3y ago

> The IRS already has code to calculate and validate everything. They don't have everything, it's not all automatically reported to the IRS. Having you report it, instead of the IRS reporting it to you, means you can't be completely certain what they do and don't know, and have to report everything to be on the safe side. On the other hand if they just billed you and left something out, you could just keep it a secret and not correct them.

harshreality 3y ago
IRS e-file software would not have to pre-fill every source of data they have, making them vulnerable to fraud if a taxpayer notices some income wasn't reported and realizes they can get away with "forgetting" to report it. All they need to do is offer free e-file software and fill in W-2, 1099, and any other standard information that everyone knows is going to be reported anyway because it comes from employers or financial institutions. IRS could still leave it up to individuals to self-report any other sources of income, even income the IRS knows about through other data sources. They don't have to show all their cards. Other countries already have systems like this. How do they handle it? Do they tell taxpayers what their tax bill is based on all data sources, or just the standard ones (incorporated employers, financial institutions) and expect taxpayers to fill in the rest even if the government already knows about them? I think it's more a theoretical problem than an actual problem. Getting away with not reporting income at the time of filing because the government doesn't know about it sounds fun, until the government discovers that income later through updated or alternate sources, and then you have to pay that plus penalties. Betting that the government won't know about it ever because they don't know about it now seems like a bad strategy. Any income the government very likely doesn't know about, like cash transactions, is already reported on the honor system, and only because of personal ethics or fear of audits or employees whistle-blowing on their employers' tax fraud. None of that would change.