8 ms·

The IRS has all our tax data. Why doesn't its new website use it?

83 points by wslh 3y ago

wslh 3y ago
https://archive.is/9Zsdd https://archive.is/9Zsdd
kwertyoowiyop 3y ago
They forgot to credit the co-author, who I assume works at Intuit.
travoc 3y ago
Asking the IRS to do your taxes is like asking the fox how to guard your henhouse. You might want a second opinion.
- Gratuity1901 3y ago
  Grover Norquist?
- cornstalks 3y ago
  Asking the IRS to pre-fill your taxes is totally reasonable. What's crazy is that they have all this information and have already computed how much tax I owe, but won't tell me what that is, and if I get it wrong or forget something then I'm both legally and financially liable. You can still get a second opinion with pre-filled taxes.
  - imgabe 3y ago
    The liability for making a simple honest mistake is greatly overstated. In most cases the IRS sends you a letter explaining the mistake and asks you to send the additional payment (or sends you the additional refund) and if you address it in a timely manner there’s no penalty or anything. The meme about “oh I forgot to carry the one now I’m going to jail” is just Internet hyperbole.
    - seanmcdirmid 3y ago
      Often times you correct it with more paper work. One year, my foreign tax deduction didn’t get filed for some reason (I was doing my own taxes by hand and sending in the forms), so I was hit with a huge tax bill of $30k or so. Then I found out I handled my non-resident wife wrong, so amend 1040X wait for ITIN, etc…it was kind of a mess. I wound up ahead, the IRS owing me instead. They were quite courteous about it on the phone.
    - dghlsakjg 3y ago
      This is my experience as well. The IRS generally knows that mistakes happen, and they generally don't really seem interested in criminally punishing small things. Normally they assess a small penalty payment at worst, and set you up with a payment plan if you don't have the money.
  - notfed 3y ago
    I've always wondered if there's some intentional poker going on here: if the IRS shows you your report first, and you realize they've made a mistake to your advantage, you're almost certainly less likely to report it...right?
  - ianburrell 3y ago
    They will tell you what they have. You can request your tax records including what they think you owe and what you earned. https://www.irs.gov/individuals/get-transcript https://www.irs.gov/individuals/get-transcript
    - cornstalks 3y ago
      But can I do that before I file taxes? Maybe I've misunderstood but I thought this is only available after I file taxes: https://www.irs.gov/individuals/transcript-availability https://www.irs.gov/individuals/transcript-availability
  - teraflop 3y ago
    > What's crazy is that they have all this information and have already computed how much tax I owe This is not really accurate. If you're a typical employee, IRS has a pretty good idea of your income, which is just one of the many factors that goes into calculating your tax. In particular, the IRS doesn't independently know most of the things that could cause you to get tax deductions, like whether you got married since last year, or you moved out of your parents' house and started living on your own, or you're taking care of a child, or you had self-employment expenses, or you bought textbooks for your college classes, or you donated to charity, or you paid expensive medical bills, etc.
    - seanmcdirmid 3y ago
      They also don’t know about the adjusted cost basis for those RSUs sold to pay for the ordinary income tax of an RSU grant.
    - cornstalks 3y ago
      To be fair, I said "how much tax I owe," not how much tax you (or others) owe. I don't have any creative deductions. And I expect many others only have one or two "interesting" deductions to add. I haven't actually measured this but I honestly expect >95% of what I enter into my tax return is information they already have.
      - buffington 3y ago
        Do they know how much you'll spend on sales tax for a given tax year? How much you'll pay out of pocket for health expenses? Do you? These are not "interesting", but nearly everyone has 'em, and the IRS cannot know, without bending space time, how much you'll owe because of those deductions (assuming an itemized deduction, though they're still in play either way because they can help tip the balance between taking a standard or itemized deductions).
        BugsJustFindMe 3y ago
        > assuming an itemized deduction Only 13% of all US federal tax filings each year itemize deductions. That means it would help the vast majority of filers and not harm the rest in any way whatsoever. Weird thing to be against if someone isn't misanthropic.
- grecy 3y ago
  The IRS already "does" your taxes. They internally compute what you owe, and if what you submit doesn't add up, they dig deeper.
  - justrealist 3y ago
    That's really not true and it's important to understand the distinction. They know a lower bound on how much income you should be reporting. They have no idea how many dependents you have, houses you sold, charity you donated, foreign income you made, etc etc etc. There are hundreds of other things they don't know which massively affect what you owe. If they got a W-4 for you and you don't report it, yes you're f'd. But they in no way know how much you owe.
    - add-sub-mul-div 3y ago
      In my experience people really love the "The IRS already knows how much you owe" meme and you'll never get much more than downvotes for clarifying the truth of it. In a better world our taxes could be simpler, but for now let's do our taxes the way they do need to be done.
    - singron 3y ago
      Most people have the same filing status and number of dependents as the previous year, just have W2 and 1099 income already reported to the IRS, and take the standard deduction. For most people, they can tell you what you owe. If it's wrong, you can tell them your dependents or filing status changed and get a new form. If you have a weird situation the IRS doesn't know about, you can still do your own taxes, but that's not most people.
    - BugsJustFindMe 3y ago
      > They have no idea how many dependents you have, houses you sold, charity you donated, foreign income you made, etc etc etc. Generally speaking, the government does in fact know exactly what houses you sold and dependents you have. Those are both matters of public record and registered with the state. How do you think cities assess property taxes? And if you think that charitable donations and foreign income make any kind of dent for 99% of all taxpayers, you're living in a very weird bubble. 87% of all filings take the standard deduction in any given year for a reason.
- Angostura 3y ago
  You should be free to get both their opinion for free - and a second opinion if you really want to pay for it, surely?
- jjav 3y ago
  > Asking the IRS to do your taxes is like asking the fox how to guard your henhouse. Remember, the IRS is already computing your taxes behind the scenes based on all the information they have. If you report an answer different from what they computed, you get audited.
venusenvy47 3y ago
I always think the biggest issue to solve, if the IRS were to send you a pre-filled form with all of your information, would be making sure that the correct person receives the form. I don't think a majority of people have online IRS accounts, and older or technology challenged people might be reluctant to have it. So that means that the US Postal Service needs to be completely sure that they send this envelope of sensitive information to the correct person. It seems like the information could end up with the wrong person with mailing mistakes or people who have moved.
- SoftTalker 3y ago
  Well we receive all kinds of other tax information in the mail, W2s, 1099s, etc. It doesn't seem to cause big problems.
  - venusenvy47 3y ago
    It seems like having all the information bundled nicely with your SSN would be a valuable target for someone walking past an old person's mailbox. As it stands now, we only put our SSN on the filing that we are sending to the IRS.
- mjevans 3y ago
  They only need to use https://www.login.gov/help/verify-your-identity/how-to-verify-your-identity/ https://www.login.gov/help/verify-your-identity/how-to-verif... As well as track and list the IP / location and time of when previous accesses occurred. Sign in and see someone not on the list? Have a link that sends to identity fraud at the FBI or whatever's the correct place. They could also hide the exact details and just name the banks / holdings places and other things involved and you could confirm that there aren't any other details or make corrections.
  - venusenvy47 3y ago
    I'm a little confused about this site. I recently had my mother get access to her IRS information using something called ID.me, which is what the IRS site directs you to. To sign up she needed to have a video conference on her phone with an agent that verified that she was a real person showing her driver's license. Is login.gov an alternate method to ID.me?
deleted 3y ago
[deleted]
nitinreddy88 3y ago
It feels so weird that US doesn't have such system where as Second/Third world country like India excels in some of them. Online Tax Filing (preloaded with all the tax data, nothing to declare extra, just 5 clicks). In fact there are third party sites/apps (freetaxfiler) which automates the entire process.
- stueynz 3y ago
  From another part of the world - if the IRS has all the data why aren’t they sending refunds/demands for payment without any clicks at all.
  - dghlsakjg 3y ago
    1. Politics. Funding the IRS sufficiently is, sadly, controversial. Additionally, tax filing is a multi-billion dollar industry, and they lobby politicians very heavily to make it hard to file taxes. 2. The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Most people could answer about 5-10 simple questions and the IRS would have everything they need (this is basically how tax filing firms/software get it done after you give them all of the information that the IRS already has). A minority have more complex tax situations, but these people likely already have a personal accountant, or are running a business.
    - jjav 3y ago
      > The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Well, not quite. The IRS knows 100% of what the average person is going to put in their tax return. So just automate that. There is a small percentage of people with more complex tax situations. Yes, they will need to file a tax return. Percentage-wise, it is very few people.
  - oliwarner 3y ago
    They don't have all the data. Your tax office wouldn't automatically know about self employment, investment earnings, your private business expenses, collected rent, profit from reselling things, etc, and they'd expect you to declare them via some form of self-assessment. The US takes one step further by allowing a plethora of non-earning items to be declared as deductions on your return (mortgage interest, healthcare expenses, kids, etc) which the IRS needs to be told about.
phyzome 3y ago
[flagged]
- jjtheblunt 3y ago
  Your point 2 is based on what? I thought the Republican Party describes itself famously as the anti big government anti governmental complexity party.
  - lotsofpulp 3y ago
    >I thought the Republican Party describes itself famously as the anti big government anti governmental complexity party Actions speak louder than words.
  - kalleboo 3y ago
    They are. They want to make tax filing as painful as possible so that the people associate "taxes => pain" and vote to lower/abolish them. Easy or automatic filing makes people forget about taxes and not care as much about them. This is also why sales taxes aren't included in item prices, this forces people to be reminded every single day how much they're paying in taxes, motivating them to reduce them.
    - soup10 3y ago
      Yes let's make taxes as automatic and as hidden as possible so that we can keep the enormous government slush funds running as seamlessly as possible without people complaining and questioning things.
      - polygamous_bat 3y ago
        Automatic != hidden. Painless != hidden. The fact that you want to cause extra pain to those who can't pay big money lawyers to simply make a point says more about your political leanings than anything else in this comment.
        3y ago
deepsun 3y ago
What if IRS doesn't have _all_ of our tax data? Then people would go like "but IRS told be to pay X, it shows that they don't know about my other source of income, so I better not tell them". In other countries with automatic payment (India, Ukraine) -- people would not disclose _any_ incomes for taxes, if given a chance. So government makes everyone to pay through a monitored taxed account. But people don't even think that if money come on another, non-business, account, they should disclose that as income. It's kinda assumed that if gov doesn't know, then they shouldn't pay.
- kccqzy 3y ago
  This should be the topmost comment. By having the government not reveal their information on you, they gain leverage. Just because you think the government might know about that income, you will report it. Tax evasion would be a lot easier without this.
beej71 3y ago
Oregon quietly rolled out its TurboTax knockoff this year, as well, and it's pretty good for a v1. They plan to add more functionality each year. No reason to have middlemen in this space.
mannyv 3y ago
The IRS has the income part of your return, not necessarily the expense part. Most people hit the standard deduction, but to do it right you need to actually do the expense part and compare. Also they may have problems retrieving data in realtime. The IRS was a batch operation historically, and transitioning to realtime is challenging. I mean what, are you going to do, put ip a wait cursor while joe bob mounts tape number 2,578,998,321?
- blahedo 3y ago
  > Most people hit the standard deduction, Is this still true? After they raised the deduction and capped the sales/local tax deductions (and some others too I thought), I assumed a lot of people that used to hit the standard deduction now didn't.
  - mannyv 3y ago
    Most people rent, and their deductions won't add up to 14.6k/29.2 without a mortgage. That said, the vast majority of tax is paid by people who don't take the SD.
  - deleted 3y ago
    [deleted]
viburnum 3y ago
I was surprised that the once-only principle wasn't mentioned: https://en.wikipedia.org/wiki/Once-only_principle#Estonia https://en.wikipedia.org/wiki/Once-only_principle#Estonia
CraigRo 3y ago
My understanding is that the IRS internal systems are still some derivative of the 1965 Cobol / IBM mainframe. This is not easy to change, and it is unlikely that anyone actually knows how it all works together.

83 points by wslh 3y ago

wslh 3y ago

https://archive.is/9Zsdd https://archive.is/9Zsdd

kwertyoowiyop 3y ago

They forgot to credit the co-author, who I assume works at Intuit.

travoc 3y ago

Asking the IRS to do your taxes is like asking the fox how to guard your henhouse. You might want a second opinion.

Gratuity1901 3y ago
Grover Norquist?
cornstalks 3y ago
Asking the IRS to pre-fill your taxes is totally reasonable. What's crazy is that they have all this information and have already computed how much tax I owe, but won't tell me what that is, and if I get it wrong or forget something then I'm both legally and financially liable. You can still get a second opinion with pre-filled taxes.
- imgabe 3y ago
  The liability for making a simple honest mistake is greatly overstated. In most cases the IRS sends you a letter explaining the mistake and asks you to send the additional payment (or sends you the additional refund) and if you address it in a timely manner there’s no penalty or anything. The meme about “oh I forgot to carry the one now I’m going to jail” is just Internet hyperbole.
  - seanmcdirmid 3y ago
    Often times you correct it with more paper work. One year, my foreign tax deduction didn’t get filed for some reason (I was doing my own taxes by hand and sending in the forms), so I was hit with a huge tax bill of $30k or so. Then I found out I handled my non-resident wife wrong, so amend 1040X wait for ITIN, etc…it was kind of a mess. I wound up ahead, the IRS owing me instead. They were quite courteous about it on the phone.
  - dghlsakjg 3y ago
    This is my experience as well. The IRS generally knows that mistakes happen, and they generally don't really seem interested in criminally punishing small things. Normally they assess a small penalty payment at worst, and set you up with a payment plan if you don't have the money.
- notfed 3y ago
  I've always wondered if there's some intentional poker going on here: if the IRS shows you your report first, and you realize they've made a mistake to your advantage, you're almost certainly less likely to report it...right?
- ianburrell 3y ago
  They will tell you what they have. You can request your tax records including what they think you owe and what you earned. https://www.irs.gov/individuals/get-transcript https://www.irs.gov/individuals/get-transcript
  - cornstalks 3y ago
    But can I do that before I file taxes? Maybe I've misunderstood but I thought this is only available after I file taxes: https://www.irs.gov/individuals/transcript-availability https://www.irs.gov/individuals/transcript-availability
- teraflop 3y ago
  > What's crazy is that they have all this information and have already computed how much tax I owe This is not really accurate. If you're a typical employee, IRS has a pretty good idea of your income, which is just one of the many factors that goes into calculating your tax. In particular, the IRS doesn't independently know most of the things that could cause you to get tax deductions, like whether you got married since last year, or you moved out of your parents' house and started living on your own, or you're taking care of a child, or you had self-employment expenses, or you bought textbooks for your college classes, or you donated to charity, or you paid expensive medical bills, etc.
  - seanmcdirmid 3y ago
    They also don’t know about the adjusted cost basis for those RSUs sold to pay for the ordinary income tax of an RSU grant.
  - cornstalks 3y ago
    To be fair, I said "how much tax I owe," not how much tax you (or others) owe. I don't have any creative deductions. And I expect many others only have one or two "interesting" deductions to add. I haven't actually measured this but I honestly expect >95% of what I enter into my tax return is information they already have.
    - buffington 3y ago
      Do they know how much you'll spend on sales tax for a given tax year? How much you'll pay out of pocket for health expenses? Do you? These are not "interesting", but nearly everyone has 'em, and the IRS cannot know, without bending space time, how much you'll owe because of those deductions (assuming an itemized deduction, though they're still in play either way because they can help tip the balance between taking a standard or itemized deductions).
      - BugsJustFindMe 3y ago
        > assuming an itemized deduction Only 13% of all US federal tax filings each year itemize deductions. That means it would help the vast majority of filers and not harm the rest in any way whatsoever. Weird thing to be against if someone isn't misanthropic.
grecy 3y ago
The IRS already "does" your taxes. They internally compute what you owe, and if what you submit doesn't add up, they dig deeper.
- justrealist 3y ago
  That's really not true and it's important to understand the distinction. They know a lower bound on how much income you should be reporting. They have no idea how many dependents you have, houses you sold, charity you donated, foreign income you made, etc etc etc. There are hundreds of other things they don't know which massively affect what you owe. If they got a W-4 for you and you don't report it, yes you're f'd. But they in no way know how much you owe.
  - add-sub-mul-div 3y ago
    In my experience people really love the "The IRS already knows how much you owe" meme and you'll never get much more than downvotes for clarifying the truth of it. In a better world our taxes could be simpler, but for now let's do our taxes the way they do need to be done.
  - singron 3y ago
    Most people have the same filing status and number of dependents as the previous year, just have W2 and 1099 income already reported to the IRS, and take the standard deduction. For most people, they can tell you what you owe. If it's wrong, you can tell them your dependents or filing status changed and get a new form. If you have a weird situation the IRS doesn't know about, you can still do your own taxes, but that's not most people.
  - BugsJustFindMe 3y ago
    > They have no idea how many dependents you have, houses you sold, charity you donated, foreign income you made, etc etc etc. Generally speaking, the government does in fact know exactly what houses you sold and dependents you have. Those are both matters of public record and registered with the state. How do you think cities assess property taxes? And if you think that charitable donations and foreign income make any kind of dent for 99% of all taxpayers, you're living in a very weird bubble. 87% of all filings take the standard deduction in any given year for a reason.
Angostura 3y ago
You should be free to get both their opinion for free - and a second opinion if you really want to pay for it, surely?
jjav 3y ago
> Asking the IRS to do your taxes is like asking the fox how to guard your henhouse. Remember, the IRS is already computing your taxes behind the scenes based on all the information they have. If you report an answer different from what they computed, you get audited.

venusenvy47 3y ago

I always think the biggest issue to solve, if the IRS were to send you a pre-filled form with all of your information, would be making sure that the correct person receives the form. I don't think a majority of people have online IRS accounts, and older or technology challenged people might be reluctant to have it. So that means that the US Postal Service needs to be completely sure that they send this envelope of sensitive information to the correct person. It seems like the information could end up with the wrong person with mailing mistakes or people who have moved.

SoftTalker 3y ago
Well we receive all kinds of other tax information in the mail, W2s, 1099s, etc. It doesn't seem to cause big problems.
- venusenvy47 3y ago
  It seems like having all the information bundled nicely with your SSN would be a valuable target for someone walking past an old person's mailbox. As it stands now, we only put our SSN on the filing that we are sending to the IRS.
mjevans 3y ago
They only need to use https://www.login.gov/help/verify-your-identity/how-to-verify-your-identity/ https://www.login.gov/help/verify-your-identity/how-to-verif... As well as track and list the IP / location and time of when previous accesses occurred. Sign in and see someone not on the list? Have a link that sends to identity fraud at the FBI or whatever's the correct place. They could also hide the exact details and just name the banks / holdings places and other things involved and you could confirm that there aren't any other details or make corrections.
- venusenvy47 3y ago
  I'm a little confused about this site. I recently had my mother get access to her IRS information using something called ID.me, which is what the IRS site directs you to. To sign up she needed to have a video conference on her phone with an agent that verified that she was a real person showing her driver's license. Is login.gov an alternate method to ID.me?

deleted 3y ago

[deleted]

nitinreddy88 3y ago

It feels so weird that US doesn't have such system where as Second/Third world country like India excels in some of them. Online Tax Filing (preloaded with all the tax data, nothing to declare extra, just 5 clicks). In fact there are third party sites/apps (freetaxfiler) which automates the entire process.

stueynz 3y ago
From another part of the world - if the IRS has all the data why aren’t they sending refunds/demands for payment without any clicks at all.
- dghlsakjg 3y ago
  1. Politics. Funding the IRS sufficiently is, sadly, controversial. Additionally, tax filing is a multi-billion dollar industry, and they lobby politicians very heavily to make it hard to file taxes. 2. The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Most people could answer about 5-10 simple questions and the IRS would have everything they need (this is basically how tax filing firms/software get it done after you give them all of the information that the IRS already has). A minority have more complex tax situations, but these people likely already have a personal accountant, or are running a business.
  - jjav 3y ago
    > The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Well, not quite. The IRS knows 100% of what the average person is going to put in their tax return. So just automate that. There is a small percentage of people with more complex tax situations. Yes, they will need to file a tax return. Percentage-wise, it is very few people.
- oliwarner 3y ago
  They don't have all the data. Your tax office wouldn't automatically know about self employment, investment earnings, your private business expenses, collected rent, profit from reselling things, etc, and they'd expect you to declare them via some form of self-assessment. The US takes one step further by allowing a plethora of non-earning items to be declared as deductions on your return (mortgage interest, healthcare expenses, kids, etc) which the IRS needs to be told about.

phyzome 3y ago

[flagged]

jjtheblunt 3y ago
Your point 2 is based on what? I thought the Republican Party describes itself famously as the anti big government anti governmental complexity party.
- lotsofpulp 3y ago
  >I thought the Republican Party describes itself famously as the anti big government anti governmental complexity party Actions speak louder than words.
- kalleboo 3y ago
  They are. They want to make tax filing as painful as possible so that the people associate "taxes => pain" and vote to lower/abolish them. Easy or automatic filing makes people forget about taxes and not care as much about them. This is also why sales taxes aren't included in item prices, this forces people to be reminded every single day how much they're paying in taxes, motivating them to reduce them.
  - soup10 3y ago
    Yes let's make taxes as automatic and as hidden as possible so that we can keep the enormous government slush funds running as seamlessly as possible without people complaining and questioning things.
    - polygamous_bat 3y ago
      Automatic != hidden. Painless != hidden. The fact that you want to cause extra pain to those who can't pay big money lawyers to simply make a point says more about your political leanings than anything else in this comment.
      - 3y ago

deepsun 3y ago

What if IRS doesn't have _all_ of our tax data? Then people would go like "but IRS told be to pay X, it shows that they don't know about my other source of income, so I better not tell them". In other countries with automatic payment (India, Ukraine) -- people would not disclose _any_ incomes for taxes, if given a chance. So government makes everyone to pay through a monitored taxed account. But people don't even think that if money come on another, non-business, account, they should disclose that as income. It's kinda assumed that if gov doesn't know, then they shouldn't pay.

kccqzy 3y ago
This should be the topmost comment. By having the government not reveal their information on you, they gain leverage. Just because you think the government might know about that income, you will report it. Tax evasion would be a lot easier without this.

beej71 3y ago

Oregon quietly rolled out its TurboTax knockoff this year, as well, and it's pretty good for a v1. They plan to add more functionality each year. No reason to have middlemen in this space.

mannyv 3y ago

The IRS has the income part of your return, not necessarily the expense part. Most people hit the standard deduction, but to do it right you need to actually do the expense part and compare. Also they may have problems retrieving data in realtime. The IRS was a batch operation historically, and transitioning to realtime is challenging. I mean what, are you going to do, put ip a wait cursor while joe bob mounts tape number 2,578,998,321?

blahedo 3y ago
> Most people hit the standard deduction, Is this still true? After they raised the deduction and capped the sales/local tax deductions (and some others too I thought), I assumed a lot of people that used to hit the standard deduction now didn't.
- mannyv 3y ago
  Most people rent, and their deductions won't add up to 14.6k/29.2 without a mortgage. That said, the vast majority of tax is paid by people who don't take the SD.
- deleted 3y ago
  [deleted]

viburnum 3y ago

I was surprised that the once-only principle wasn't mentioned: https://en.wikipedia.org/wiki/Once-only_principle#Estonia https://en.wikipedia.org/wiki/Once-only_principle#Estonia

CraigRo 3y ago

My understanding is that the IRS internal systems are still some derivative of the 1965 Cobol / IBM mainframe. This is not easy to change, and it is unlikely that anyone actually knows how it all works together.