The IRS already has all your income tax data - so why do Americans still have to file? [View all]

[BigmanPigman]

https://news.yahoo.com/irs-already-income-tax-data-130029063.html

"The government could toss the 1040 in the trash. Doing taxes in the U.S. is notoriously complicated and costly. And it gets even worse when there are delays and backlogs, making it especially hard to reach the Internal Revenue Service for assistance. But to me this raises an important question: Why should taxpayers have to navigate the tedious, costly tax filing system at all? As an expert on the U.S. tax system, I see America’s costly and time-consuming tax reporting system as a consequence of its relationship with the commercial tax preparation industry, which lobbies Congress to maintain the status quo."

"At least 30 countries permit return-free filing, including Denmark, Sweden, Spain and the United Kingdom. Furthermore, 95% of American taxpayers receive at least one of more than 30 types of information returns that let the government know their exact income. These information returns give the government everything it needs to fill out most taxpayers’ returns."

"Commercial tax preparation...
About two decades ago, Congress directed the IRS to provide low-income taxpayers with free tax preparation. The agency responded in 2002 with “Free File,” a public-private partnership between the government and the tax-preparation industry. As part of the deal, the IRS agreed not to compete with the private sector in the free tax preparation market."

"The public part of Free File consists of the IRS herding taxpayers to commercial tax -preparation websites. The private part consists of those commercial entities diverting taxpayers toward costly alternatives.
According to the Treasury Inspector General for Tax Administration, which oversees IRS activities, private partners use computer code to hide the free websites and take unsuspecting taxpayers to paid sites. Should a taxpayer discover a free preparation alternative, the private preparers impose various restrictions such as income or the use of various forms as an excuse to kick taxpayers back to paid preparation. Consequently, of the more than 100 million taxpayers eligible for free help, 35% end up paying for tax preparation and 60% never even visit the free websites. Instead of 70% of Americans receiving free tax preparation, commercial companies whittled that percentage down to 3%."

"Tax savings and evasion...
Perhaps you are guessing that there are valid policy justifications for avoiding government and empowering the private sector. Judge those arguments yourself. One argument from commercial tax preparers is that taxpayers will miss out on valuable tax savings if they rely on free government preparation."

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