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Government The Almighty Buck

IRS Moves Forward With a New Free-File Tax Return System (pbs.org) 122

An anonymous reader quotes a report from PBS: An IRS plan to test drive a new electronic free-file tax return system next year has got supporters and critics of the idea mobilizing to sway the public and Congress over whether the government should set up a permanent program to help people file their taxes without needing to pay somebody else to figure out what they owe. On one side, civil society groups this week launched a coalition to promote the move toward a government-run free-file program. On the other, tax preparation firms like Intuit -- the parent company of TurboTax -- and H&R Block have been pouring millions into trying to stop the idea cold. The advocacy groups are exponentially out-monied.

An April AP analysis found that overall, Intuit, H&R Block, and other private companies and advocacy groups for large tax preparation businesses, as well as proponents in favor of electronic free file, have reported spending $39.3 million since 2006 to lobby on "free-file" and other matters. Federal law doesn't require domestic lobbyists to itemize expenses by specific issue, so the sums are not limited to free-file. Intuit spent at least $25.6 million since 2006 on lobbying, H&R Block about $9.6 million and the conservative Americans for Tax Reform roughly $3 million. In contrast, the NAACP has spent $140,000 lobbying on "free-file" since 2006 and Public Citizen has spent $110,000 in the same time frame. "What we have on our side is public opinion," said Igor Volsky, executive director of the liberal Groundwork Action advocacy group. Volsky's organization and leaders from Public Citizen, the Center for the Study of Social Policy, Code for America, the Economic Security Project and others launched the "Coalition for Free and Fair Filing" on Wednesday. The group's mission is to "ensure all U.S. taxpayers can easily file tax returns and get the tax credits they deserve by safeguarding and expanding" the new IRS program. "The overwhelming majority of people demand a free-file option," Volsky said. "Now the question for us is how do you channel that into effective political pressure."

The IRS in May released a report that said most taxpayers are interested in filing their taxes directly to the IRS for free, and concurrently announced plans to launch the pilot program for the 2024 filing season. The goal is to test a direct file system that will help the IRS decide whether to move forward with a more permanent program. That idea has faced the immediate threat of budget cuts from congressional Republicans. Republicans on the House Appropriations Committee in June proposed a budget rider that would prohibit funds to be used for the IRS to create a government-run tax preparation software, unless approved by a group of House and Senate committees. The move "safeguards the IRS from an obvious conflict of interest where the tax collector becomes the tax preparer," the bill's summary states.

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IRS Moves Forward With a New Free-File Tax Return System

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  • by etash ( 1907284 ) on Thursday July 20, 2023 @05:11PM (#63702938)
    filing taxes should be free. If you want money from me, i don't have to pay extra money to calculate how much i owe you.
    • by PsychoSlashDot ( 207849 ) on Thursday July 20, 2023 @05:30PM (#63702966)

      filing taxes should be free. If you want money from me, i don't have to pay extra money to calculate how much i owe you.

      This should be simple. Citizens should have access to a free government-provided filing system that covers most straightforward filings.

      Then... people could show up at H&R Block et al and say "here's my paperwork and here's what the free site says."

      If the professionals can massage the results legally better in favor of their potential customer, they can have half of the extra return. If they can't pay for themselves, the citizen clicks the "finalize" button on the free site and walks away, happy.

      Everyone wins. The big guys just win less than when they're buying legislated revenue streams.

      • ...If the professionals can massage the results legally better in favor of their potential customer, they can have half of the extra return.

        I seriously cannot believe you just suggested that in the land of free-market corruption, as if half of whatever they find "extra" would ever be enough to satisfy shareholders or those receiving a quarterly bonus.

        Next thing you know TurboTax is Too Big To Fail according to the IRS...with a trillion-dollar tax fraud scheme paid for by taxpayers while those who got rich live on their extradition-free islands.

      • It should be even simpler than that. Property tax districts send you a statement. The IRS should do the same. If it's right, just pay the bill. If it's wrong, then file an amendment or correction, by whatever means you want (software, H&R block, whatever).

        • It should be even simpler than that. Property tax districts send you a statement. The IRS should do the same. If it's right, just pay the bill. If it's wrong, then file an amendment or correction, by whatever means you want (software, H&R block, whatever).

          I think there's still a step missing here. "Software, H&R Block, whatever". Not good enough. If you've made a charitable donation or have any item that the IRS won't be aware of because it isn't a payroll deduction sent to them, your list of methods to explain that are status quo. They're the current, out-of-pocket paid methods, which sucks. I'd amend that to "the free government-provided-web-site, H&R Block, whatever".

          • In the UK, the charity has to report the donation to HMRC. They receive the basic rate deduction direct from HMRC, so you make your donation a bit lower because you know they will get the tax refund.
            Then, if you are entitled to a higher rate deduction, HMRC already know about.

            • In the US, charities also report donations to the IRS. However, the tax code also allows deductions for "Unreimbursed volunteer expenses" which never go through a formal reporting process. For this kind of deduction, the volunteer is required to keep receipts in case of an audit. So reporting does happen automatically to a great degree, but there are always exceptions.

      • by mjwx ( 966435 )

        filing taxes should be free. If you want money from me, i don't have to pay extra money to calculate how much i owe you.

        This should be simple. Citizens should have access to a free government-provided filing system that covers most straightforward filings.

        Then... people could show up at H&R Block et al and say "here's my paperwork and here's what the free site says."

        If the professionals can massage the results legally better in favor of their potential customer, they can have half of the extra return. If they can't pay for themselves, the citizen clicks the "finalize" button on the free site and walks away, happy.

        Everyone wins. The big guys just win less than when they're buying legislated revenue streams.

        In Australia where filing your taxes (En_AU: Doing your tax return) is free, a good accountant will get you far more back because they know not only what can be deducted, but the maximum amounts that can be deducted without singling your return out for auditing and what amounts you can claim without receipts. However these kind of professionals are not the people at chains like H&R Block. My accountant charges well above the going rate but earned his keep each year.

        A free filing service is under no o

      • by Toad-san ( 64810 )

        I like this very much.

    • If you submit your tax return to the UK's HMRC, they will calculate the tax refund or tax owing for you.

      But the difficult part is often gathering data. I have rental houses in the UK and I have to accurately gather my costs and income, then convert it. More than that, I have depreciation of the rental houses to deal with.

      • You don't get to deduct depreciation for rental property in the UK.
        You used to get wear and tear allowance, but that was abolished in 2015 and instead you can deduct the replacement cost.

        • You don't get to deduct depreciation for rental property in the UK.

          That's true. But you do get to deduct depreciation in the USA.

    • Filing taxes should not be a requirement unless you are self employed or have losses/medical costs/life changing events/unusual situations. The IRS already has enough information to determine your tax refund or bill and issue it automatically. Filing a tax form annually is a waste of everyones time and money.

  • So the "Americans for Tax reform" want to keep it difficult and expensive to prepare and submit a tax return?

    I'll say one thing for this group though: they appear to be against the legalized theft that is "civil asset forfeiture".

  • Fuck you Intuit (Score:5, Insightful)

    by e065c8515d206cb0e190 ( 1785896 ) on Thursday July 20, 2023 @05:18PM (#63702954)
    Pieces of shit
  • If you do your own taxes there is no cost. If your a w2 employee with a high school diploma you should be able to do your taxes.
    • Re: (Score:3, Insightful)

      by ebh ( 116526 )

      Only if your time is worthless.

      • Not American, have done American taxes and yes.

        None of the rules are complex, per se, but they are an awful lot of them and they are often written in somewhat perverse ways. Once your tax situation gets complex, i.e. out of the ordinary, it is astoundingly time consuming trying to even figure out if one of the rules is triggered by a particular holding or not.

        Plus if you use a reputable accountant there's also a veneer of respectability: if you fuck up and get it wrong then it really doesn't look like you w

        • The U.K. system catches out a lot of people who think they have to do nothing when in fact they need to tell HMRC to give them the extra tax relief on their pension contributions. For example, this happened to everybody I worked with when the company was bought and our pensions went from salary sacrifice to relief at source in the companyâ(TM)s scheme.

      • Only if your time is worthless.

        Yes, pay an accountant hundreds of dollars so you have time to post on slashdot.

        • by ebh ( 116526 )

          If your tax situation is at all complicated, paying an accountant hundreds of dollars can save you thousands.

          I do miss the 1040-EZ form. That took me less than half an hour to fill out. But I don't miss being broke enough to be able to use it. :)

    • Nearly free. I still need the envelope and the stamp, in my case for an ounce and a half. My taxes are a bit complicated.

      No, I can't file electronically due to one particular form that must be sent in physically.

    • by SirSpanksALot ( 7630868 ) on Thursday July 20, 2023 @05:38PM (#63702994)
      honestly - a w2 employee shouldn't even have to do taxes. Why the fuck isn't it automatic. Unless you have some special circumstance you shouldn't have to file a damn thing.
      • Taxes are unfortunately way too complicated for that.
        • by SirSpanksALot ( 7630868 ) on Thursday July 20, 2023 @06:10PM (#63703064)
          bullshit. With the increase in size of the standard deduction, the vast majority of people have nothing to deduct. Unless you have special circumstances like owning a business there's no reason most people should need to file.
          • There's more to it than deductions. Filling jointly, dependents, interest from bank accounts, investments, etc.
            • "Filling jointly, dependents,"
              You already have the incentive to change your withholding immediately upon a change in status.

              "interest from bank accounts"
              Your 1099-INT is already reported to the IRS if you have interest over $10.

              "investments"
              Brokerage accounts already report your 1099-DIV and 1099-B to the IRS. More importantly, most people have either zero investments or only 401k contributions. The only small players affected are those making eligible contributions to a traditional IRA, which would

        • by tsqr ( 808554 )

          Taxes are unfortunately way too complicated for that.

          If you're an apartment-dwelling W2 employee with no other sources of income, no rental property, and an IQ over 80, it shouldn't take more than 20 minutes to fill out Form 1040-EZ. If you have a more complicated situation, you can probably afford $50 for TurboTax.

          • Yeah it's not hard, but it's not simple enough to be done automatically through just a w2 if you have other income like investments. If they had all the information they could do it automatically, but they don't.
            • What do you think they don't have? For most people they have literally everything.

            • by tsqr ( 808554 )

              If you have investment income, you can afford 50 bucks for tax preparation software. I haven't spent more than an hour preparing my Federal and State returns in many years, and I don't consider an hour per year plus a few minutes per month maintaining records to be an unreasonable burden.

              If you think your time is too valuable to spend an hour on it, then you can afford to get a tax accountant to do it for you.

              If you don't trust the government not to lie to you and spy on you, why on Earth would you trust it

          • If you are the equivalent in the UK. HMRC send you your tax return. It will take you like 30 seconds to read it, see that everything is correct and you don't need to take any further action, and put it in your filing location.

            • by tsqr ( 808554 )
              Congratulations - you've saved yourself 19-1/2 minutes over the course of a year! What will you do with all that spare time?
        • They can do MOST peoples taxes easily in the computer and mail you a receipt/invoice! If you want money back... then you fill out some forms and get a refund. Hell, each donation you claim etc should be part of a running online total you can look at all year long! The charity can tell them too and you login or get a text in minutes it lowered your running total.

        • Taxes are unfortunately way too complicated for that.

          No they aren't. Reclaims are too complicated for that. The aspect of taxing people is automatic to the point where the IRS happily handles the load of hundreds of millions of Americans already, implying the existence of an automated verification system.

          And that's the same all over the world. Rules for taxation are actually simple, simple enough that employers know how much tax to withhold. Simple enough for stores to apply tax on products. The only complication is deductions.

          Sane countries, even those with

      • The problem for the government is that they don't know if you have a special circumstance. Could there be easier ways for people to tell the IRS that there is nothing else to report? Maybe.

      • honestly - a w2 employee shouldn't even have to do taxes. Why the fuck isn't it automatic. Unless you have some special circumstance you shouldn't have to file a damn thing.

        The simple W4 / W2 information isn't enough to determine all other things that would enable an employee to retain or get back some of those taxes or have to pay more. Yes a LOT of other financial information is automatically shared with the IRS, but not everything that affects someone's tax burden. At least under the current laws, to process everything automatically.

    • Ok, you heard about the stock market and that Round Robin Hood app and accidentally bought into a master limited partnership - here's your K-1... good luck.
  • by backslashdot ( 95548 ) on Thursday July 20, 2023 @05:40PM (#63702998)

    Can't I just put the treasury department as a joint account holder on my bank account? That way it'll be super convenient, they can get a debit card.

  • by quonset ( 4839537 ) on Thursday July 20, 2023 @05:41PM (#63703000)

    Won't someone think of the companies?

  • by ve3oat ( 884827 ) on Thursday July 20, 2023 @05:50PM (#63703014) Homepage
    ... a free-file system in Canada, too. Mind you, I have never had a problem calculating and filing my own tax return. But our Canadian income tax system has become so tedious and complicated and without any apparent logic for many of the calculations involved, that it tortures the mind of any rational person. And I have to do it twice! Once for my federal return and again for my provincial (Ontario) return but with slightly different factors and limits and deductions.

    The most galling thing is that, in my circumstance (retired with pension), the government already knows *all* of the numbers that I am going to enter as inputs. So a government-prepared tax assessment would be most appropriate. All they really need is my signature and a cheque to pay what I owe them.
    • Canadian taxes are easy by comparison to the US. I do the US return for my wife since she is a US citizen. She owes zero to the US each year (actually over covid they paid her several thousand dollars each year!) but to get that zero you if forms, schedules and worksheets to an insane depth. At one point I started with the 1040, then had a schedule that needed a form which itself required a worksheet which then used a sub-worksheet.

      Canadian taxes are trivial by comparison and easy to understand. As for t
  • by jonwil ( 467024 ) on Thursday July 20, 2023 @05:59PM (#63703044)

    Here in Australia there is a free government system that (last I looked) uses the information the tax office already has on you to fill in a bunch of stuff.

    • Yeh e-tax has been going for over 10 years now, and its fast and simple. It even pre fills your reported income.

      • by mjwx ( 966435 )

        Yeh e-tax has been going for over 10 years now, and its fast and simple. It even pre fills your reported income.

        Longer than that, the last paper return I did was in the early 2000s.

    • Same here in France. Most people only have to check the thingâ¦
      If you really donâ(TM)t do anything out of your salaried job, you donâ(TM)t even have to do anything, and the tax return is validated automagically

    • Same in most countries. Australia is currently the most complex of the tax returns I need to file.

  • by tsqr ( 808554 )

    Federal law doesn't require domestic lobbyists to itemize expenses by specific issue

    Well, pf course it doesn't. That would make it too easy to follow the money in suspected bribery cases.

  • I've seen what the government has done with other websites. There is no way they can make it as simple as TurboTax. They could literally copy and paste the source code for TurboTax and somehow nothing would work in their new website still just because of how poorly the government creates software.
    • Sure they can make it easier. They just ring up the number they say you owe, and you pay it. You know, the one that if you don't pay you get audited for anyway.

    • The government KNOWS all the important information about you ALREADY so you shouldn't have to enter anything except some data they don't know like that you bought a house... although they should be able to know that and the interest deduction you want to take.

      MOST PEOPLE do not have complex taxes and it may as well be a receipt postcard they mail you. The complex loophole dodging cheats will always have to hire accountants... and that should be a sign of who needs auditing... plus the processing of taxes is

    • Guess it depends on the government.

      For years, Maryland has had an online questionnaire-style website that I have used every time and never had it disagree with TaxCut/HRBlock.

      And every year in the feedback, I ask for the simple "fill-in-the-blanks" like a PDF of the actual MD502 form, because I already did the heavy lifting and just want to enter my answers without giving somebody $20 for the "privilege" of e-Filing.

  • All our data already belong to them.

    When I lived in Sweden in the 90s, their IRS would send me my completed return and I only had to act if something was incorrect. When I returned to the US, they just sent me my last refund as a paper check, written off a US bank, in dollars. I did nothing (but cash it!)â¦

  • Yes and No (Score:5, Insightful)

    by biggaijin ( 126513 ) on Thursday July 20, 2023 @06:13PM (#63703072)

    It is nearly impossible for me to do my own taxes unassisted. The regulations change every year and it can be an expensive mistake for me if I miss a change. I buy turbotax every year though it offends me to pay that much just to figure out how much I need to give to the government. So, free software from the government to take care of this would be great.

    The outrage from Intuit and all the other accountants who make their living calculating taxes will be enormous. The income tax system is their rice bowl and they don't want to see any cracks in it.

    However, I vividly recall the software the government provided to enroll in Obamacare. It was badly designed, badly implemented, and terrible to use. Several times I tried it just wouldn't work at all. Imagine how this would be when you're calculating your taxes.

    • the problem with contractors is that the talent is not in the service but in the process of getting contracts! I've read stories of "companies" who didn't do what they were contracted for! They get the contract THEN go into that service!

      I remember many Obamacare problems I observed related to using bloated overdone frameworks instead of simple older approaches. A problem IT and nerds continually have.... But in hearing from workers in that area with experience, the problem is the gov is a bad client who c

    • by idji ( 984038 )
      I've been doing taxes myself on my country's finance ministry's website for 20 years. When I get stuck I call their free number and they answer the phone immediately.
      When I lived in USA for 2 years I used Turbotax to prepare my data and then submitted it myself to IRS, paying turbotax nothing. I even got a 5000$ refund from IRS.
    • by ljw1004 ( 764174 )

      It is nearly impossible for me to do my own taxes unassisted. The regulations change every year and it can be an expensive mistake for me if I miss a change.

      Some years I've done taxes myself manually, some years with Turbotax. I've come to feel that the "assistance" provided by Turbotax is in fact lower quality that the instructions provided by the IRS for filling out their forms -- less precise, less helpful. That might be because I'm a software engineer by profession with a precise analytical brain, and the IRS documentation seems designed for people like me, whereas the Turbotax documentation seems designed for less precise people.

      I think I get it done in 3h

    • You're struggling due to not being in a position to have things automated for you. This is largely unacceptable in the modern world and an online free filing system is the first step to you having a future free of complexity.

      I remember the same chaos when Australia introduced e-Tax. At the time it was a shitty java program, with a new version released every year. The first time it was a shit show. The second time it was shitshow--; thanks to being able to import the data from the year before. The time after

    • The outrage from Intuit and all the other accountants who make their living calculating taxes will be enormous.

      The outrage from the window installers when we made it illegal to break windows were pretty upset too. We didn't see a need to waste money like that. It was not good for the economy as a whole to enrich a few people at the expense of everyone else.

      I wonder why that line of thought does not take hold here? Merely because there are no smashed windows? What do you think the lack of infrastructure here really is? It is essentially a smashed window.

      TL:DR, Them being upset is a them problem, not a me problem. The

  • by silentbozo ( 542534 ) on Thursday July 20, 2023 @06:14PM (#63703074) Journal

    I find it unamusing that congress is using the fox and hen house argument against the IRS running its own tax preparing software, since a lot of the friction comes from people having to ask the IRS to interpret the rules and regulations, and then implementing that as code. Wouldn't it be much simpler for the IRS to develop its own software and then be forced to codify their interpretation as auditable code, which could then be unambiguously used as tests for 3rd party software? Or, horror of horrors, just use a flat tax regime?

    Also, the fox and henhouse argument could be used for 3rd party tax preparers as well. There's no requirement that they get you the best return. If anything, if they can convince you to pay extra money for "audit protection" insurance, then they have an incentive to file returns which will statistically be less likely to trigger IRS examination, which might actually mean giving you less money back, in exchange for reducing the likelyhood that they'll actually have to spend that sweet insurance premium to defend you against an audit.

  • Australia launched eTax in 1998. It's always been free for individuals and ABN holders (ie businesses). Unless you have the complexity of capital gains tax or some diverse investments, "doing your own tax" is trivial and fast. Welcome to the future, friends!
  • by Anonymous Coward

    Really? What exactly is America's advantage right now for the average person? It's not health care, it's not education, it's not prospects, it's certainly not convenience.

    You guys have really fallen behind and most of you are seemingly proud of it for some reason. So pathetic.

    • Depends on how you calculate "falling behind".

      I know this much....I would have less available discretionary income in Europe than I do in the U.S.

      • by ledow ( 319597 ) on Friday July 21, 2023 @03:23AM (#63703738) Homepage

        But you don't have to spend a decade of that discretionary income on a single hospital visit, or health insurance.

        • I don't have to do that now.

          My insurance costs about $2500/year. That's for no deductible and $30 office visit copays.

          In the last year, due to having stage four cancer, my medical bills have been almost two million dollars. Virtually all of it covered by insurance. I have absolute NO complaints about my healthcare costs, even as a very heavy consumer.

          $70,000 chemotherapy visit, one session (I had 24 sessions). My cost? $0.
          $90,000 inpatient hospital bill for liver resection. My cost? $0.

          I just have no compla

          • by ledow ( 319597 )

            $2500 is more than I've ever directly spent on healthcare collectively in my entire life, AND I pay less tax than you guys.

            And that's fine if you can afford that, and fucking atrocious if you can't.

            You just described a bill for $160,000 - years of income - that you only avoid by "subscribing to Healthcare Prime" at $2500 a year, whether you use it or not. And your $2500 doesn't cover everything, may not be renewed, and can be almost impossible to get in the first place (e.g. pre-existing conditions, etc.).

  • by MarkWegman ( 2553338 ) on Thursday July 20, 2023 @06:49PM (#63703136)
    W-2's go to the Feds already, companies are required to send them over. Similarly all stock trades are sent to the government and banks send the interests and loan info. Remember that filing taxes is not on the honor system. There are some exceptions about income that is not reported but it's few and far between (if you make a profit on a drug trade you are required to pay taxes or they can get you the way they got Al Capone -- but that doesn't apply to most people). In Japan you get a post card and I think you can agree to pay what the Gov't thinks you owe. There are two groups that want to make it hard to file. Intuit, HR Block have an obvious incentive. But there are politicians that want to shrink the government and one prime way to do that is to make it difficult to file forms. In the 60's there were many income tax brackets and taxes were better for the middle-class and worse for the very rich. It wasn't possible to say we should tax the middle class more, but it was possible to say we should simplify tax filing. I never found the multiple brackets took more than a few minutes to figure out, but of course a computer makes that whole argument nonsensical. Hence we can't allow free computer filings because then there might not be a reason to make the tax code fairer. Why am I not surprised that it's the Republican's who are objecting to this.
  • No, this isn't an ad. It was just one of the sites I was referred to from the IRS main page and of all the trash I've had to wade through on the internet, I'd never seen anything like it. I was just floored at how well-designed it was. My tax situation was very non-trivial and I still ended up not using my accountant this year.

    It's a travesty people don't try these sites out first. I know it should be really, like really free, but we're almost there. Just take a look.
  • Any politician that doesn't support this should be immediately subject to an intense financial audit. The tax system in the US was designed by accounting companies for accounting companies. If you normal individuals have to pay for help to do their taxes and to file electronically, the system is broken.

  • by uncqual ( 836337 ) on Thursday July 20, 2023 @08:35PM (#63703284)

    Back in the days of paper returns, if Intuit had been a printing company they would have lobbied to stop the IRS from printing forms and instructions and instead required taxpayers to buy the forms and instructions from Intuit and other "authorized tax form printing companies".

    What I will be curious to see is how much "help" the IRS site will give to the taxpayer and how easy it will be to get an offline (and hopefully "runnable" in case of an audit) version of your return and everything that went into it for future reference.

  • End the income tax and shut down the IRS.

  • Why do they even get a say in anything? This Corporate protection crap needs to be.. there aught to be a law...
  • by ledow ( 319597 ) on Friday July 21, 2023 @03:05AM (#63703718) Homepage

    Only in America.

    You must pay us again, the people you already pay to govern us, in order to effectively use the service you pay us to provide, in order for you to correctly pay us your tax (that funds our service), which if you don't do correctly, you have to pay us.

Truly simple systems... require infinite testing. -- Norman Augustine

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