The IRS could be on the verge of changing the way Americans file their taxes

[mystery-ak]

 The IRS could be on the verge of changing the way Americans file their taxes
by Tobias Burns - 08/22/22 5:30 AM ET

The IRS could be on the cusp of revolutionizing the way that Americans file their taxes. 

The Inflation Reduction Act signed into law by President Biden on Tuesday provided $80 billion in funding for the agency, including $15 million to deliver a report on a free, government-run tax e-filing system that tax simplification advocates have long argued for. 

But the agency is on a tight deadline to deliver. 

While most of the $80 billion for the IRS in the new legislative package goes out over the next decade, the agency has only about a year to turn in its e-filing report. 

Specifically, the agency has to figure out how much an online filing system would cost, the design of the system and how taxpayers would feel about using one.

Tax experts say the system could take two basic forms: one more conservative in scope and one more far-reaching.

more
https://thehill.com/homenews/3607174-the-irs-could-be-on-the-verge-of-changing-the-way-americans-file-their-taxes/

[DefiantMassRINO]

Previous attempts to modernize IRS information technology are notorious epic fails.  Good luck with that.

[Bigun]

We will never again be truly free people for so long as we continue to abide the Marxist income tax and the IRS.

https://fairtax.org/

[cato potatoe]

Tax software has to be updated constantly, and every provider has a large support team.  Anything the government runs will be unstable and riddled with errors.  I'd also hate to see how this interacts with the state filings.

[libertybele]

Tax software has to be updated constantly, and every provider has a large support team.  Anything the government runs will be unstable and riddled with errors.  I'd also hate to see how this interacts with the state filings.

Riddled with errors on purpose to taunt, fine and put a lien on property. How do you fight the gov't with 87,000 weaponized IRS agents??

[Kamaji]

Tax software has to be updated constantly, and every provider has a large support team.  Anything the government runs will be unstable and riddled with errors.  I'd also hate to see how this interacts with the state filings.

[Elderberry]

I sure hope they don't go to an e-file only system. I have never ever e-filed. Pre-internet I'd get the forms from the library, fill 'em out and mail them off. Now I download the forms fill 'em out and mail them off. I haven't gotten a refund in a long long time. And no estimated tax penalties so far.

[Elderberry]

Tax software has to be updated constantly, and every provider has a large support team.  Anything the government runs will be unstable and riddled with errors.  I'd also hate to see how this interacts with the state filings.

Back around 1970, I worked part time, after school, for my dad, a CPA, with his own business. I'd keep his library current as changes came in. For clients whose returns wouldn't be too complex, he'd send them questionnaires. After he looked at them, I'd take them and fill out the tax returns. Up to the 15th I'd drive all over town taking tax returns to clients for their signatures. And the night of the 15th, I'd be in that long line outside of the downtown post office, getting returns stamped before midnight. They'd stamp them right at the window of my car.

[libertybele]

I sure hope they don't go to an e-file only system. I have never ever e-filed. Pre-internet I'd get the forms from the library, fill 'em out and mail them off. Now I download the forms fill 'em out and mail them off. I haven't gotten a refund in a long long time. And no estimated tax penalties so far.

I use Turbo Tax but I never e-file.  I print out a copy and mail it to the IRS certified registered mail.  It took them 6 months to issue us our measly tax refund check. I don't care, I'm not about to put our bank information on-line.  I don't do on-line banking either. Nor do I do auto debits; it's too easy to get hacked and it takes forever to stop the auto debit.

[mountaineer]

My understanding was that the bill would authorize the IRS to prepare taxpayers' returns for them. No need for accountants, TurboTax, H&RBlock, nada. Yeah, what could go wrong?

[Kamaji]

My understanding was that the bill would authorize the IRS to prepare taxpayers' returns for them. No need for accountants, TurboTax, H&RBlock, nada. Yeah, what could go wrong?

Something like that.  From further on in the article:

...
Return-free filing is the second, more dramatic option for a free, IRS-run e-filing system that experts say could once again be under consideration as part of the Inflation Reduction Act.

Return-free filing is used by many countries with advanced economies in the Organization for Economic Cooperation and Development. It essentially means that the government would do your taxes for you, withholding what’s owed and then doing its own accounting without requiring forms to be sent in by taxpayers.

The main type of return-free filing — used by the United Kingdom, Japan and Germany, among dozens other countries — is referred to as an exact withholding system. With this system, the IRS would try to withhold fewer taxes from people’s paychecks and skip the refunding process made necessary by a self-reported tax return.

“In most of these countries, taxpayers meet their tax obligations entirely through tax withholding payments made throughout the year,” the Treasury Department found in a 2003 report on return-free tax systems.

But experts say that all the tax credits in the U.S. tax code make self-reporting helpful — if not necessary — from an administrative point of view.

“With withholding, the IRS already has that information. So it’s kind of annoying that you have to go through and enter it in yourself. But in the U.S. we have, for instance, joint filing. So if your employer knows what your income is, they don’t necessarily know what your spouse’s is. Employer withholding isn’t reflective of various credits and tax programs,” Alex Muresianu, tax analyst at the Tax Foundation, a Washington think tank, said in an interview.

The other kind of return-free filing is called agency reconciliation. This is where “tax authorities prepare tax returns for individuals based on information returns from employers and others, and send taxpayers a completed tax form for their review,” according to the Treasury report.

Some studies have shown that the government would lose revenue with this kind of system since the IRS is doing all the clerical work without relying on reporting from taxpayers.

...