There’s already a hugh popular misconception that you only need to claim what has been reported. That is the opposite of reality. I dont see how anyone can think further perpetuating this myth would be any sort of a solution, making it easier for people to know what has been reported so they can “safely” skip claiming what wasnt reported.
Unless it has demostrated calculation errors, I dont see how a free tax filing system can be any more of a “weaponization against Americans” than any other tax program. The only info you provide is the same info you provide to any tax program, and it all ends up at the same place regardless of how you chose to provide it.
Me thinks 29 House Repoublicans have sold themselves to the tax prep lobby…
I did not say it was but the amounts reported are certainly a good place to start, and I would have to have a very good reason to add another payer. I just looked it up and you cannot use the service if you have a 1099 div and many other types of income. I stand by my statement. $20is dirt cheap and the current service is too limited.
Except most do not consider it a place to start, they consider it the place to stop. A very good reason to add another payer is you having received income from them, there is no other reason.
I can understand wanting to kill it due to redundancy or lack of usage. But the reason here is that it “weaponizes government against Americans”. I cant understand that claim.
It is not that simple. A large part of US tax code is devoted to defining what is income. See this.
Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Annuities;
(9) Income from life insurance and endowment contracts;
(10) Pensions;
(11) Income from discharge of indebtedness;
(12) Distributive share of partnership gross income;
(13) Income in respect of a decedent; and
(14) Income from an interest in an estate or trust.
H&R raised prices this year – Deluxe+State is now $50 regularly or $30 on BF/CM (last year was $20), and it’s download-only, no CD.
But the bigger problem is that many people do not do taxes themselves, they pay someone else, which costs a lot more than $20. The statistics appear to be all over the place, so I do not know which number to trust, but I do know that before the IRS went ahead with this free direct file program implementation, they sent out a survey asking how much it costs and how long it takes to file taxes. They have the stats.
The fact they proceed to give some examples of what they includes doesnt make it any more complex. There’s very little income that isnt taxable and doesnt need to be claimed. There’s lots of income that isnt reported by the payer but the payee is supposed to claim.
Here is the Republicans’ rationale. It makes sense to me
Smith and Edwards argued in their letter that the program represented a conflict of interest for the IRS — that the agency shouldn’t be in charge of both assessing taxes and enforcing them. The duo wrote that the agency “has little incentive to ensure hardworking Americans do not pay more than they owe in taxes.”
Sure that makes sense, if they can show examples of where their software did something incorrectly. For as much as people complain about the complexities, it’s all just pretty straightforward math applied to user-provided numbers. Either it does the calculations properly or it doesnt. And if it doesnt, that’s a problem regardless of who developed the software.
I wrote this while you were responding. Even with these simple examples the “correct” amount is not straightforward. Who will check the IRS software to make sure it is computing the result in a favorable manner to the taxpayer?
Is a credit card opening bonus taxable? What about a broker account transfer bonus? Airline miles for spending on a credit card? The interest you avoid with 0% APR offers?
Is a withdrawal from an IRA always taxable income?
Is the increase in value of a Tips bond due to inflation taxable? Even though you do not receive the increase until the bond matures?
Agree 100%. I even use my AMZ Free ship credits to pay for HRB
The IRS should allow their transcripts to be in readable pdf/ .tax files so we can import vs putting in 50 passwords at banks etc /manual entry. Current transcript is all XX’d out for “privacy”…
How does it make sense? I don’t understand what they’re trying to say, but I can tell you that the IRS already is in charge of assessing taxes. If by “enforcing them”, they mean “collecting them”, they’re also already in charge of that. The IRS has never had an incentive (other than one of honor, the amount of which is questionable) to ensure blah blah. In fact, tax court is the one of the few places in the legal system where you have to prove your innocence, as opposed to the government proving your guilt. It’s been that way for at least 36 years.
I understand some people’s concern that the IRS is not a trustworthy organization and has been politicized in the past (Tricky Dick, The Anointed One, Joe “where am I” Biden). As well, they’ve been handed a big bag of money and may feel the need to pay for themselves. However, would you prefer they spend some of that bag of money on a fairly easy to verify software program, or thugs in ties who may feel that your privilege has to be paid for?
I prefer that they not be given the money, but this is mission creep of the worst kind. The government never does a better job than a private company. There are better ways to spend money. They could use the money to provide a $25 tax credit to buy a tax program. See my suggestion above for a way to make it easier for taxpayers to file taxes by providing the 1099 information in electronic form. They could use it to update their antiquated computer systems to bring more information online. I have received tax inquiries from them a few times and it’s impossible, as far as I know , to respond to them online. Instead, I have to print out the form and mail it and my response to them. They do not post their response on my online account but instead, I have to call their call center and wait a long time.
I also think that paranoia is called for. This is heading for a system where the IRS sends you a bill with no justification for the amount.
Obviously private mercenary armies are more efficient and trustworthy than a dedicated government run force that swears allegiance to the Constitution.
Totally agree it’s hard to see this as anything but lawmakers lining their pockets from tax prep lobbyists.
I don’t understand how the free filing tool from the IRS overreaches in any way either. At the end of the day, you will have to provide the IRS whatever data they want you to provide, whether it’s via their free software, a third party or a paper return. Besides, if you feel the IRS tool is asking more stuff than they should compared to paper version or third party software, you don’t have to use it. Other methods will still be available.
Otherwise, how does this fit with the campaign promises to make things more affordable for regular Americans? By removing a free filing option?
Smith and Edwards argued in their letter that the program represented a conflict of interest for the IRS — that the agency shouldn’t be in charge of both assessing taxes and enforcing them.
Hasn’t the IRS always been in charge of assessing and enforcing taxes? Who else is assessing federal income taxes? Who else enforces federal tax compliance by doing audits, garnishing wages, charging penalties/interest for failed compliance? You know, asking for a friend who may revise their filing strategy going forward if it turns out the IRS won’t be doing any enforcement any more…
Now, whether it saves enough people from filing via paper (a huge cost for the IRS currently) and/or increases tax compliance enough to make it worth the costs of updating and running the tool each year, probably only the IRS knows. As a government efficiency item, I don’t see any harm in having the cost efficiency of the program be monitored. But that did not seem to be the central part of the complaint.
I don’t know how this is mission creep. As far as I understand, mission of the IRS is collect the most taxes compared to what the IRS is owed by law as set by Congress. And ideally to do so for the least amount of operating costs.
Personally, I think it should be part of its mission to ensure that tax compliance is as little a burden (financially and time-wise) on taxpayers as possible. As such, providing taxpayers with a simple direct free e-filing system seems straight on mission to me. Reagan first suggested a pre-filled simple return option in his 1985 tax reform proposal. As another precedent, about half of the states already provide free e-filing tools for state tax filing. So clearly, offering simple free options seems to have been very much part of the IRS mission.
Now I agree with your argument on questioning whether the program is cost efficient. IMO the actual letter makes a better case for it than the article. Direct File having a 2024 budget of $114M for 140k tax filers using it, does not seem very efficient but maybe that was to be expected for first year development costs. As the program roughly doubles in availability in 2025, I’d hope that the costs decrease considerably now that the program has been developed while the number of filers using it increase as well. After a few years, if the savings don’t justify the costs, then I agree it would be appropriate to rethink/kill it.
The free tool is voluntary and optional, and does no more than what paid software does (actually does less since it does not cover itemized deductions or complex filing scenarios and doesn’t cover every state). It’s nowhere near a mandatory black box sending you an uncontestable bill.
I would say that you may find a private company that does a better job than the government. Although there’s no guarantee it will continue to do a good job after winning the contract. But I also believe there are some things which must never be entrusted to a private company. This is because the sole purpose of a private company is to make a profit for its owners, and some things should never be profited from. I would choose incompetence and high overhead of the government over private corporate profit.
