Do you think maybe it [the IRS.GOV web site] might be a step toward not having to use tax preparers?

[bill_schubert]

I think the IRS would love to be able to process the 95% of the tax returns that are (or should be) simple enough to do over the phone.  They used to actually have a 'phone in your tax return' option for people just starting out and really a lot of people could still do that.

The IRS has been working for years towards creating a system where most people would not have to use tax preparers. 

BUT

Two things work against it.  First is that everyone wants their deduction, their tax credit, their piece of the money pie back.  The ones with a few bucks push very hard on their congress reps to get some small piece of tax rebate or credit pushed through buried in the next tax bill or as an amendment to some important financial bill.  There are hundred of thousands of these little caveats that help one interest group or another making the actual tax documentation into a huge mess that only an expert can really get through.  Or really good software written by an expert.  

The other piece of the puzzle that mitigates against something like a true flat tax is the companies, like Inuit (Turbotax, Quickbooks, et al) that make millions and millions by creating an industry to process complex taxes.  If the complexity were to go away then that part of the company that managed taxes would be bankrupt.  They pay an amazing amount into the political pockets of reps who ensure that the tax code stays complex (while saying how much they regret it being so).  It is a racket.

Some group of liberal congress types decided that the IRS should have a provision so that most people could file for free and, in the way that Congress does, legislated that specific requirement.  And left the IRS with the problem of engineering it while telling them that they aren't allowed to do it themselves.  So the IRS has opened up to any company that can do it the opportunity to do people's taxes for free.  There are a number of companies who are directly in that program and a bunch like TurboTax and H&R Block who start you out with a free filing program and expand to a paid version only when you have more complex elements in your return.

We'd all be better served with a flat system but that is never going to happen.  This dance is set in concrete.

I'm sorry, sleepybadger was that a yes or no question?

Comments

[sleepybadger.livejournal.com]

lol It was not really a yes or no question, but I appreciate you taking the time to spell it out! I knew about the companies that fight to keep things complex so they can keep charging people to do their taxes, but what you mentioned about the IRS site seemed like it could be a step in the right (or at least easier) direction. I didn't think about the little caveats that keep getting pushed through and making things more complicated.

[msconduct.livejournal.com]

Yer darn tootin' about the complexity. I was researching payment gateways and discovered a prominent US one was asking its overseas customers to pay US tax. The comment about it was that, essentially, you might under US tax law have to do that and you might not, with a link to the relevant law. I clicked the link, expecting to quickly establish which category my business would fall into.

OH. MY. GOD. I've never seen such a dense thicket of impenetrable prose in my life, and I used to have a job that involved interpreting the law! It was impossible. I gave up and chose a payment gateway that was based in the UK.

[amw.livejournal.com]

I deliberately don't claim deductions because i think they are a rort, but the secondary effect is... i just put in my income earned for the year (bank account interest plus salary), my tax paid, hit next next next and it all calculates and tells me if i owe or if i'm getting a check. That's how it works in Australia and in Canada both. In Germany and China you don't even fill anything in, they just send you a letter saying "this is what we calculated for you, if you disagree, please reply". Obviously, i didn't reply. It's utterly pathetic that the biggest economy in the world can't make it that simple.

[bill-schubert.livejournal.com]

Of course, that is one of the reasons why it is the biggest economy in the world. Everyone looking for an edge all the time. I Me Mine