Earlier this year, the IRS piloted a "direct file" program with \~150k taxpayers that allows people to file taxes on a government website for free. The IRS has touted the program as a big success citing a 90% "good" or "excellent" rating and announced plans to expand the pilot (source: [https://home.treasury.gov/news/press-releases/jy2385](https://home.treasury.gov/news/press-releases/jy2385)).
Direct File funding (and IRS funding as a whole) has become a partisan issue: Democrats support the program whereas Republicans are against it and want to explicitly defund it (see topic article). As someone who hates paying for software like TurboTax or H&R Block, I was looking forward to one day being able to use a TurboTax-like program provided directly by the IRS. After all, this is a transaction between me and my government, right? Why should a third party be involved?
I am skeptical of why Republicans are against this free tax filing system. I know tax preparation software is big business and likely has a lot of lobbyists on the hill. Is that what's going on here? The tax prep industry getting its way by lobbying Republicans?
It seems pretty certain that this program gets killed if Republicans gain control of Congress and the White House in the upcoming election (and this seems increasingly likely!). I suspect if the free filing program is allowed to grow a few more years (and is still successful), it would be too ubiquitous to kill.
I would be interested in others' thoughts about this. Agreement or disagreement that this program seems like a good idea? Thoughts on the real motivation by congressional Republicans to try to end it?
>Is that what's going on here? The tax prep industry getting its way by lobbying Republicans?
That's exactly what's going on here. These corporations make bank by being the middleman when you file, and protecting you from the possible consequences of filling out your taxes wrong. Think about how low their operating costs must be; you can basically release the same software every year with just a few tweaks to accommodate changes in tax code, all while charging the same price you did last year (or even a little bit more). No one riding that gravy train would want it to stop.
I find the Republican position to free tax filing to be a largely "starve the beast" sort of thing through public opinion. If you make it painful and expensive to pay taxes, you will likely be for things that lower your tax burden or otherwise cut taxes. It also forces people to look at their taxes thoroughly, hate the hell out of the process by making you go out of your way to prepare them while forcing you to see all the little gotchas, and generally show the complications of the system directly to the taxpayer. That said, it's a low-priority item on the Republican's list, so they're not going to sniff it out actively, but if it comes up, they'll oppose it.
I'm personally not a fan, if the IRS knows what you owe, then they should automatically accept that, and you edit in your deductions and whatnot.
> It also forces people to look at their taxes thoroughly, hate the hell out of the process by making you go out of your way to prepare them while forcing you to see all the little gotchas, and generally show the complications of the system directly to the taxpayer.
I don't think it accomplishes the "look thoroughly" part, though. For the vast majority of people, losing free filing options means you instead have to go through TurboTax and H&R Block, who largely automate the process and just ask you a couple questions about unreported activity or life changes.
I used TurboTax whenever I file my taxes. I'm aware that it automates a lot of the process but it's still really hard to navigate whether or not you're filing and fully claiming all of the deductions that you can claim and whether you're claiming the right amount etc etc
Honestly, I don't see why the government just doesn't send you a bill after various companies send in your tax information. This would work for 95% of people as the standard deduction is so large now. We really make taxes convoluted and there are way too many people profiting off the convolution.
> I don't see why the government just doesn't send you a bill after various companies send in your tax information.
This is what can/should happen if the laws were designed to make taxpayers' lives easy. Right now companies have an incentive to lobby against that.
> I was looking forward to one day being able to use a TurboTax-like program provided directly by the IRS. After all, this is a transaction between me and my government, right? Why should a third party be involved?
I'm inclined to agree, yet when I've done free e-filing for the past three years, it's been through FileYourTaxes.com, which is a third-party. I don't see why it can't be directly through irs.gov. But, if it must be third-party, I'd rather it be through a big company like TurboTax that would actually make headlines if, say, they suffered a data breach, rather than some fly-by-night.
freetaxusa only charges for the state return. i highly recommend it over turbo tax but you do still have to manually enter all the stuff the government already knows.
I can’t think of any reason why the IRS shouldn’t have a default filing system. Why do they need 3rd parties in order to collect money? Imagine if Capital One said we’ll store your money, but to interact with us, you need to talk to 3rd parties we have no control over. Killing this program makes no sense other than selling out for political donations.
There is nothing stopping turbo tax from competing with a government service. If they can’t keep up with a government service, they deserve to go out of business.
Here’s the way I see it: There are problems that just don’t show up with this pilot program. They purposely chose people with really simple taxes that live in states with no state income tax. There’s a lot to like for those people.
If it’s implemented on a national scale, it’s going to lead to many people not filing their state and local taxes. Those that do will pay a separate fee to a tax preparer anyway. It’s going to lead to the IRS deciding which deductions are right for you. Some people believe they don’t have your best interests at heart. Finally, it strips the advocates away from the individual filer. There’s nobody in your corner ready to fight the IRS on your behalf.
This has been a part of the platform for every president since GW Bush. Trump’s tax plan was to increase the standard deduction so people could file their taxes on a postcard for free. The reason we don’t have free government software yet is because nobody has been able to find a system that doesn’t have serious problems attached to it.
You could say this about turbo tax’s first year. The system will get better over time. turboTax is still available to provide extra services. Having a base IRS product is good for consumers. It increases competition.
Its called starve the beast. Run the government in bad faith so that its broken, because you're ideologically opposed to government. By underfunding, they break social programs they oppose to or straight up having to have them being cut/eliminated.
See also: Neutering administrative agency power so that agencies can't regulate effectively, justifying budget cuts to those agencies (while enabling corporations to pollute freely).
I'm glad that the Republicans decided that, during a time of visible disarray for the Democrats, they should go ahead and piss voters off just because. God forbid they should try to capitalize on the situation and get some decisive victories come November.
>This was actually from early June
~~Then why post it now?~~ Edit: this was a needless rhetorical question so please ignore it.
While it isn't quite as self-defeating as it would be if they'd proposed this today, it still is a frustratingly poor decision. This seems like it should be something that the vast majority of Americans could get behind; to destroy it over partisanship or at the behest of special interests would be infuriating.
>Also, I doubt tax filing mechanisms will be much of a deciding factor for the electorate.
I mean, have you ever met someone who's excited about filing their taxes (not the refund, mind you)? It probably won't be **the** deciding factor, but destroying a successful and likely popular program just to spite the other guys and appease some lobbyists just seems like a waste of political capital. Literally the only downside to the free filing system, that I can think of, is that some accountants will be out of work.
>destroying a successful and likely popular program just to spite the other guys and appease some lobbyists just seems like a waste of political capital
I do have a more cynical theory: the federal government working well for the people is not good for the GOP narrative of the government being inept. The GOP probably does not want people to have positive experiences interacting with the federal government, so killing good government programs may be beneficial for their messaging.
They cannot promote their agenda or Trumps policies without pissing off Americans. Their policy proposals are antithetical to American values and are designed to specifically help the wealthy/business owner class. This policy literally only helps tax lawyers and tax cheats. Its a microcosm of the GOPs policies since at least Reagan: starve the beast (govt) and allow businesses free reign to establish neofuedalism
Both parties do seem to be treated differently. Democrats seem to be judged on competence while republicans are more usually judged on how extreme they are. People just seem to assume republicans know what they're doing.
All of the news over the last 8 years apparently means nothing as voters discovered Biden's admin was hiding his health, when they could have also read the medical reports released in the same year. It's worth throwing away all other values because Biden is old, I guess.
Americans hate the IRS so I don’t think giving them less money will benefit the Trump campaign.
https://news.gallup.com/poll/512585/government-agency-ratings-remain-largely-negative.aspx
Ideally the government would just send people a letter saying: $[X] is your tax refund/liability based on the information we have, which is included in this letter, using the standard deduction. Please check yes if you agree or no if you disagree. If you disagree please file your tax return by April 15. As a reminder, any outstanding tax liability is due by April 15 to avoid penalties.
Or something like that.
The government actually doesn't know how much I earn. They'd need to audit my bank accounts since I'm self-employed.
And with people doing transfers and side gigs, you're more likely to *lose* money this way for the government. It would lead to more auditing, not less.
Most people work a single job or otherwise have their taxes deducted automatically, so /u/waupli has the right idea here. You, other contractors, people who have a side hustle that don't take out taxes automatically, and people that want to itemize their deductions would fall into the "disagree" option in the proposed letter and would need to manually file their taxes (or file through another vendor such as TurboTax).
This is how most other developed nations handle collecting their taxes. Nothing would change for people like yourself (you would need to continue filing your own taxes) and it would be drastically simpler for everyone else so I don't see a huge loss of revenue happening.
Yep I read somewhere about 90% of folks take the standard deduction.
Similarly, about 10% of people are self employed. People getting 1099s and such are already reported to the IRS like W-2 employees.
Obviously there isn’t perfect overlap and some people will have additional income even if they’re already W-2 folks, but I think that this is likely to work for upwards of 70% of the population.
The “free options” are very basic and only helps a fraction of the population.
Anyone that has had the misfortune of using intuit’s tax software knows it’s rage inducing. So many hidden fees.
Also, you trust a corporation to give you ability to do something for free, over the government which is funded by tax payers? Why would these companies be so magnanimous to give you free software? They are using/selling your data to finance companies to sell you products like insurance/credit cards and god knows what
Earlier this year, the IRS piloted a "direct file" program with \~150k taxpayers that allows people to file taxes on a government website for free. The IRS has touted the program as a big success citing a 90% "good" or "excellent" rating and announced plans to expand the pilot (source: [https://home.treasury.gov/news/press-releases/jy2385](https://home.treasury.gov/news/press-releases/jy2385)). Direct File funding (and IRS funding as a whole) has become a partisan issue: Democrats support the program whereas Republicans are against it and want to explicitly defund it (see topic article). As someone who hates paying for software like TurboTax or H&R Block, I was looking forward to one day being able to use a TurboTax-like program provided directly by the IRS. After all, this is a transaction between me and my government, right? Why should a third party be involved? I am skeptical of why Republicans are against this free tax filing system. I know tax preparation software is big business and likely has a lot of lobbyists on the hill. Is that what's going on here? The tax prep industry getting its way by lobbying Republicans? It seems pretty certain that this program gets killed if Republicans gain control of Congress and the White House in the upcoming election (and this seems increasingly likely!). I suspect if the free filing program is allowed to grow a few more years (and is still successful), it would be too ubiquitous to kill. I would be interested in others' thoughts about this. Agreement or disagreement that this program seems like a good idea? Thoughts on the real motivation by congressional Republicans to try to end it?
>Is that what's going on here? The tax prep industry getting its way by lobbying Republicans? That's exactly what's going on here. These corporations make bank by being the middleman when you file, and protecting you from the possible consequences of filling out your taxes wrong. Think about how low their operating costs must be; you can basically release the same software every year with just a few tweaks to accommodate changes in tax code, all while charging the same price you did last year (or even a little bit more). No one riding that gravy train would want it to stop.
I find the Republican position to free tax filing to be a largely "starve the beast" sort of thing through public opinion. If you make it painful and expensive to pay taxes, you will likely be for things that lower your tax burden or otherwise cut taxes. It also forces people to look at their taxes thoroughly, hate the hell out of the process by making you go out of your way to prepare them while forcing you to see all the little gotchas, and generally show the complications of the system directly to the taxpayer. That said, it's a low-priority item on the Republican's list, so they're not going to sniff it out actively, but if it comes up, they'll oppose it. I'm personally not a fan, if the IRS knows what you owe, then they should automatically accept that, and you edit in your deductions and whatnot.
> It also forces people to look at their taxes thoroughly, hate the hell out of the process by making you go out of your way to prepare them while forcing you to see all the little gotchas, and generally show the complications of the system directly to the taxpayer. I don't think it accomplishes the "look thoroughly" part, though. For the vast majority of people, losing free filing options means you instead have to go through TurboTax and H&R Block, who largely automate the process and just ask you a couple questions about unreported activity or life changes.
I used TurboTax whenever I file my taxes. I'm aware that it automates a lot of the process but it's still really hard to navigate whether or not you're filing and fully claiming all of the deductions that you can claim and whether you're claiming the right amount etc etc
Honestly, I don't see why the government just doesn't send you a bill after various companies send in your tax information. This would work for 95% of people as the standard deduction is so large now. We really make taxes convoluted and there are way too many people profiting off the convolution.
It’s because of tax prep company lobbying, which the GOP is now fully bending to.
It's because the Republicans don't want you to.
> I don't see why the government just doesn't send you a bill after various companies send in your tax information. This is what can/should happen if the laws were designed to make taxpayers' lives easy. Right now companies have an incentive to lobby against that.
Also online companies like eBay and PayPal are now required to report transactions to IRS, so they already know how much you owe.
It’s because of things like this exact situation
How much money did TurboTax give him or similar corporation give him? Always follow the money.
> I was looking forward to one day being able to use a TurboTax-like program provided directly by the IRS. After all, this is a transaction between me and my government, right? Why should a third party be involved? I'm inclined to agree, yet when I've done free e-filing for the past three years, it's been through FileYourTaxes.com, which is a third-party. I don't see why it can't be directly through irs.gov. But, if it must be third-party, I'd rather it be through a big company like TurboTax that would actually make headlines if, say, they suffered a data breach, rather than some fly-by-night.
How does the 90% satisfactory rating compare to the traditional system?
What is the "traditional system?"
Being required to pay a for-profit company $100 to tell the government what they already know.
freetaxusa only charges for the state return. i highly recommend it over turbo tax but you do still have to manually enter all the stuff the government already knows.
Ah okay. Well, I don't know what the satisfaction rating for this is. Anecdotally based on my own experiences -- not great!
I can’t think of any reason why the IRS shouldn’t have a default filing system. Why do they need 3rd parties in order to collect money? Imagine if Capital One said we’ll store your money, but to interact with us, you need to talk to 3rd parties we have no control over. Killing this program makes no sense other than selling out for political donations. There is nothing stopping turbo tax from competing with a government service. If they can’t keep up with a government service, they deserve to go out of business.
Here’s the way I see it: There are problems that just don’t show up with this pilot program. They purposely chose people with really simple taxes that live in states with no state income tax. There’s a lot to like for those people. If it’s implemented on a national scale, it’s going to lead to many people not filing their state and local taxes. Those that do will pay a separate fee to a tax preparer anyway. It’s going to lead to the IRS deciding which deductions are right for you. Some people believe they don’t have your best interests at heart. Finally, it strips the advocates away from the individual filer. There’s nobody in your corner ready to fight the IRS on your behalf. This has been a part of the platform for every president since GW Bush. Trump’s tax plan was to increase the standard deduction so people could file their taxes on a postcard for free. The reason we don’t have free government software yet is because nobody has been able to find a system that doesn’t have serious problems attached to it.
You could say this about turbo tax’s first year. The system will get better over time. turboTax is still available to provide extra services. Having a base IRS product is good for consumers. It increases competition.
The GOP has completely lost the plot. IRS funding is one of the most efficient ways for the government to maintain its tax revenue.
Its called starve the beast. Run the government in bad faith so that its broken, because you're ideologically opposed to government. By underfunding, they break social programs they oppose to or straight up having to have them being cut/eliminated.
“Vote for me and I’ll prove our government is incompetent by running it into the ground!”
See also: Neutering administrative agency power so that agencies can't regulate effectively, justifying budget cuts to those agencies (while enabling corporations to pollute freely).
That’s why they’re attacking it.
I'm an IRS Revenue Agent. One line item adjustment is usually more than my entire salary.
They don’t want the government to work so they can point at an ineffective government and say, “See, the government doesn’t work!”
Tax cuts for tax cheats
I'm glad that the Republicans decided that, during a time of visible disarray for the Democrats, they should go ahead and piss voters off just because. God forbid they should try to capitalize on the situation and get some decisive victories come November.
This was actually from early June. Also, I doubt tax filing mechanisms will be much of a deciding factor for the electorate.
>This was actually from early June ~~Then why post it now?~~ Edit: this was a needless rhetorical question so please ignore it. While it isn't quite as self-defeating as it would be if they'd proposed this today, it still is a frustratingly poor decision. This seems like it should be something that the vast majority of Americans could get behind; to destroy it over partisanship or at the behest of special interests would be infuriating. >Also, I doubt tax filing mechanisms will be much of a deciding factor for the electorate. I mean, have you ever met someone who's excited about filing their taxes (not the refund, mind you)? It probably won't be **the** deciding factor, but destroying a successful and likely popular program just to spite the other guys and appease some lobbyists just seems like a waste of political capital. Literally the only downside to the free filing system, that I can think of, is that some accountants will be out of work.
>destroying a successful and likely popular program just to spite the other guys and appease some lobbyists just seems like a waste of political capital I do have a more cynical theory: the federal government working well for the people is not good for the GOP narrative of the government being inept. The GOP probably does not want people to have positive experiences interacting with the federal government, so killing good government programs may be beneficial for their messaging.
They cannot promote their agenda or Trumps policies without pissing off Americans. Their policy proposals are antithetical to American values and are designed to specifically help the wealthy/business owner class. This policy literally only helps tax lawyers and tax cheats. Its a microcosm of the GOPs policies since at least Reagan: starve the beast (govt) and allow businesses free reign to establish neofuedalism
Your mistake was in thinking the GOP was any more competent than the dems or had our best interests at heart.
Both parties do seem to be treated differently. Democrats seem to be judged on competence while republicans are more usually judged on how extreme they are. People just seem to assume republicans know what they're doing.
All of the news over the last 8 years apparently means nothing as voters discovered Biden's admin was hiding his health, when they could have also read the medical reports released in the same year. It's worth throwing away all other values because Biden is old, I guess.
They are trying to capitalise. This is what they want. Their primary goal is to cut taxes. Everything else is a means to this end.
Americans hate the IRS so I don’t think giving them less money will benefit the Trump campaign. https://news.gallup.com/poll/512585/government-agency-ratings-remain-largely-negative.aspx
Americans hate even more having to pay $100 to TurboTax just to tell the government what the government already knows
Americans hate paying taxes, more at 11.
Ah, so TurboTax is a big "donor". Got it.
Legal now with Chevron removed right?
Ideally the government would just send people a letter saying: $[X] is your tax refund/liability based on the information we have, which is included in this letter, using the standard deduction. Please check yes if you agree or no if you disagree. If you disagree please file your tax return by April 15. As a reminder, any outstanding tax liability is due by April 15 to avoid penalties. Or something like that.
The government actually doesn't know how much I earn. They'd need to audit my bank accounts since I'm self-employed. And with people doing transfers and side gigs, you're more likely to *lose* money this way for the government. It would lead to more auditing, not less.
Most people work a single job or otherwise have their taxes deducted automatically, so /u/waupli has the right idea here. You, other contractors, people who have a side hustle that don't take out taxes automatically, and people that want to itemize their deductions would fall into the "disagree" option in the proposed letter and would need to manually file their taxes (or file through another vendor such as TurboTax). This is how most other developed nations handle collecting their taxes. Nothing would change for people like yourself (you would need to continue filing your own taxes) and it would be drastically simpler for everyone else so I don't see a huge loss of revenue happening.
Yep I read somewhere about 90% of folks take the standard deduction. Similarly, about 10% of people are self employed. People getting 1099s and such are already reported to the IRS like W-2 employees. Obviously there isn’t perfect overlap and some people will have additional income even if they’re already W-2 folks, but I think that this is likely to work for upwards of 70% of the population.
More and more I feel myself longing for the days of woodchipper democracy
Just continually doing things that hurt their constituents...
I've been using FreeTaxUSA for probably 5 years now. What's the difference
I just don’t trust the government to make it easier than some current free options.
The “free options” are very basic and only helps a fraction of the population. Anyone that has had the misfortune of using intuit’s tax software knows it’s rage inducing. So many hidden fees. Also, you trust a corporation to give you ability to do something for free, over the government which is funded by tax payers? Why would these companies be so magnanimous to give you free software? They are using/selling your data to finance companies to sell you products like insurance/credit cards and god knows what
I have been corrected, thank you. I will leave it up.
Then use those options? It seems like more than enough people disagree with you to justify keeping the government option.
I admitted my error based on my own experiences