What would your thoughts be if the IRS offered to file your tax return for you? Although filing taxes isn’t something that’s eagerly anticipated by most Americans, most people wouldn’t be too excited about letting the IRS handle their tax filings. (The illustration of the wolf in charge of the chicken coop comes to mind.)
The New York Times featured an article highlighting Joseph Bankman, a well-known Stanford University professor, and his tireless campaign to allow the IRS to use the financial data it already has on file to drastically simplify the springtime ritual of filing income taxes.
In many ways, his basic premise makes a lot of sense. The IRS already receives electronic reporting records on nearly every aspect of your financial life from employers, banks, investment firms, and nearly all other financial-related businesses. You receive copies of the exact same information in the form of W-2s and 1099s. For those in simple tax situations, filing taxes is more or less the taxpayer being required to submit information that the IRS already has. Mr. Bankman contends that the IRS could prepopulate much of the already-existing information into a simplified reporting system, requiring just several minutes of time from the average taxpayer to file their taxes.
If spending five minutes on your taxes sounds like it’s too good to be true, however, it might be. Not surprisingly, Intuit, the manufacturer of the leading tax-preparation software TurboTax is staunchly opposed to this idea. It has spent millions of dollars to lobby against this idea, dubbed “return-free filing.” David Williams, Intuit’s chief tax officer contents this proposal, “minimizes the taxpayers’ voice and control over the tax process by reducing their role in filing their taxes and getting their own money back.” He further argues it does not advance tax payer rights or simplify the underlying tax code. This argument is what you’d expect from a tax-preparation software company, but his points are something to consider.
Currently, there are no serious proposals being considered to implement the idea of “return-free filing” for US taxpayers. So at least for now, there’s no escaping those required W-2s and 1099s when tax time comes.