Here's a fun example of why the government should maintain its own databases and use them to pre-fill your taxes.
This year, the state sent me a letter claiming I had paid zero taxes in 2010. They said I had to pay 100% of my tax liability right away or face liens, etc.. Of course, this was patently untrue--my employer had actually withheld more than my total tax liability for 2010. (I know this because I still have my 2010 W-2). So I was entitled to a refund for 2010, but the state was saying I owed them the full amount, plus penalties.
After contacting the state about this, they said the problem was that my W-2 form had likely become "detached" from my 2010 return.
So apparently, the state relies on a paper copy of your W-2 attached to your return to determine whether your employer has paid them the withheld taxes. If they can't find the W-2 you send them, they assume your employer didn't pay them anything on your behalf. Given that employers are already making electronic payments each quarter, why can't the government just derive its W-2 data from that? (I know, I know--they're probably not collecting that data right now. But the point is they could do it as part of the quarterly payment process.)
EDIT: Another funny bit to this story. I asked the state to confirm that my employer had indeed paid the amount reflected on my W-2. I figured that if the error was on my employer's end, I could take it up with them. But the state refused to say one way or another, citing confidentiality.
Most likely your employer is withholding your taxes with the wrong SSN, or quite possibly, not actually withholding them at all (keeping them out of your check, but not sending them to the tax authority). This happens fairly frequently with employers that are heading down the road to bankruptcy. But if your employer is still around a year later it's probably the wrong SSN.
I've wondered the same thing. This year the state asked me to supply a paper copy of my W2 to verify my electronic return submission. Are things so messed up at the state level that they don't know who paid what and when? Why couldn't they just look up in their database that says I paid $X and it matches box 3 on form Y. For extra credit they could do this using this new technology called a computer.
I'm pretty sure that at least in California this isn't true. IIRC if your taxes are normal enough (low enough amount, just a W-2) you can actually login to the California tax site and it can automatically compute your refund for you.
I think my girlfriend used this once - I may be remembering incorrectly though.
As a developer who's married to a CPA, here are my thoughts:
1. Taxes are a hard problem. Besides basic W2s, There are a lot of deductions to know about, and it's hard to keep track of all of them.
2. Depreciation schedules. They vary from item to item, and there's a bit of a grey area on what you can use, and what you can't. What can have bonus depreciation?
3. Calculating cost basis is too damn hard for most of us. Not just stocks, but partnerships as well.
4. When can you take a distribution from a business? How many times is that money taxed?
5. Add another 50 use cases, one for each state.
6. How do the states interact for individuals with diverse activity? Easily 2^50 cases here, and my gut say more like 50!
7. Foreign activity. Good luck with that.
The bottom line is there still is enough complexity that this needs to be done manually. Not to mention there are a lot of things that are legitimate judgement calls, and vary from accountant to accountant (or auditor to auditor when dealing with the IRS).
So, that's why robot's aren't doing my taxes any time soon.
That's why robots aren't doing your taxes. How about for the vast majority of Americans who have one job, no business ownership, no foreign income, no equities trades, a very simple IRA or 401(k), zero or one spouse, zero to n dependents, and possibly a mortgage?
1040EZ should be replaced with 1040AUTO: at the end of February you get: what we've already had submitted by your employer and bank(s), here's the precalculation: sign here and check off the agreement box, or check the complication box and file the appropriate form in April.
Don't let the best be the enemy of the good enough for most people.
About 60% of tax payers submit a 1040A or 1040ez return. This is a dead simple return. The IRS already has all of the information needed to process these returns. The IRS could trivially set up a website that has two pages: 1. Verify this information is correct. 2. Where should we mail the check.
The _only_ reason they don't is that there is a HUGE industry that exists solely to fill out these trivial forms for intimidated people. HR block, et al will never allow the tax system to be simple.
According to the Tax Policy Center over 70% of tax payers took the standard deduction in 2010. Surely solving for that case first and letting those people who will always pay accountants to minimize their liabilities continue to file on paper would increase general welfare. It's the 80/20 rule in action.
1. What deductions? I fill out a ton of them every year and they're never more than my standard deduction. Maybe things change as I get older, but in the meantime it seems like a safe default. "Do you want to try and get your taxes lower than $X by filling in a bunch of info? (Y/N)"
2. What am I going to deprecate, my Civic?
3. Despite being in a healthy tax bracket I don't know what this is.
4. See #3
5. Snoozefest
6. Diverse activity?
7. Yeah I think most of your objections apply to the minority of people who actually hire a CPA to do their taxes.
The bottom line is, for the vast majority of people (even people with interesting W2/1099 incomes like me) you could do your taxes on a napkin if you enjoyed a bit of paperwork/math pain. Again: the IRS already has basically all of this info. What gives?
Except, that in my case, and a large minority of others (at least measured in the millions) all we are doing is filing a 1040 with the info from our W2s and taking the standard deduction. I've also had to fill out a schedule D for stocks, but as of this year that info is also reported to the IRS, so there's nothing I know that they don't know.
OK, but it seems like robots could at least make this a lot easier. Why can't the IRS send me forms with information pre-filled in based on the best of its knowledge? Doesn't CA do something like that with state taxes?
So, what you're essentially saying is that robots aren't doing out taxes because the rules are poorly defined and open to wide subjective interpretation? That sounds to me like the rules are broken, not the robots.
If you don't itemize or have a business, then the IRS has all your income available to it. In particular, brokerages must now report cost basis on all stock/MF sales.
I was on a StartupBus to SXSW this year- at the pitching stage, one of the guys pitched an idea based around simplifying people's taxes. He was a qualified CPA himself, and had years of experience working in the tax industry. No-one volunteered to work on his idea. The winning StartupBus team was a site that let you make your own custom breakfast cereal.
I suspect that if we want to ask "why isn't tedious process [x] automated by now?", we should be looking at ourselves for answers.
There exists a school of thought that says making taxes painful is a great way to remind you that taxes have visible consequences on your life just like spending does, which is a point of non-trivial interest ot the American polity. Someone subscribing to that school of thought might rationally oppose non-economic ways to make taxation less painful as a way to prevent a transition to invisible (or even fun!) higher taxes.
I'm stopping here to avoid committing politics on HN.
I worked at an e-commerce store that shipped a lot internationally. In the beginning, we had calculations for all of the tariffs and taxes required to ship and added that to the end (ups would allow us to pay for this up-front to make it easier for our customers).
Customers would bitch at us all the time about how our prices were too high. We changed it so they had to pay for all of this separately (and so they knew that we weren't the ones increasing prices) and the bitching stopped.
It's one of the reasons I don't want taxes hidden on goods sold in the US. Because people won't think about it and won't really know when the government starts raising taxes.
They will just assume it's the big, evil, companies overcharging.
It's happening right now with gas. Many states have additional taxes/gallon and people just assume it's the stations.
If you want to maximize the painfulness of paying taxes, why not just have everyone pay their income tax as a lump sum instead of the current system where employers have to withhold an estimate of an employee's tax burden and then the employee has to compute the difference between their actual tax burden and the estimate and get it fixed.
Of course, if you did that, people might try to pay taxes using their credit cards.
Except the popular response to modern day taxation is for people to say that they wish they could pay more taxes instead of getting hassled.
Complicated tax law is the banal result of decades of special interest lobbying to carve out giveaways for favored parties and the finance-industrial complex.
Imposing one form of pain (tax complexity) in the hope of reducing a different form of pain (higher taxation) seems to miss the point. That's like imposing a tax on education to prevent private schools from raising their fees (parents won't be able to afford higher fees plus taxes!!)
I'm in this school. I do my taxes on paper and mail them in. It's probably not rational. It definitely takes longer than using software (but honestly, not a lot longer). I like to be reminded how absurd the whole system is.
It can be done. In the UK, most people don't even do a tax return. And let's say you're self employed.. if your tax affairs are reasonably straight forward, you fill out a handful of numbers and dates on a Web site, get an estimated tax bill within minutes, and you're done. You then get sent a proper statement later. In a system with flat taxes, it'd be even easier.
I think the author touches on the real problems in the last couple of paragraphs. The American government isn't particularly good at spearheading initiatives that benefit voters without allowing "lobbyists" or commercial interests to take over. It also doesn't help that you have the federal and state structure (as good as it may be for other things) since the decisions can't be taken by one central place given all the local tax laws.
I'm pretty sure Intuit lobbied pretty hard to kill any and all progress that would allow most people to have their taxes automatically completed for them, equivalent to the 1040AUTO mentioned in some of the other comments.
Normal humans can do their own taxes in a few minutes if they qualify for the 1040EZ. Intuit has a mobile app called SnapTax where you take a photo of your W2 and answer a few questions. http://www.denverpost.com/business/ci_17101221
Unfortunately, the political will to implement these ideas is almost entirely lacking.
Also, while most people claim to object to tax credits to special interests in principle, in reality they only object to tax credits that other people enjoy.
But tax expenditures are the only way for anti-government types in government to spend money! ;-)
The complexity doesn't come from the simple cases: it comes from the cases that are legitimately complex. Carried interest, investment gains, charitable contributions, foreign income, corporate debt and so forth aren't reducible to a simple equation. For the vast majority of Americans taxes are simple: for many of the rest, they will never be simple unless they are abolished all together.
My father did mainframe dev contract work for the IRS and once told me it's a miracle you even get your tax returns every year. :) There's quite a mess behind the scenes due to a number of failed new projects at the cost of taxpayer money.
I wish we could automate all of this but taxes themselves are also still a sort of art with all the exceptions. Technically there are rules about when you qualify for things but from my experience accounting firms operate more like law firms in that they help you figure out how to meet the bare minimum to legally qualify for various returns.
"Better yet: since the agency is already receiving that data from all those financial institutions through a separate stream, how about organizing the data for me and simply letting me sign off on my automatically-generated return? I suspect that a lot of people would like that, given that the alternative is spending a spring day doing paperwork."
Especially for those who only have a single W2 or a similarly simple state of affairs, it is quite ridiculous the amount of pain you have to go through (and preparation fees you have to pay) CONSIDERING THE GOVERNMENT ALREADY HAS THE INFORMATION!
I definitely think tax preparation firms are lobbying to keep from simplifying the preparation process.
I remember one year around 2005 or so I was able to file my (federal) return by telephone directly with the IRS for FREE (I was a student and had only the one W2) and it was relatively painless but the next year the option seems to have disappeared. Anyone remember that?
I once complained on a message board that sales tax should be included in the sticker price, so that I know ahead of time what I'm going to pay.
I still feel that way, but someone pointed out that it would further hide from consumers the fact that the government takes money out of every transaction. Now I contend that every sticker should tell me both the price with taxes, and the price without. This would make it very clear how much I would have to pay without government intrusion, and how much extra they get from me.
I'm getting the same vibe here with income taxes. Taxes used to be a much more contentious issue before it was taken out of every paycheck prior to the worker seeing the money. Now the single pain point in paying taxes is an hour's worth of paperwork once a year. Eliminate that friction, and the government becomes an invisible siphon, sucking money right out of the economy, with hardly anyone noticing.
By all means, make paying taxes easier, but don't obscure the fact that someone is taking your money, all the time, without giving you a choice in the matter.
> ...but don't obscure the fact that someone is taking your money, all the time, without giving you a choice in the matter.
I've always been curious about this point of view. While it is true that you are paying money in taxes throughout your life, it is also true that at the same time you are receiving the benefits, to some degree, of that taxation in the form of public infrastructure and spending. How you experience life from your moment of birth depends on how those in the past have spent and dealt with issues like taxation and public spending and how you take advantage of those things, knowingly or not.
If you could choose to not pay some or all of the taxes you pay now, would you? Would you ever spend that extra income to benefit people who you will never meet or interact with? Would you ever spend that extra income to benefit people you actively disagree with or find repulsive?
That's the price for living in a civilization that provides enough safety for having a source of reliable income, and a market to spend it in.
Not that the US government is really doing a good job allocating that price or spending the proceeds, mind you, but please don't go all "MAH TAX DOLLAHS".
Autotax.me is going to help you deal with your independent contractors. It contracts, files and audit proofs your 1099 taxes. It's almost like an HR/Tax service in one.
You can check it out now but its still really rough/ugly. The functions work but there's no real UI so that's what I'm going to be finishing up.
Any questions, you can check out cameronkeng.com
if you're interested in any of these products, shoot me an email at [email protected] or tweet me @cameronkeng =D
I work on optimization software and I'm pretty sure you could do some serious damage to the government's tax collection efforts if you hooked up a genetic algorithm to some very good accounting software to minimize taxes.
The problem with GA's is that they frequently exploit loopholes in their setups, so you get solutions that technically satisfy your evaluation criteria but it's not what you really want. This process is basically what corporate accountants do manually to get ridiculously low tax rates for big companies. Congress writes the tax code but it will always have loopholes, and GA's will definitely find them.
Here's a recent blog post of mine that goes into some of the problems with GA's, which when you're looking for loopholes is actually a huge advantage:
Auto-generating a tax return is one thing. Taking advantage of all your potential tax benefits and considering your edge cases is another thing. I've seen tax returns for many of inDinero's customers, and it's clear to me that their previous accountants took shortcuts in compiling the return.
Yes, it'll get filed. But there were probably more tax advantageous things they could have / should have done. Consider these examples:
1 - tax credits. How is the government supposed to automatically know that you're paying for child care? How are they to know that you just installed solar panels on your roof or that you just purchased an electric vehicle? Sure, they can make this "automatic" -- but then you'd still be going out of your way to report your purchase, and this is in no way simpler than the current solution today.
2 - does it make sense to be taxed as a partnership or sole-proprietor? For a lot of our customers, they're basically flushing $20k down the toilet because they didn't want to go through the tiny nuisance of filing as an S-Corporation. Pretty sure you don't want the IRS to dictate your tax treatment.
3 - should you depreciate your Aeron chairs over multiple years, or do accelerated depreciation which will allow you to deduct the entire amount in a single year? The IRS gives us the flexibility to choose, and it's questions like these that may require the help of a tax professional.
4 - deducting vehicle expenses. How is the IRS supposed to figure out how many miles on your car were used for business VS personal purposes?
5 - what part of your apartment was used exclusively for hacking? No way for the IRS to know that the number is 250/1500 square feet.
In short, putting together a tax return isn't that hard. The difficult part is hunting down all of this other information that we have no way of just knowing.
Instead of asking why robots couldn't be doing our taxes by now, we might rephrase the question to read "how can we do year-round accounting in such a way that taxes are 10X easier to take care of?"
The real problem is not the lack of systems but the ridiculous complexity of tax law. Since the complexity is unlikely to go away any system would have to handle it - and this is not an easy task.
Given that the OP works for an organization which is "focused on digitization of government data" it is quite peculiar that he doesn't understand the problem domain any better. It's quite a joke to think that it's a matter of throwing in some web forms here and there.
In complexity I would say it's up there with his favorite Apollo quote. Maybe not on par - but close. Just thinking about the size of the rule engine which is required makes my head hurt.
Not just complexity, but vagueness. Good luck writing a program that calculates what's "reasonable". Was the construction work a "repair" or an "upgrade"?
How about determining what would be a reasonable amount for someone to pay if they were in the shoes of the businessperson but dealing at arm's length?
I owed them money a few years back and had to pay them using some online payment system.
It was necessary to do this because they failed to implement the payment plan that they agreed to. So interest was piling up and they weren't withdrawing what I owed them.
So I sign up on this system. They had to MAIL me the password. By USPS mail!
So it finally comes. I log in and pay off the entire amount.
Later, I find out that the system applied the payment to the wrong year. Apparently this was my fault somehow, as the system defaults to the current year, not the year that you owe on.
So I have to call to get that straightened out. The person applies the payment to the correct year. yea!
Now can I find out my balance? Is it paid off? "Let me transfer you to the department that can do that."
Apparently, that's a different skill set altogether. No way to check it online. Why would you ever need to do that?
Finally get to a person who can tell me. And it turns out they started the original withdrawal of funds from my bank. So now they owed ME money.
And that came by paper check, delivered by USPS of course.
Over in my corner, we have a State provided income tax simulator and filer. Not too pretty, but correct and useful; it's done in Java and runs under Windows, MacOS and Linux.
It's been so successful that most tax returns are nowadays filed with it, and quite a few public offices where people used to queue up to file their (paper) returns have been closed. There was never much of a setup/tradition of filing by mail like in the U.S.
Over the last couple of years, they've improved data cross-referencing to the point where I can get most of my form pre-filled from the government.
The thing is, complicate tax code is merely a welfare program for tax lawyers and accountants. If we made taxes easy, or automated parts of the process that are the same for everyone, we would be cutting off the supply of money to the leeches. Since they don't want that, and they are better at being parasites than the groups normally attacked for parasitism (teachers, postal workers etc), they successfully lobby against making taxes easier for most people.
Belgium has had this for a few years now. In my case everything is prefilled, even the deduction for charitable donations. Basically this is a US-specific problem.
If I was ever elected president, I would direct congress to reduce the size of the tax code by 10% each year. If they fail to do so then 10% are automatically eliminated - eg all those whose last digit of the article number is 3.
The real reason for why things are so screwed up is corrupt politicians who use their power as a fund raising mechanism. For example there were several taxes added temporarily to see if they worked well. They did, but congress doesn't make them permanent. Instead they wait to be paid each time to renew them temporarily again. (This started in the Reagan administration.)
[+] [-] jarrett|14 years ago|reply
This year, the state sent me a letter claiming I had paid zero taxes in 2010. They said I had to pay 100% of my tax liability right away or face liens, etc.. Of course, this was patently untrue--my employer had actually withheld more than my total tax liability for 2010. (I know this because I still have my 2010 W-2). So I was entitled to a refund for 2010, but the state was saying I owed them the full amount, plus penalties.
After contacting the state about this, they said the problem was that my W-2 form had likely become "detached" from my 2010 return.
So apparently, the state relies on a paper copy of your W-2 attached to your return to determine whether your employer has paid them the withheld taxes. If they can't find the W-2 you send them, they assume your employer didn't pay them anything on your behalf. Given that employers are already making electronic payments each quarter, why can't the government just derive its W-2 data from that? (I know, I know--they're probably not collecting that data right now. But the point is they could do it as part of the quarterly payment process.)
EDIT: Another funny bit to this story. I asked the state to confirm that my employer had indeed paid the amount reflected on my W-2. I figured that if the error was on my employer's end, I could take it up with them. But the state refused to say one way or another, citing confidentiality.
[+] [-] jellicle|14 years ago|reply
Most likely your employer is withholding your taxes with the wrong SSN, or quite possibly, not actually withholding them at all (keeping them out of your check, but not sending them to the tax authority). This happens fairly frequently with employers that are heading down the road to bankruptcy. But if your employer is still around a year later it's probably the wrong SSN.
[+] [-] nostromo|14 years ago|reply
[+] [-] matwood|14 years ago|reply
[+] [-] sbov|14 years ago|reply
I think my girlfriend used this once - I may be remembering incorrectly though.
[+] [-] francoisdevlin|14 years ago|reply
1. Taxes are a hard problem. Besides basic W2s, There are a lot of deductions to know about, and it's hard to keep track of all of them.
2. Depreciation schedules. They vary from item to item, and there's a bit of a grey area on what you can use, and what you can't. What can have bonus depreciation?
3. Calculating cost basis is too damn hard for most of us. Not just stocks, but partnerships as well.
4. When can you take a distribution from a business? How many times is that money taxed?
5. Add another 50 use cases, one for each state.
6. How do the states interact for individuals with diverse activity? Easily 2^50 cases here, and my gut say more like 50!
7. Foreign activity. Good luck with that.
The bottom line is there still is enough complexity that this needs to be done manually. Not to mention there are a lot of things that are legitimate judgement calls, and vary from accountant to accountant (or auditor to auditor when dealing with the IRS).
So, that's why robot's aren't doing my taxes any time soon.
[+] [-] dsr_|14 years ago|reply
1040EZ should be replaced with 1040AUTO: at the end of February you get: what we've already had submitted by your employer and bank(s), here's the precalculation: sign here and check off the agreement box, or check the complication box and file the appropriate form in April.
Don't let the best be the enemy of the good enough for most people.
[+] [-] dmm|14 years ago|reply
The _only_ reason they don't is that there is a HUGE industry that exists solely to fill out these trivial forms for intimidated people. HR block, et al will never allow the tax system to be simple.
[+] [-] roguecoder|14 years ago|reply
According to the Tax Policy Center over 70% of tax payers took the standard deduction in 2010. Surely solving for that case first and letting those people who will always pay accountants to minimize their liabilities continue to file on paper would increase general welfare. It's the 80/20 rule in action.
[+] [-] zyphlar|14 years ago|reply
2. What am I going to deprecate, my Civic?
3. Despite being in a healthy tax bracket I don't know what this is.
4. See #3
5. Snoozefest
6. Diverse activity?
7. Yeah I think most of your objections apply to the minority of people who actually hire a CPA to do their taxes.
The bottom line is, for the vast majority of people (even people with interesting W2/1099 incomes like me) you could do your taxes on a napkin if you enjoyed a bit of paperwork/math pain. Again: the IRS already has basically all of this info. What gives?
[+] [-] unknown|14 years ago|reply
[deleted]
[+] [-] nowarninglabel|14 years ago|reply
[+] [-] kalleboo|14 years ago|reply
I would have said "The bottom line is there is still enough complexity that this needs to be done by machine".
We have machines simulating weather patterns. Is tax code that much more complicated?
[+] [-] eli|14 years ago|reply
[+] [-] yock|14 years ago|reply
[+] [-] zeroonetwothree|14 years ago|reply
[+] [-] gcb|14 years ago|reply
[+] [-] untog|14 years ago|reply
I suspect that if we want to ask "why isn't tedious process [x] automated by now?", we should be looking at ourselves for answers.
[+] [-] molsongolden|14 years ago|reply
[+] [-] patio11|14 years ago|reply
I'm stopping here to avoid committing politics on HN.
[+] [-] paulhauggis|14 years ago|reply
I worked at an e-commerce store that shipped a lot internationally. In the beginning, we had calculations for all of the tariffs and taxes required to ship and added that to the end (ups would allow us to pay for this up-front to make it easier for our customers).
Customers would bitch at us all the time about how our prices were too high. We changed it so they had to pay for all of this separately (and so they knew that we weren't the ones increasing prices) and the bitching stopped.
It's one of the reasons I don't want taxes hidden on goods sold in the US. Because people won't think about it and won't really know when the government starts raising taxes.
They will just assume it's the big, evil, companies overcharging.
It's happening right now with gas. Many states have additional taxes/gallon and people just assume it's the stations.
[+] [-] uiri|14 years ago|reply
Of course, if you did that, people might try to pay taxes using their credit cards.
[+] [-] Drbble|14 years ago|reply
Complicated tax law is the banal result of decades of special interest lobbying to carve out giveaways for favored parties and the finance-industrial complex.
[+] [-] seunosewa|14 years ago|reply
[+] [-] ams6110|14 years ago|reply
[+] [-] petercooper|14 years ago|reply
I think the author touches on the real problems in the last couple of paragraphs. The American government isn't particularly good at spearheading initiatives that benefit voters without allowing "lobbyists" or commercial interests to take over. It also doesn't help that you have the federal and state structure (as good as it may be for other things) since the decisions can't be taken by one central place given all the local tax laws.
[+] [-] asnyder|14 years ago|reply
http://www.techdirt.com/articles/20100723/09055310339.shtml
[+] [-] carsongross|14 years ago|reply
[+] [-] jaredsohn|14 years ago|reply
[+] [-] jaredsohn|14 years ago|reply
[+] [-] draggnar|14 years ago|reply
[+] [-] jsdalton|14 years ago|reply
Unfortunately, the political will to implement these ideas is almost entirely lacking.
Also, while most people claim to object to tax credits to special interests in principle, in reality they only object to tax credits that other people enjoy.
[+] [-] roguecoder|14 years ago|reply
The complexity doesn't come from the simple cases: it comes from the cases that are legitimately complex. Carried interest, investment gains, charitable contributions, foreign income, corporate debt and so forth aren't reducible to a simple equation. For the vast majority of Americans taxes are simple: for many of the rest, they will never be simple unless they are abolished all together.
[+] [-] protomyth|14 years ago|reply
[+] [-] vyrotek|14 years ago|reply
I wish we could automate all of this but taxes themselves are also still a sort of art with all the exceptions. Technically there are rules about when you qualify for things but from my experience accounting firms operate more like law firms in that they help you figure out how to meet the bare minimum to legally qualify for various returns.
[+] [-] rweba|14 years ago|reply
"Better yet: since the agency is already receiving that data from all those financial institutions through a separate stream, how about organizing the data for me and simply letting me sign off on my automatically-generated return? I suspect that a lot of people would like that, given that the alternative is spending a spring day doing paperwork."
Especially for those who only have a single W2 or a similarly simple state of affairs, it is quite ridiculous the amount of pain you have to go through (and preparation fees you have to pay) CONSIDERING THE GOVERNMENT ALREADY HAS THE INFORMATION!
I definitely think tax preparation firms are lobbying to keep from simplifying the preparation process.
I remember one year around 2005 or so I was able to file my (federal) return by telephone directly with the IRS for FREE (I was a student and had only the one W2) and it was relatively painless but the next year the option seems to have disappeared. Anyone remember that?
[+] [-] drcube|14 years ago|reply
I still feel that way, but someone pointed out that it would further hide from consumers the fact that the government takes money out of every transaction. Now I contend that every sticker should tell me both the price with taxes, and the price without. This would make it very clear how much I would have to pay without government intrusion, and how much extra they get from me.
I'm getting the same vibe here with income taxes. Taxes used to be a much more contentious issue before it was taken out of every paycheck prior to the worker seeing the money. Now the single pain point in paying taxes is an hour's worth of paperwork once a year. Eliminate that friction, and the government becomes an invisible siphon, sucking money right out of the economy, with hardly anyone noticing.
By all means, make paying taxes easier, but don't obscure the fact that someone is taking your money, all the time, without giving you a choice in the matter.
[+] [-] king_jester|14 years ago|reply
I've always been curious about this point of view. While it is true that you are paying money in taxes throughout your life, it is also true that at the same time you are receiving the benefits, to some degree, of that taxation in the form of public infrastructure and spending. How you experience life from your moment of birth depends on how those in the past have spent and dealt with issues like taxation and public spending and how you take advantage of those things, knowingly or not.
If you could choose to not pay some or all of the taxes you pay now, would you? Would you ever spend that extra income to benefit people who you will never meet or interact with? Would you ever spend that extra income to benefit people you actively disagree with or find repulsive?
[+] [-] angersock|14 years ago|reply
Not that the US government is really doing a good job allocating that price or spending the proceeds, mind you, but please don't go all "MAH TAX DOLLAHS".
[+] [-] camz|14 years ago|reply
Taxcast.co is a system that forecasts your tax deductions, audit proofs your information and calculates your current and future tax liability.
you can check out the demo here: http://www.youtube.com/watch?v=-4CuvWkKW4w&context=C4404...
Autotax.me is going to help you deal with your independent contractors. It contracts, files and audit proofs your 1099 taxes. It's almost like an HR/Tax service in one.
You can check it out now but its still really rough/ugly. The functions work but there's no real UI so that's what I'm going to be finishing up.
Any questions, you can check out cameronkeng.com
if you're interested in any of these products, shoot me an email at [email protected] or tweet me @cameronkeng =D
[+] [-] pgroves|14 years ago|reply
The problem with GA's is that they frequently exploit loopholes in their setups, so you get solutions that technically satisfy your evaluation criteria but it's not what you really want. This process is basically what corporate accountants do manually to get ridiculously low tax rates for big companies. Congress writes the tax code but it will always have loopholes, and GA's will definitely find them.
Here's a recent blog post of mine that goes into some of the problems with GA's, which when you're looking for loopholes is actually a huge advantage:
http://designbyrobots.com/2012/03/29/evolution-is-cleverer-t...
[+] [-] jlm382|14 years ago|reply
Yes, it'll get filed. But there were probably more tax advantageous things they could have / should have done. Consider these examples:
1 - tax credits. How is the government supposed to automatically know that you're paying for child care? How are they to know that you just installed solar panels on your roof or that you just purchased an electric vehicle? Sure, they can make this "automatic" -- but then you'd still be going out of your way to report your purchase, and this is in no way simpler than the current solution today.
2 - does it make sense to be taxed as a partnership or sole-proprietor? For a lot of our customers, they're basically flushing $20k down the toilet because they didn't want to go through the tiny nuisance of filing as an S-Corporation. Pretty sure you don't want the IRS to dictate your tax treatment.
3 - should you depreciate your Aeron chairs over multiple years, or do accelerated depreciation which will allow you to deduct the entire amount in a single year? The IRS gives us the flexibility to choose, and it's questions like these that may require the help of a tax professional.
4 - deducting vehicle expenses. How is the IRS supposed to figure out how many miles on your car were used for business VS personal purposes?
5 - what part of your apartment was used exclusively for hacking? No way for the IRS to know that the number is 250/1500 square feet.
In short, putting together a tax return isn't that hard. The difficult part is hunting down all of this other information that we have no way of just knowing.
Instead of asking why robots couldn't be doing our taxes by now, we might rephrase the question to read "how can we do year-round accounting in such a way that taxes are 10X easier to take care of?"
[+] [-] doc4t|14 years ago|reply
Given that the OP works for an organization which is "focused on digitization of government data" it is quite peculiar that he doesn't understand the problem domain any better. It's quite a joke to think that it's a matter of throwing in some web forms here and there.
In complexity I would say it's up there with his favorite Apollo quote. Maybe not on par - but close. Just thinking about the size of the rule engine which is required makes my head hurt.
[+] [-] a3camero|14 years ago|reply
How about determining what would be a reasonable amount for someone to pay if they were in the shoes of the businessperson but dealing at arm's length?
[+] [-] dangoldin|14 years ago|reply
http://www.guardian.co.uk/technology/2012/apr/15/estonia-uss...
[+] [-] stretchwithme|14 years ago|reply
It was necessary to do this because they failed to implement the payment plan that they agreed to. So interest was piling up and they weren't withdrawing what I owed them.
So I sign up on this system. They had to MAIL me the password. By USPS mail!
So it finally comes. I log in and pay off the entire amount.
Later, I find out that the system applied the payment to the wrong year. Apparently this was my fault somehow, as the system defaults to the current year, not the year that you owe on.
So I have to call to get that straightened out. The person applies the payment to the correct year. yea!
Now can I find out my balance? Is it paid off? "Let me transfer you to the department that can do that."
Apparently, that's a different skill set altogether. No way to check it online. Why would you ever need to do that?
Finally get to a person who can tell me. And it turns out they started the original withdrawal of funds from my bank. So now they owed ME money.
And that came by paper check, delivered by USPS of course.
[+] [-] ableal|14 years ago|reply
Over in my corner, we have a State provided income tax simulator and filer. Not too pretty, but correct and useful; it's done in Java and runs under Windows, MacOS and Linux.
It's been so successful that most tax returns are nowadays filed with it, and quite a few public offices where people used to queue up to file their (paper) returns have been closed. There was never much of a setup/tradition of filing by mail like in the U.S.
Over the last couple of years, they've improved data cross-referencing to the point where I can get most of my form pre-filled from the government.
[+] [-] sophacles|14 years ago|reply
[+] [-] Joeri|14 years ago|reply
You can see a flash demo (in dutch) of the belgian tax-on-web app here: https://eservices.minfin.fgov.be/taxonweb/static/nl/demo_v2/...
[+] [-] rogerbinns|14 years ago|reply
The real reason for why things are so screwed up is corrupt politicians who use their power as a fund raising mechanism. For example there were several taxes added temporarily to see if they worked well. They did, but congress doesn't make them permanent. Instead they wait to be paid each time to renew them temporarily again. (This started in the Reagan administration.)
See this excellent talk by Lessig: http://www.youtube.com/watch?v=Ik1AK56FtVc
The whole tax provisions as fund raising is covered at 7m30s.