Re:IRS will look into setting up a free e-filing system
by lukeschlather on Wednesday September 07, 2022 @08:14PM
(#32759217)
What we need is an open, automated, auditable system where the rules are transparent. The IRS is not there to cheat you out of money, they have no incentive to do so (they don't get bonuses for that.)
On the other hand, with our present adversarial system there are a variety of private businesses that do get money when the IRS makes mistakes.
Re:IRS will look into setting up a free e-filing system
by pclmulqdq on Wednesday September 07, 2022 @08:40PM
(#32759473)
I used to think that the IRS was not trying to cheat you out of money, and the individual employees are usually great if you return their calls and treat them with the minimum level of respect that they deserve. However, the systems at the IRS are designed to maximize revenue.
The adversarial process that exists today (between you and the IRS's automated systems and processes, mediated by the humans at the IRS) allows you to generally get the benefit of being on the side that minimizes your tax burden. Usually, the more complicated your tax filing is, the more gray there is, and the more advantage you can take of it.
What is crazy about the system is that every one of those years, I have been asked to pay the same amount of money (roughly $2000 extra), but the mistakes change each time. Each time, I have sent a very kind letter to the IRS telling them, "no, I did this correctly," and the IRS agreed. It failed to account for cost basis on RSUs from an employer. It failed to account for long-dated options expiring worthless. It failed to account for long term capital gains being long term.
It's hard to avoid drawing the cynical conclusion here, that the IRS each time attempts to extract a payment that is slightly less than the cost of having a lawyer or accountant deal with them. I don't want this kind of system sending out a tax bill to me that I have to contest, because:
1. It will almost certainly not do the accounting that minimizes each person's burden. The US tax code is long and full of terrors.
2. Most people will just accept the result, regardless of the fact that it will cost them thousands in extra taxation.
3. People that don't accept the result will likely be flagged for future audits, and will likely face a lot more scrutiny. In the previous system where everyone has to file, there are a lot more targets.
This is an utterly self-serving rationale, but I don't want this system.