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Comment by mbell | Hacker News Reader

I think this is large simplification of the issue.

The agreement does prevent the IRS from creating a free filing system, but requires the private companies involved to produce a free filing system for 60% of filers which is currently anyone making under $66,000 per year. Functionally this amounts to the IRS outsourcing the development and operating costs of the system to the private companies involved. In turn this means the folks paying those companies for filing, ostensibly meaning those making over $66,000 a year, are paying the tax filing costs of those making less.

I don't think this is a particularly bad deal given how awful the government is at building things like this, look at the cost of HealthCare.gov as an example. Where I take issue with the agreement is that it should have put in place requirements to promote/advertise the free option to anyone qualified for it.

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For those lower-income tax payers, is there really any reason to have an end-user initiated return?

With no itemized deductions and only wage income, the IRS already has everything that is needed. They should just mail/email a pre-filled form. If everything is correct, no action needed (other than paying any taxes due). If something is wrong, that bumps you into the existing "pay TurboTax" model.

The only hole I can see in this plan is that it would require our government to change a standard for the better.

how does the IRS know you only have wage income? if you also have cash or some other income that's not automatically reported then their pre-filled form would be wrong

They don't, but most tax payers will only have wages, and for them, the no-file system is easier. For those of us with investment income, itemized deductions, or anything else, we do the same as we do now. Still not perfect - my taxes aren't that unusual, but I still feel like I need a CPA to do them some years - but I'll take anything.

Objection--it shouldn't be the same as it is now. Rather, the IRS should mail you the pre-filled portion and you should be able to use any portion of it you can in filing your own taxes.

The pre-filled return should also have a QR code that allows tax programs to obtain the data.

Then you have to do changes to the form yourself. I don't really see the problem. That's how it works in a lot of countries.

But it doesn't work that way now, therefore it can NEVER work that way!

The distinction is an important one simply for liability and accountability purposes. I'm ok with going to a .gov site and doing tax work rather than foobartax even if they both are run by the same software shop. I have no idea what I'm signing away in the fine print while using foobartax. Almost all free financial products have some sort of a data siphon gig (all the free credit report and identity protection products for example). Is there any reason to believe a free file from a company is any different ? And even if you have some protections, it will be close to impossible to fight it out.

Indeed. I think the government needs to revise the deal. These corporate tools are well-designed to make the tax system fairly understandable and straightforward, I found using TurboTax to be pretty pleasant, and I highly doubt an IRS-built system would feel as polished.

I see nothing wrong with the inherent basis of the free file program, they just need to literally forbid the companies from charging for comparable tax services to free file eligible users. Tax companies would still have a strong incentive to run it, as users using their under $66,000 are likely to continue doing so once they rise above that mark.

I don’t do my own taxes anymore due to the complexity. The last year I filed my taxes myself was in 2014, and I used Turbo Tax’s online product.

1. It makes no sense to me why I have to pay because my income was over some threshold. Why does the government prop up an industry and force me to pay to file my taxes. If Uncle Sam already knows what I owe, just show it to me to review and a box to sign and attach bank account details. This is a scam. Uncle Sam has an agreement with these companies not to provide a product and relies on these companies instead, who are only in it to maximize profit. It doesn’t make sense.

2. There was no traceability. At least in 2014, Turbo Tax had me enter my W2, add in some interest I’d earned and then connect to my brokerage accounts to pull in cost basis and selling prices for various equity trades.

Then they told me I owe about $85K. A magic number... great! This was all wrong. My W2 withholding was fine, and the sum of what I owed on a few trades I made that year and accrued interest was closer to $12K.

I don’t trust TurboTax. Maybe it’s sufficient if all you have is a W2, but they’re not acting on their customers behalf. They exist to maximize their own profit.

Except the free file should apply to all returns done by the program. Anyone can download the full version, but without a license key it won't let you see any forms if you are over the limit.

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