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Comment by newsyyswen | Hacker News Reader

We badly need legislation to force the IRS to send every taxpayer a bill which they can pay.

They certainly have enough information from employers, banks, estimated payments from contractors, etc. Otherwise, how would they decide who to audit? How would they know to mail you an adjusted return for a past year?

It feels completely ridiculous that we need to calculate these things ourselves, only to be bugged by the agency for entering the wrong numbers. Just tell us what you think the bill is, and let us make a counter-claim if we think you're wrong!

But this has been true for years, decades. I'm not holding my breath.

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This is one of those areas where Congress has purposefully injected friction into the system specifically so that businesses can seek rents. It’s incredibly obnoxious, but the amount of money made is so obscene that it makes bribing[0] Congress people trivial.

0 - Yes, I know it’s technically a donation. But if it walks like a bribe and it quacks like a bribe, I see no reason to arbitrarily let them off the hook.

It walks like a bribe, it talks like a bribe, it quacks like a bribe, it flaps like a bribe, it lies like a bribe, it hides like a bribe, it looks like a bribe, it feels like a bribe, it smells like a bribe, what is it?

Lobbying, duh. Definitely not a bribe.

It's pretty wild that legal lobbying + the realities of campaign finance effectively mean that our government has instituted a policy of mandatory bribery. I mean, democracy is always going to have warts, but this one is really special.

You're 100% right except for one thing - you're describing campaign finance, not lobbying.

Totally not a duck!

(quack)

Seriously, though, go on. I'm dying to hear how you've got a definition of "lobbying" that cleverly gerrymanders around all the corrupt dealmaking and only includes purely informational communication. I can't wait to hear why we should confuse this definition -- which seems precision-engineered to deflect blame away from certain shortfalls in our political apparatus -- with the common usage of the term, which frequently refers to real life events and therefore inevitably includes a great many situations where the thing going "quack" is, in fact, a duck.

Lobbying is advocacy. If you call your congressperson you're lobbying. If the ACLU files an amicus brief in a SCOTUS case that's lobbying. When the NRA hosts events for their members to speak to congresspeople that's lobbying.

Registered lobbyists work for interest groups to have their voices heard. It's not always innocent, but it is not the same problem as campaign financing. Money is not changing hands.

> This is one of those areas where Congress has purposefully injected friction into the system specifically so that businesses can seek rents.

Its sticky because that's not the only purposes; GOP politicians who want to campaign against taxes to push serial tax cuts weighted to the rich as the solution to every problem also want to preserve the current filing system as a source of leverage because it makes the perceived burden of taxes higher, though some of them (e.g., flat taxers) are willing to trade it off in exchange for a permanent massive downward redistribution of tax burden.

Each party has their own exemptions they push. Notice the Democratic support state tax exemption - complete nonsense.

> Each party has their own exemptions they push.

I'm not talking about pushing “exemptions”, I’m talking about motivation for specifically not allowing the IRS to prepare and provide taxpayers with a baseline calculation based on information they have as a complete return for the common simple cases requiring supplemental filing for compelx cases.

> Notice the Democratic support state tax exemption

Both Democrats and Republicans support the State and Local Tax Deduction; the GOP supports a dollar cap so as to increase pressure for low-tax state policies (more than would exist without the deduction at all or with an ubcapped deduction), Democrats prefer it be untaxed which leaves the federal hand off state tax policy.

I'm generally less anti-lobbying than most - I think there's value in corporations being able to express their desires to elected officials - but this is the case that just completely destroys the validity of it.

It's just unjustifiable that we have the current system in place. There is not one single, rational argument to be made that US citizens are better off having to file their taxes every year. A system in which people get a tax bill from the government with an explanation of how it's calculate, then they can file their own tax return if they disagree, is just clearly better in every single way.

I think Intuit is a company that makes a lot of really useful products, but I can't look at them as anything except just utterly unethical because of their lobbying on this topic.

> We badly need legislation to force the IRS to send every taxpayer a bill which they can pay.

The truth is the IRS bill would be wrong and the IRS would have countless challenges and no practical ability to review any in-house type of challenge and all cases would needlessly result in court.

I had a horror story that took 2-3 years to resolve went all the way to tax court for a fraudulent 1099 in the amount of $75k presumably so the company could take a deduction and the IRS was seeking about 30k in taxes/fees/interest. Tax court require an agreement on the facts and issues before trial which the IRS dragged its feet until about 1 week before the agreed order was due when the conceded I was right and owed $0 taxes.

To even get to that point there were about 1/2 dozen phone calls with the IRS which took hours and always resulted in the employee confirming the believe me and I won’t owe anything. There were about 3 formal written responses I provided but IRS kept giving me standard boilerplate letters that I hadn’t proved I wasn’t paid the 1099 income reported and escalating the matter until finally they adjusted my return and forced my hand into filing a petition for tax court. Once in tax court their is supposed to be a stay on the matter until resolved by the court, but the IRS put me in collections, so I filed a motion which the Judge granted in chamber without a hearing to remove me from collections, this was after multiple conversations with the IRS attorney who never did anything but laugh when I called it a IRS automated track of hell and otherwise did nothing to looking into what I felt should have been pretty obvious case of fraud by the company that falsely reported the 1099 income.

This took hundreds of hours and the only way possible I got through it is that I happen to be an attorney.

This has nothing to do with the IRS sending automated bills. It's not like they would have not pursued you if you'd chosen not to report the fraudulent 1099. This is an entirely separate problem.

I'm sorry about your horror story, but if the bill they sent were wrong, ideally you could just file as you do now.

They should just auto approve all complaints, and randomly audit some of them. That's effectively the system today, just less convenient.

This, combined with the ability to audit back 20 years if they find any deliberately incorrect tax returns, is a neat way to only audit a tiny fraction of returns, while keeping losses to fraud small.

>> We badly need legislation to force the IRS to send every taxpayer a bill which they can pay.

> The truth is the IRS bill would be wrong and the IRS would have countless challenges and no practical ability to review any in-house type of challenge and all cases would needlessly result in court.

That's not how it would work. The IRS wouldn't send you a bill: it'd sent you an offer in the form of a pre-filled tax return. You accept the offer or you submit your own tax return.

Yes, this would be awesome. For >50% people it would probably be correct.

Seems like this would make tax evasion easier for cash businesses.

That's how most of the world does it and it works fine. And for businesses it can be just as is.

Its the insane burden and waste of time for the average person that is the problem.

Imagine how much more productive the entirety of the US would be if tax filing would be simple. The amount of time saved would be enormous, there are approx 140 million tax payers and if everyone would spend just an hour (in reality its probably multiple days) per year doing tax related work you get an idea how much time is wasted.

Eliminate cash with instant payment systems. Central banks are already working on it.

I’m sure it would be wrong. But I think it would be less harm than forcing tens of millions of people to pay TurboTax $100 every year.

This seems like another case of American exceptionalism. Countless countries around the world do this, they do it by having employers report income when they pay people. I’m in the UK and other than a short period of being self-employed I’ve never had to fill in a tax return, I just get the amount I should deducted from payroll each month and get on with my life. Occasionally I’ll change jobs which causes my tax code to move and I get a cheque in the mail from HMRC for the amount I overpaid.

Employers report that in the US, too. But that is just the beginning of the story. The IRS doesn’t know about your charitable contributions or your extra income from that side-job you did for your uncle until you report it. On the form.

The way it works in the UK is there's £1000 of untaxed self-employed income.

So you only need to bother with a "self-assessment" tax return if you earn over £1000 of casual income.

And then, if you have less than £1000 of expenses related to that income, you don't have to justify the deductions so you just enter the income as a number and you're done.

Charitable contributions are claimed by the charity at the basic taxpayer rate. So when you donate £1 they can claim 20p from the government.

You only need to itemise your charitable contributions (to claim back the difference between the 40p of tax you paid and 20p the charity got) if you are a higher rate taxpayer, which is something like £70k per year gross, so you're well into <5% of people here.

I'd expect if we moved towards a direct-bill model, tax policy would begin to optimize for "causes least frustration for the 200 million common-case taxpayers who do the direct billing."

We'd probably see more monkeying around with the standard deduction. I know for me, and presumably a lot of people (especially those without major mortgage interest), the current standard deduction exceeds the benefits to be had by itemization-- and claiming the trivialities like charitable donations or medical expenses.

> We badly need legislation to force the IRS to send every taxpayer a bill which they can pay.

Some in congress are working for this:

https://twitter.com/senwarren/status/1214310004804792320

https://twitter.com/SenWarren/status/1416088088934338562

This is America. Nothing good ever happens legislatively, only things that benefit large capitalist institutions.

Social security was a good thing, and it happened. Medicare was a good thing and it happened. Even Obamacare had lots of good things, and it happened. So did the child tax credit. And the endangered species act. The establishment of the Environmental Protection Agency. Our air, btw, has a lot less smog and small particles than it did in the 80s.

Cynicism like you expressed may earn likes in some contexts, but it isn't accurate, and it isn't helpful.

Nothing has happened in my lifetime that has made my life better compared to my parents. The ACA mandated I buy private insurance, and that hasn’t really helped me at all. I still got charged almost $1000 for an ambulance ride last year, one that I didn’t really have a choice on.

So no, I don’t think anything good happens in America. Maybe it did at one point, but I’ve never seen it. What I see instead are trillion dollar bailouts for banks, airlines, and auto manufacturers. Student loans, though? Yeah, get fucked. Qualified immunity? Yeah, get murdered.

Every system will offer some disproportionate rewards to the groups that are able to exert some control over it. In our system it seems that large business interests, wealthy individuals and the politicians themselves are the ones able to cash in somewhat on this control. In general, I think most people living in the real world accept this as human nature and we collectively try to minimize this corruption.

I’m aware of many systems where this disproportionate distribution of benefits to certain groups is much worse. But in theory, it would be utopia!

Which countries do you feel operate in a “better” or less corrupt way?

Note that I wouldn’t consider “in theory” responses valid answers to that question.

None. I believe the answer to the Fermi Paradox, at least for humanity, is “capitalism.” There are no governments or international institutions which are capable of responding to climate change. Every organization with political clout is based around growth, and that is the very thing which must be halted if not reversed.

But that won’t happen.

The french equivalent of IRS provides citizens with a pre-filled tax return form with information from employers, banks, etc...

You can fix it on the web, add stuff not known by IRS, simulate tax level, and then validate it on the web.

You can explain in text boxes if you have a doubt about something (which I did for the first time this year since I did contract some home exterior insulation work but it was done in more than one fiscal year and the subsidy rules for such work changed between the two years).

https://www.impots.gouv.fr

Something approaching this is certainly possible and is the status quo in other countries. I remember a Swedish colleague demonstrating their tax system by filling out his return on his mobile phone live in front of an audience about 5 or 6 years ago. It involved literally no typing - all the numbers were already there, he just had to check them and hit "accept" or challenge anything that was wrong. At the end it told him how much he still owed/was owed.

In the UK a very substantial portion of my tax return is trivial to fill out, and filing online doesn't require any kind of software - the uk hmrc website does all the calculations for you. I was absolutely flabberghasted when I had to complete a US tax return a few years back at how incredibly archaic and byzantine the process was. It could certainly be a lot simpler which would save time and money for both the citizens and the IRS themselves.

I file my taxes as if all of this is true.

For me, cost/time savings of paying a few hundred in fees is cheaper than a CPA (or spending an entire weekend doing it myself).

I never protest what they send back - either some check or a bill. I just take care of it and don't ask any questions.

If the IRS doesnt think I am paying them enough money, they can feel free to send me a bigger bill or assess greater fines.

I may get audited but I just don't give a shit about this broken mess anymore. I don't have anything to hide, and I would happily pay whatever shortfall is calculated just to get them out of my life again.

I am fairly confident that as long as you are paying your taxes and not giving the IRS a hard time (i.e. WRT overseas tax haven shenanigans and insane corporate structures), they will not fuck with your life.

A quality tax preparer is no more than "a few hundred bucks". It is a more direct and quicker route than this faintly dramatic treatment, TBH.

You're right in that the IRS will treat people operating in good faith just fine, but a decent preparer makes it so much easier. My guy just asks me for my stuff in January and does his thing.

Where do you find good people for this?

I asked friends and got recommendations from solid people I trust, like I do most things.

> A quality tax preparer is no more than "a few hundred bucks".

I do not want to continue to contribute to the tax preparation ecosystem any more than absolutely necessary. Paying a CPA to file my taxes is no different than paying intuit for a new copy of turbotax every year. I don't see a distinction in principle. They probably use the same software internally.

My tax preparer is also my accountant and one of my financial advisors. Tax preparation is a service he offers. And I have access to all of the spreadsheets he uses to calculate them, so I'm fairly certain it's not "the same software internally".

If you don't see a distinction here, I suspect it's because you don't want to.

Can people in the EU chime in on this? My understanding is that is how France does it (just go to a website, pay what the gov't says you owe because the gov't has all the details).

> I'm not holding my breath.

Yeah I assumed back in the 80s this was a no brainer.

Edit: I see below that many from Sweden, UK, Germany have chimed in and basically said only the US is this stupid when it comes to federal and state income taxes. Thanks for the info.

Norway is technically not in the EU, just the EEA (European Economic Access) zone. But we do it the same way. Our tax authorities get all information they need from employers, banks, stock brokers, etc. Each citizen then get a tax settlement report and can submit a pre-filled tax statement online. You make any adjustments to taxable income or tax deductions that might be missing, and then you are done. Pretty simple.

This wouldn't be possible unless we had government surveillance of everyone. If I sell junk in my house for a profit there is no IRS record nor is there a government record for selling Bitcoin for cash or a million other possible transactions.

The IRS could make things easier to fill out but they can't just send you a bill.

What do you mean? It's already possible in countries that use the push-tax-bill system. If you're a small business, you self-report. It will be literally the same situation for any small business under a push or pull system - they either choose to self-report or not self-report. No government surveillance required.

The whole point of the push system is to make it easier for anyone who has a simple tax setup. That is, they work for an employer who is continuously reporting on pay checks to the IRS and state revenue departments.

> This wouldn't be possible unless we had government surveillance of everyone.

What do you think W-2s and 1099s are?

> If I sell junk in my house for a profit there is no IRS record nor is there a government record for selling Bitcoin for cash or a million other possible transactions.

Yes, but most people do very few of the possible transactions that don't create records, at least so as to incur income tax liability. Requiring supplemental filing only where actually necessary would vastly reduce the burden on most taxpayers, and sending a baseline bill with notice of the need and conditions for supplemental filing would be a viable alternative to the current system.

The easy solution that the UK takes is to have £1000 of untaxed casual income. If you sell things at home for profit and make less than £1000 a year (which is most people), then you don't have to do anything.

Selling stuff on craigslist, sure. but they're already all over bitcoin if you buy/sell it with your bank/cc info. They even have several contractors trying to break the monero rings.

The IRS only gets your employer's contribution to taxable revenue. They don't have a way of knowing what you do with that income, which may be taxable. That's what you're supposed to do.

IRS has tried to do this for decades, which is one reason why the free file program exists. Intuit is the #1 company lobbying against the IRS giving out a paper that says the number you owe.

That’s a pretty old idea, but Intuit and H & R Block have spent substantial money blocking that legislation

You cannot depend upon the IRS to send you an accurate bill. Anyone who has ever dealt with IRS will know that they seem to arbitrarily inflate the amounts they ask for. When this happens, you need a tax attorney to point out to them that they got it wrong. Rinse and repeat a few times and they will eventually get it right after several years and many iterations.

Every proposed legislation I’ve ever seen on this would let the individual tax payer still fill out a Form 1040 and send it in, if they disagree with the IRS prepared numbers.

So this would still be an option.

No, if taxes are actually going to be non citizen-hostile, the IRS needs to get it right the first time. If everyone knows you need to find an appeal to get the real tax rate, you haven't made any progress, just moved the annoyance to the appeal stage.

You need to ask why it wasn’t right. It’s not that their computers can’t do basic math - usually it comes down to incorrect data in (e.g. your payroll processor or broker listed something incorrectly) or missing data. In most cases, supplying the complete records will solve that problem.

But it’s not an appeal. It would be the exact same process as if you filed your taxes for the first time.

And for most people the tax bill that arrives would be correct. The parts that wouldn’t be correct would be if there are deductions you’re eligible for, that the IRS may not have any documentation of.

Same thing as we do now, with 2 extra steps.

For the majority of taxpayers, the proposed legislation would introduce about two-dozen fewer steps.

Most people don't hire lawyers to fight protracted legal battles with the IRS, so it's a bit ridiculous to suggest that we optimize the system for that path. Besides, nobody is suggesting we take that option away from you, or from anyone else who finds it worthwhile.

I've never been audited by the IRS but I've been hounded by the CRA (Canada) 3x now and each time it's been a huge pain, one time dragging on more than a year partially because it was so hard getting CA FTB to send me my tax transcript. Every time they've audited me they've ended up having to refund me more, did that stop them?

Right now the IRS thinks I'm using a fake American address for some good forsaken reason despite me paying almost 100k in taxes the last few years under the same name/address. And for what?! Half a penny in taxable intrest?!

I never suggested that the system should be optimized for the < 10% path. I was simply pointing out that the current IRS culture is not based upon accurate accounting. They seem to "accidentally" make errors in their favor, and then send notices out to taxpayers.

I am all for a flat tax. It would be fair and easy.

I dispute your suggestion that IRS culture tends to make errors accidentally in their favor. First, it is not my experience at all. To me it just sounds like lemons.

> Anyone who has ever dealt with IRS will know that they seem to arbitrarily inflate the amounts they ask for. When this happens, you need a tax attorney to point out to them that they got it wrong.

The people I know who weren’t cheating or in very complicated scenarios did not have this problem. It’s certainly possible but remember that our impressions are skewed by a large, well-funded media operation promoting the idea that the IRS is horrific for political and business reasons. Intuit alone makes billions from that idea.

A retired IRS auditor mentioned that around half of the cases they processed ended up finding deductions which benefited the taxpayer more than the discrepancies.

Well you don't know me. I usually leave off a few deductions just in case I get audited. That way the IRS will end up owing me money after the audit. Despite this, there have been a number of screw ups. The latest was in 2017 when they "lost" the cost basis (submitted by me and my brokerage) for my investments and then sent me a bill for over $200k of capital gains.

I have known people who could not be bothered to file their taxes. The IRS would bill them and they would pay. If somebody pays the IRS without question, it seems to set off a red flag and the IRS will immediately follow up with another bill. Also, if you do not file, you get zero deductions and they will base their bill on that.

> Well you don't know me. I usually leave off a few deductions just in case I get audited. That way the IRS will end up owing me money after the audit.

So you’re saying that you give the government a donation every year just in case you get audited so you might get it back that year? This does not seem like a financial win.

Again, I’m not saying that the IRS are perfect — only that it’s not wise to base your opinion on anecdotes. This is both a political issue and one where a lot of people have an incentive to blame the government for catching them, while everyone else has little reason to say they haven’t had problems. It’s like learning about feminism at a bar favorited by middle-aged divorced guys.

I choose to not claim several deductions to which I am entitled. E.g. Use of vehicle for business, Home office deduction, etc. I could easily defend these deductions, but claiming them would increase the odds of an audit. I don't want to waste my time and money dealing with an audit, so I pay a little more and decrease my odds of having one. I do not view this as a "donation".

What you describe is only half the process, they don't know about your expenses and deductions, which is where most of the work is when preparing the tax return. Do you file your own taxes and do you itemize? It's not something I want the government to do for me.

Here we go again. Expenses and deductions don't apply to most tax filers. There is no reason to keep a broken system in place for the benefit of 10%.

If there are deductions to be made we can do the same as other modern countries, have the taxpayer fill in an amendment and recalculate the proper amount.

Exactly. The standard deduction in the US recently doubled in size. That covers a lot of people. We could cover even more if the IRS sent you an email in January and said, "We expect your refund to be $X. If you think you have more than $12k in deductible expenses, click here to tell us about them."

People for whom that's not enough can still go through the whole ritual.

In 2019, 87% of people took the standard deduction.

Then do it yourself. Most people, however, don't game the system and would benefit from removing rent-seeking barnacles from the "no games" path.

TBF, deductions aren't "gaming the system", but rather a very limited form of what companies get to do for all of their expenses. I agree they're a pain in the ass and much nicer to not do personally, but I don't see much of an alternative (besides not itemizing). But really if you want to make the tax code more fair, the restrictions on individual deductions for transportation, housing, food, etc should be eliminated. Those expenses are in fact required for you to earn your income.

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