40 Years of Failure: IRS Unable to Fix Computer System | Hacker News Reader

40 Years of Failure: IRS Unable to Fix Computer System

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47 pointsreformedben31 comments

For several years, starting when I was married and began filing jointly with my spouse, we have figured our tax owed (we rarely have a refund), paid it, and then several months later receive in the mail a two dollar check from the Treasury with no explanatory letter. This happens whether we e-file, do a paper return or use TurboTax.

My pet theory/fantasy is that my spouse's very long hyphenated foreign name is overflowing some buffer in an ancient IBM 1402 program somewhere in Washington and causing our "tax-owed" to be decremented by two dollars when our returns are processed, but have no specific evidence of this.

Very long... hyphenated... it wouldn't happen to end with '); DROP TABLE TAXOWED;--, would it?

Good old Bobby tables

Previous discussions https://news.ycombinator.com/item?id=16377329 (2018) and https://news.ycombinator.com/item?id=23535937 (2020). The reason their modernization effort failed was because they lost key programmer employees, because they were bureaucratically forbidden from paying them market-rate salaries.

I thought it was mainly caused by them not properly collecting tax from rich people...

I would assume though by the sheer amount of annual waste that that the additional revenue collected would be easily absorbed as well though. :/

I would really like to see the IRS get this done and done well. There's really no excuse for their inability to give us a preliminary tax report, allow us to input the details they don't have, and pay our taxes without all the wasted time and effort.

The IRS is not permitted to do that, by law.

You can thank Intuit for that.

That is not true. In fact, Intuit and H&R Block dropped out of the Free File Alliance primarily because of the following change made at the end of 2019 to the Memorandum of Understanding.

The following sentence in Article 2 of the MOU is hereby stricken from the MOU: "In recognition of this commitment, the federal government has pledged to not enter the tax return software and e-file services marketplace."[1]

[1]https://www.irs.gov/pub/irs-utl/FFI%20Signed%20MOU%20Addendu...

You are confusing two different (but related) things.

The Free File Allowance is intended for lower-income individuals to e-file for free. (Some tax service providers still participate.) The IRS withdrew from the agreement preventing them from providing their own such software to low-income taxpayers, but it's a moot point since they don't have the resources to create such software.

What the parent commenter was referring to was the EU-style tax systems, where they send you a pre-filled in tax return, you verify the amounts and sign, with minimal input/preparation required by the taxpayer. That is what the IRS is prevented from doing, by law, as a result of Intuit's lobbying.

Can you provide a cite for the law you refer to?

I just reviewed all the section descriptions in the IRC (USC Title 26, Subtitle F - Procedure and Administration §§ 6001 - 7874) and can find nothing like that.

In my opinion, a substantial number of taxpayers would not be in favor of that, they like our current system of "voluntary compliance" because it allows even the little guys the opportunity to fudge a little without getting caught. Fortunately, most do not take advantage of that opportunity, but the "tax gap" (legitimately owed but unreported and uncollected taxes) is quite large.

More importantly, automating the keypunching of a few standard forms such as W-2, 1099-R, 1099-INT/DIV/B, etc would only cover a small portion of the "time and effort" to prepare most tax returns. The IRS does not know what your filing status is (married filing joint or separate, single, head of household), who is a dependent of whom (there are two main flavors of dependency to determine), whether and how much you made or lost running a business or being a landlord, your medical expenses, charitable donations, real property taxes, your total gambling wins/losses, the list goes on. Even things that are reported, such as contributions to your IRA, don't get reported to the IRS until well past the original filing deadline.

Because of all these things, there is no way the IRS could give you a "preliminary tax report", they can only import a limited set of data for you. California does actually have something like what you are asking for, CalFile (formerly ReadyReturn), but originally it was limited to "single, no-dependents, standard-deduction, only-wage-income, one-employer, with a maximum adjusted gross income of $139,917. The purpose of ReadyReturn was to make it easier for taxpayers to file their returns, and to make the filing process more accurate and faster."[1]

[1]https://en.wikipedia.org/wiki/CalFile

If other country revenue systems can do this, why do you feel the US tax filing landscape is so different? As gamblor956 mentions in other comments, this is not a technical or practical limitation, but regulatory capture via statute.

https://blogs.worldbank.org/developmenttalk/how-are-countrie...

https://www.taxpolicycenter.org/briefing-book/what-other-cou...

> Denmark and Sweden, both small countries, operate tax agency reconciliation systems. About 87 percent of Denmark’s taxpayers and 74 percent of Sweden’s had their returns filled out by the tax authorities in 1999. Spain, Estonia, Finland, Norway, and Iceland have also implemented tax agency reconciliation systems.

CalFile was purposely kneecapped in a fight with Intuit.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1668912 | https://escholarship.org/content/qt1tw989zv/qt1tw989zv_noSpl...

> Under the auspices of the Free File Alliance (FFA), Intuit, manufacturer of TurboTax, has been attacking state-run, free e-filing services for several years. The latest victim, Virginia’s successful iFile program, succumbed late last year. Through it all, the unquestioned crown jewels of state e-filing programs – California’s CalFile and ReadyReturn – have managed to survive. But this year, Intuit has ratcheted up its annual campaign to end the two programs. In the process, it is peddling some familiar falsehoods as well as some newly crafted misrepresentations.

> This article describes Intuit’s nine lies, the false arguments about ReadyReturn and CalFile that Intuit and its lobbyists have been telling elected officials, staffers, and nonprofit organizations serving California’s low-income communities. It also evaluates Intuit’s proposed Free File alternative to the state’s existing programs. For all of Intuit’s assertions – whether regarding the purported shortcomings of the state programs or the purported benefits of the Free File initiative – the article offers a point-by-point refutation.

I think it's more about the politics involved. You basically answered the question with the last quote in your response. It's all intuit, the enormous silent power they can weild through lobbying, and the disproportionately smaller power the tax payers have.

It's fucked up, and there's no end in sight.

Those senators love their money and power more than the people they purport to serve.

>If other country revenue systems can do this, why do you feel the US tax filing landscape is so different?

Because we have 50 states that do everything differently?

As other people said, the federal government doesn't even seem to know basic info like if you are married, how many dependent you have, etc etc.

If we didn't have any states (or all states used like the same systems that could easily talk to each other) and everything was federal, then yeah it would probably be a piece of cake because all the info is already there.

But, we don't.. everything is done differently everywhere, and that affects the taxes.

The American political system isn’t uniquely more complicated than others; it simply doesn’t want to solve the problem. Lobbying by parasitical entities such as Intuit is the true reason. We could solve these problems if we chose to. We don’t.

Federal and State taxes are two completely separate things. Why can't they just send the federal tax bill and let states do what they want?

What if we just eliminated the I get a W-2, I enter the info that the IRS already knows into a 3rd party system, the IRS accepts it.

We'll never make taxes easier for everyone, and this "tax gap" argument is great and all but I don't know why I have to do anything for my exceedingly simple taxes.

Your W-2 does not come from the IRS, though.

It is created by your employer. The form is simply informing you what it reported to the IRS.

The W-2 your employer created and sent could be wrong.

It’s a screwed up system.

>The form is simply informing you what it reported to the IRS.

So why do I submit it too?

>The W-2 your employer created and sent could be wrong.

Not a simple tax situation, I should be able to check my tax status of course so I can figure out when my simple taxes are borked by someone especially if it isn't in my favor.

Three w-2 your employer created could be wrong, but it was reported to the IRS.

Correcting it on a 1040 leads to an eventual audit, as opposed to you need to correct what was reported.

my understanding is that tax attorneys are lobbying against such reforms, for obvious reasons

https://en.wikipedia.org/wiki/Americans_for_Tax_Reform#Oppos...

I would seriously love to read a detailed case study on this.

And another one on the US army's failed ERP project. https://www.thirdstage-consulting.com/lessons-from-the-us-ai....

Air Force. The Army uses GFEBS (https://asc.army.mil/web/portfolio-item/general-fund-enterpr...), which wasn't exactly a walk in the park to transition to, but it was a success in the sense that the data migrations were basically completed 7 years ago, the project was not abandoned, and it is still used by the Army and expanding to additional users.

Honestly, the biggest question here might be why do other branches of service all need their own custom ERPs? Why not just use the Army's?

I assume it's public sector emergent behavior. I've seen large failure in France public offices too. There's near zero incentive (beside political posture) for things to be done well and neat.. so they don't.

Plenty of enterprise projects fail as well, they just don't get the publicity that public ones do.

I discussed that with someone on reddit. Indeed private sector can fail too, they share some of the reasons. People said it was also a function of size.

Yes, the chance of success does seem inversely proportional to the size:

https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.43...

My limited observations on the non IT side of execution was an absolute lack of care about the actual goals.

- Companies would just cash in the fat check, produce "something" close enough to spec and leave profit over value

- Customer higher rank has no clue about anything but paid 500M for something, so it has to be good, and anything not working is blamed on employees being stupid.

- Even though agile is overblown at times, big projects inability to react to issues on the ground was a daily cause of pain for everybody in the building. Stupid bugs, random crashes, absurd ergonomics.. (to the point that pen and paper felt like sci-fi level of performance, you could even make a logistical assessment of the innate nature of handwritten document speed vs bogus IT stack)

ps: thanks for the link. If you know other papers, sites about this, shoot

Another reason why America is the bad place.

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