Welcome to late stage capitalism.
At least, that's more or less how I personally view it.
On the other hand, I would think that late stage capitalism would be defined when there is regulation of greed to prevent predatory and monopolistic practices that reduce competition. Or maybe that should just be called sustainable capitalism?
Fiduciary duty responsibilities are about putting the interests of the company in front of personal interests, and are mostly designed to protect shareholders. In other words, not doing things like signing up for a product you don't need just because you happened to angel invest in the company and it would benefit your portfolio. There are other fiduciary responsibilities as well, but certainly none of them are "return as much money to shareholders, or else."
Regardless, if we want this world where the government has publicly funded tax software that just works and is easy (and I personally do), the right way to solve it is through public policy changes.
Corporate leaders are expected to act in the interests of shareholders, but their legal obligations are satisfied if they can argue that their business judgment supported their chosen direction. And business judgment can consider the long term, it can consider the value of a thriving society in general, it can consider much besides short-term maximization of profit. Fiduciary duty exists only to curb overtly abusive self-dealing.
For more on this, see The Shareholder Value Myth by Lynn Stout. She has written a gloss on it here [1]. Her seminal 2008 legal review article, "Why We Should Stop Teaching Dodge v. Ford" [2], is a delight to read and I highly recommend it.
[1] https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti...
[2] https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?arti...
Maybe it also helps them realize that they have a choice too, that they are not "just following orders" from the legal system.
If taxes were simple, their predatory business model really would stop existing. There is no business justification in favor of Intuit to NOT sue the IRS if the IRS tries to make taxes simple.
https://www.propublica.org/article/inside-turbotax-20-year-f...
Not really ... Americans for Tax Reform (Grover Norquist) .. a very influential conservative group, opposes this because they want people to associate taxes with pain. If its easier to do, its less pain.
https://www.propublica.org/article/how-the-maker-of-turbotax...
> When Sens. Ron Wyden, D-Ore., and Dan Coats, R-Ind., introduced a bipartisan tax reform bill in 2011 that included a return-free plan called "Easyfile," Norquist blasted it.
If it were universally supported, this wouldn't have happened
https://www.propublica.org/article/congress-is-about-to-ban-...
For example here's the info on self-employed / business audits: https://www.irs.gov/businesses/small-businesses-self-employe...
> How far back can the IRS go to audit my return?
> Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years.
> The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly most audits will be of returns filed within the last two years.
> If an audit is not resolved, we may request extending the statute of limitations for assessment tax. The statute of limitations limits the time allowed to assess additional tax. It is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds. Extending the statute gives you more time to provide further documentation to support your position; request an appeal if you do not agree with the audit results; or to claim a tax refund or credit. It also gives the IRS time to complete the audit and provides time to process the audit results.
> You don't have to agree to extend the statute of limitations date. However if you don't agree, the auditor will be forced to make a determination based upon the information provided.
So it's three years, but they sometimes go back six years. But they can also go back an arbitrary amount of years, so the three / six is completely meaningless.
So, the statute of limitations seems… pretty ironclad. I don’t understand the issue you’re raising. If you don’t want them to look further back, don’t consent to extending the statute of limitations?
The way that line is worded, the IRS can compel you to agree by rejecting your current return for lack of documentation.
For example, if you have a capital loss carry over from twenty years ago that you've been rolling over every year (applying the $3,000 deduction limit to ordinary income), they could compel you to allow being audited for the past twenty years or reject allowing you to apply it to the current year.
Since you never know how far back they can go, you effectively have to keep all your documentation forever or risk having them reject your current returns until you comply.
If you are claiming a deduction or credit, you are required by law to maintain the documentation proving that you qualify for that deduction.[1] If you can't provide that documentation, they can reject the deduction because there's no proof that you are actually entitled to that deduction. Your word that you super-duper remember having a capital loss 20 years ago that you can still deduct on your current return isn't good enough. They're not "compelling" you to allow your previous 20 years of returns to be audited, they're just upholding the law.
And quite frankly, they aren't going to audit anyone for 20 years of returns over $3000. They don't have the manpower for that.
[1] Once the SOL expires, you can discard that documentation. Tax advisors will generally tell you to keep your documentation for 7 years from when you receive it (because the 6 year window starts in the following year when you file the tax return including that information.)
You should retain *all* supporting evidence for your returns filed in the last 3 years. If that includes information from years before that, then you should be retaining supporting information for those filings.
There’s no ambiguity there.
3 years (from the later of date of filing or the due date) to audit any return, for any reason. The 3 year statute of limitations applies to taxpayers seeking refunds by filing an amended return. Note that because the amended return is essentially a new return, the IRS gets 3 years to audit the amended return.
6 years (from the later of date of filing or the due date) to audit a return with a substantial undereporting of gross income or overstatement of deductions in credits resulting in a 25% or more understatement of taxable income
No deadline for returns that were not filed. Because obviously you can't audit a return that hasn't been filed.
There is also no deadline for fraudulent returns. Fraud is something more than the type of things that would trigger a 6-year audit window, like trying to avoid tax entirely, or taking advantage of a deduction or credit for which it's clear that the taxpayer wouldn't qualify for without some active effort to falsify their return. (Think Wesley Snipes.)
How complex are your taxes that you need more than one CPA and lawyers to do them?
I moved out of CA and had to pay taxes on my ISOs. Financially it was a good move as the market soured after I sold them. Even after paying taxes to two states, I came out ahead. However, my life was misery just trying to do the right thing.
It took three CPAs. One quit after he was sufficiently intimidated after calling the FTB for instructions, one just gave up, and the third told me correct enough instructions that I paid and filed. I apparently still did something wrong per California and had to write them another check. I have no idea if I overpaid or not. It’s simply not worth the fight but if I did think it was, in come the lawyers.
I just want to get to a point where I am not living with monthly taxation discussions so I’m ok with being done with it, whatever overpayment I may have made.
This is why I would love to see the IRS just show me what they think I owe and if I see any red flags I should be able to click a line item and dispute it, otherwise just click a button, do a wire transfer and be done with it. IRS gets their money and I get my time back for more important things like commenting on HN.
Someone might suggest that the lawyers should go after both the IRS and the institutions for their mistakes and the lawyers would totally agree with big dollar signs in their eyes. They've tried to egg me on in the past.
The last one I got claimed I owed $10,000 and I had to write a very nice letter back explaining that they actually owed me $45. I got my check 6 months later.
I end up missing documents that somehow the IRS knows about but the institutions neglect to provide.
The IRS knows about these because your counterparties to these transactions filed their own documents, and you were reported in these documents in some fashion. If you are failing to file those documents, that is absolutely a failure of your tax advisors to properly handle your compliance, and you should absolutely demand they make you whole for penalties and interest owed on these failures, and sue them for malpractice if they do not. (99% of the time they will just pay you without needing a lawyer to get involved, though this might come in the form of a credit against current/future services if you are still a client.)
If the CPA is aware of the transaction, then they are aware that the documentation by the counterparties exists (or should exist), and of their client's legal responsibility to file similar documentation.
If they are not competent to handle the compliance associated with an M&A transaction, then they have no business providing accounting services to a client that engages in M&A transactions regularly.
If none of these things apply to you and your taxes are really just a single w2 income it’s pretty simple to just fill out a paper 1040 form (or even 1040ez). You just need your w2 and an hour of time.
I think their point was that this case should be "log in, check the totals match, click OK", not an hour of your time.
Or better yet, not require you to do anything if you believe your withholdings were sufficient.
Sure, if you have a bunch of weird expenses/deductions you can file, but for most people, the numbers the government has are already correct.
We would need a fair few laws for the government to be able to get the information to cover most people's taxes, though I think this is less true after the standard deduction was doubled during the Trump years. (Banks have reporting duties, but are not run by the government so anything not directly related to fraud prevention isn't covered under the law)
The government already has all the info they need to create near perfect tax returns for everyone. The IRS doesn't necessarily have it, but the information exists in databases that can be accessed.
The way it's done in Japan, they send you a form. If it's right, you're good and you do nothing. If it's not, you send them a correction.
- page zoom at 100% or different
- hardware acceleration on or off
- autofill on
- history tracked
- cookies recorded
And it is able to do it. Software engineering is usually far ahead of most other fields, it is true, but I think this concept https://en.wikipedia.org/wiki/Default_(computer_science) is transferable without it being too much trouble.
It would be a lot easier in most cases then you’re making it out to be - and even in exceptional cases, you would only have to address those exceptions, and skip the drudgery of regurgitating all the information the government could have easily found for itself.
This is already reported to the IRS by servicers via Form 1098.[1]
The details of mortgage debt are reported to the IRS on a standard form already.
The first two would be minor corrections. The latter two would naturally require more attention and detail, but they don't apply to most people.
> Deducting mortgage interest?
The IRS has my 1098s. They know the mortgage interest, principal, and origination date.
But they don't know what you used the proceeds for. Not all mortgage interest is deductible. Nor do they know what use you make of the property that secures the mortgage (primary residence, rental, other). They also don't know about prior year points you paid to originate a mortgage.
You failed to address this important point. There is a difference between acquisition debt and equity debt that the IRS has no information about your situation. Also the "primary residence address" is not required to be provided on the tax return, so no they can't "reasonably assume".
And taxes have never taken "just" an hour of my time. It's an entire afternoon of frustrated reading up on tax esoterica so I can figure out e.g. whether I should itemize or take the standard deduction (which I always wind up doing anyway). And 14 other things that I promptly forget about.
My taxes for the first few years as an earning adult were fairly simple. Yet, I was never sure I did it right. I’m still not sure I’ve ever done my taxes correctly.
Having a filled in form from the IRS for those first few years would have taught me what correct taxes look like, at least for the simplest of cases.
Now as there are more complications in my taxes, with marriage, multiple jobs, etc. at least I would have the confidence I got my basics right and it would just be a matter of learning about those complications instead.
When I traveled freelance, it was an easy 40 hours. If I'd hired a bookkeeper and an accountant I might have saved most of it but it would have cost me more than I saved.
You end up with a situation where if the IRS ignores it, then I’m getting away with paying less than my fair share. If they don’t ignore it, then it’s a lot of unavoidable hassle for me.
If the IRS gives me their calculations (which they do already!) then I know the baseline they’re using. If something looks wrong, or they don’t cover some scenarios in my life, I can simply adjust those situations from the IRS baseline.
This leads to a much more transparent, less stressful, more efficient process.
I think the less discussed part about this is the philosophical aspect of it as well. The current system frames the IRS-taxpayer relationship as adversarial. Now, this may be naturally true for 2-3% of high earners. But it’s not for 90+% of people who are basically just receiving a paycheck.
Starting with the IRS baseline allows the process for that 90+% to be more collaborative as opposed to adversarial, with either side trying to see how much they can get away with in the latter system.
Something like 85% of people take the standard deduction. I itemize most years, and pretty much everything I itemize (taxes and mortgage interest) are things the government already knows about. I think the only exception is charitable donations.
It would be a great time saver to just get a form from the IRS saying "here's everything we know, edit any mistakes or things we missed".
File for an extension. Then after April 15, download your wage & income transcripts from the IRS. Use that to reconcile with your own records and file before October
So if you file for an extension, don’t pay anything by April 15, and then it turns out you owe $1000 in taxes in October, you will now have to pay $1000 + penalty + interest on the $1000.
Filing for an extension only extends the time to file your taxes. Not the time to pay your taxes (I think the one exception to this was when COVID hit, where even the date to pay taxes was extended, but I’m not a 100% sure).
This is what we have in New Zealand, and it's wonderful; most people simply don't need to do anything other than check their assessment and get on with their lives. Even if you've got e.g. investments you can usually do your filing with no more effort than taking the PAYE (income tax) assessment and bolting on your additional sources of income.
Much like the US banking system, it bemuses me how backward the US is in this regard.
So what you’re proposing would work for most individuals. I don’t agree with the “accounting firm handling all this” for the remaining thought (unless you count TurboTax as an accounting firm).