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Comment by NikolaNovak | Hacker News Reader

It's tricky.

I can definitely foresee a future, based on governmental record in publicly-facing IT systems, where every single word of that statement is technically 100% true.

First part is all but tautological - Of course it won't s not free to build or operate; and thus it wouldn't be "free for taxpayers" in the most technical sense (this doesn't mean it wouldn't be excellent value or save money overall or even cost more money but save it where it counts).

It's the last sentence (unnecessarily cost taxpayers billions) that could go either way. This could in principle end up an efficient and effective, easy to use and helpful well performing system that's a brilliant investment of public money.

I hate to say it though, but it's also extremely possible it would cost a lot of money with nobody using it because it sucks.

Besides, it feels like in the USA, IT systems are only a part of issue with tax system. Actual tax code and submission options are the bigger part.

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It could completely suck and still be incredibly useful if they would just tell me what 1099's (or other) they have on me. They're going to eventually if I don't file it appropriately.

For instance, I just received some mail that I owe tax based on my Uber and Lyft earnings. One problem, I never worked for either. So now I'm expected a big slog through paperwork to remedy this problem that happened a couple years ago. Oh, and it may continue on to the next two years. I have no way of knowing what they think they know about me.

I thought you could get your tax transcripts from the IRS any time off the website, unless you make over a certain amount of money (to be fair, I think most HackerNews readers do exceed that limit..)

That's really interesting. I've never been able to see anything like this on their site before.

Also interesting is my account balance is currently $0, and I know that's not true even if they 100% believe the last mailing denying my 1099's from Uber and Doordash (not Lyft as I said above).

Incidentally, Neither Uber, nor Lyft can help through customer service. I was thinking of taking them to small claims court since I'm not bound by any forced arbitration.

The IRS says you owe money from past earnings but irs.gov says your balance is zero? Are you sure this isn't a scam for money or personal information?

It was 17 pages of mail with SSN, all my tax info, accounts, etc... Even if it were sent to someone scamming me (and I know it was sent to the IRS), I would have been sending back less info than they sent me.

The mail I was sent does match the the 1099's in irs.gov. So maybe the mail I sent back was believed and they just zeroed out everything as the only dispute left would have been around $13.

I'm sure it will play out over time. I've had a couple interactions with the IRS over the years and it's always been a fair experience. I'm sure Uber and Doordash will have a hard time providing any valid identification to the IRS.

Classic political rhetoric. Who cares about “free”? I’m already paying for TurboTax. This only needs to be cheaper.

The government could always nationalize intuit.

USGov hasn't nationalized a company like that since WW1 when they seized Merck, and even then they just sold it back after the war. We'll nationalize utilities, transportation and transport-adjacent industries like airport security. Also finance companies will drift into and out of state control, as finance companies do.

But USGov would far sooner regulate the tax prep industry more heavily than simply take it over. We ain't no China.

Nationalization without representation doesn’t have quite the same ring to it.

Takings clause means the government would have to pay full market value which is currently 137 billion dollars.

A few more news stories suggesting Intuit is going to see a huge drop in revenues from this free IRS offering should bring that number down significantly.

Honestly I don't see how it would impact them significantly. Intuit already offers free file for the cases that would likely be covered by this tool from the IRS.

That’s no big deal, they could immediately turn around and sell the half of the business (QuickBooks, etc) to recoup a good portion of that.

> I hate to say it though, but it's also extremely possible it would cost a lot of money with nobody using it because it sucks.

IMO The government should directly be hiring the best and the brightest with the pay to match. I would be more than happy to pay more taxes at my pay grade (or would support higher capital taxes) for free e-filing that's easy, fast, and multiplatform. However my taxes are raised would surely be cheaper than what I pay my accountant annually to file for me.

It's ridiculous to me that government contracting is always expected to cheapen out for "efficiency". Governments should have excellent software and product minds on staff at all times to manage communication and data internally and externally, imo.

Yet most US constituents, of all parties and socioeconomic status, seethe at the thought of a government worker of any level making “too much” money.

It doesn’t matter that someone working for the government has the potential to have a much higher impact on a nationwide level than some rank and file worker who works at some blue chip auto insurance company, the moment increased pay for government workers is even brought up, that person imagines it as coming directly out of their paycheck.

See teachers, urban planners, sanitary workers, NASA scientists, etc…

It’s a shame, because I have the unpopular opinion that _more_ government, filled with talented people who actually want to _fix_ the issues they’re passionate about, is the answer to almost all of the USs domestic problems. Right now the highest paid government workers are those on the brink of retirement in administrative positions so far removed from any real work. A bureaucracy of gerontocracy, if you will. I really wish the government (not the political world, but the civil staff) was seen as as a place for passionate young people to aspire to, with the pay to match.

The highest paid state government workers are typically coaches. Go figure.

This is pretty simple to explain: Governments respond to a completely different incentive structure than private companies. It shouldn’t be surprising that their outcomes differ, even (especially?) when the government spends more.

Here's the thing, though. Tax filing should not be a thing nearly anyone actually does. The IRS already knows what you made. I should be able to log into a website and verify that it's correct, or receive a letter, or both, and sign off on it. If my tax situation is complicated then I should be able to log into that same platform and tell them that I will be filing proper documentation.

I agree with the rest of your statement but while Conservatives exist with their two Santa Claus nonsense then it won't matter.

forget a "free filing" system.

Why can't the IRS just send me a statement with my obligations and if I don't want to contest it I pay and I am done?

Think about all the information (marital status, dependents, residence, childcare spending, healthcare spending, education spending, charitable contributions, …) you need to correctly calculate your taxes owed. Now imagine that the IRS is tasked with maintaining all of this information in a single database so they can send you your “statement”.

Folks argue that most of this information is available to some level of government already, but that’s a far cry from centralizing all of it in what by definition must be an easily accessible form.

Dramatically simplify the tax code and this approach becomes feasible without being a security and privacy nightmare.

> Think about all the information (marital status, dependents, residence, childcare spending, healthcare spending, education spending, charitable contributions, …) you need to correctly calculate your taxes owed. Now imagine that the IRS is tasked with maintaining all of this information in a single database so they can send you your “statement”.

There's nothing hard about updating a few values with these then you're done in five minutes. State governments already do simple walkthrough forms and federal is really no different. If you have a complex tax situation then that's your problem to deal with. Don't burden 99.9% of the population with something that should be free, should be simple, and should be fast.

OK, but now we’re back to “free tax filing”, not “send me a statement”.

Reviewing and editing if needed (often not) is dramatically easier than filling out from scratch, regardless of what you call "free tax filing".

It’s actually not. I lived in a country that filled out the forms.

I actually had to dig up pay statements, etc to confirm the information. I’m glad I did because my employer made a mistake on a retirement contribution.

So what did it save me? Maybe typing in some numbers, which is probably 5% of the total effort.

The issue is the complexity of the tax code. It would be great if the IRS pre-filled forms, but the forms aren’t going away.

Many people won’t review the dozen or so pages of forms to make sure they’re correct. No doubt that will favor the IRS, not the tax payer.

This is a bad take in my opinion. First of all, we already have W-4 forms today, where you report your intentions to the government, vis-à-vis married, single, etc — they just need to be updated so that you send it in to the government (a joint one for couples) when you make a change (birth, marriage, divorce, deaths). Most people are not eligible for child care deductions, nor healthcare deductions, other than the ones that come through an employer program which can already be reported to the government without your interaction. Education tax credits are based on 1098(?) forms the government should already have their copy of. Also most people don’t give enough charity to bother with those either.

You could log into a website occasionally and upload charity receipts or click through a wizard to apply for a deduction for one of those deductions most people don’t use, but the flow for basically 80% of taxpayers, and essentially 100% of the bottom 70% of earners, should be a quick form update when life changes happen, and a yearly EITC-funded refund check that just shows up.

This is a lot like the argument that Microsoft’s Office products could be so much simpler: 80% of users use only 20% of the features.

But of course everyone in that 80% uses a different 20%. When you consolidate the overlapping deductions, credits, exceptions, exemptions, … you end up with a staggering amount of data required to accurately “pre-compute” income tax bills for even 80% of taxpayers.

“Quick form update when life changes happen” is, I think, an overly sanguine way to express a requirement that grieving parents file paperwork with the revenue service when a child has passed. That’s a bit melodramatic, but my point is that centralizing the execution of a complex tax code inside a state bureaucracy creates a perverse relationship with the folks who are supposedly in charge.

Once all the calculations are taking place in an opaque, voracious IRS database, what constraint is there on even more complex taxes and exemptions? Your doctor knows you’re a smoker. Should you pay a Medicare surcharge? ACA plan purchasers already do, in contrast with most private employer plan members.

> everyone in that 80% uses a different 20%.

No, no they don’t. Because we already have determined what most people use and made a special form for them called 1040EZ. It only offers simple things but is enough for most people. Then there’s the 1040A which goes a few steps further but is still simple. Millions and millions of returns are submitted on these short forms every year. These filers are proving that they don’t need complicated deductions and stuff because they already don’t use them.

> grieving parents file paperwork with the revenue service when a child has passed.

What are you talking about, in our current system you’d be filing next April and omitting the deceased person from the list of dependents. Your grieving strawmen would be able to take many months to go update the info before the cutoff when they print your check/bill (likely it would be minimum 4 months after year end like it is today).

> Once all the calculations are taking place in an opaque, voracious IRS database, what constraint is there on even more complex taxes and exemptions?

I don’t really want to talk politics on here, but I think this is a separate battle to fight. The tax system is already ridiculously complex because it’s trying to use the tax system to incentivize/punish behavior and at least two parties/factions have engineered it, so it’s quite confused. All politicians will continue to use this to scam the people who they like less, for the benefit of whoever they like more (campaign contributors) and they obviously don’t mind complexity even when it’s on taxpayers to compute. All things equal I’d rather force a computer to compute it and know that I can’t be audited for not understanding tax code.

Because increasing the friction around paying taxes makes people angrier about having to pay taxes and plays into larger political narratives around whether the government is effective or not.

It’s a huge, political dark pattern designed to keep people angry at the government to lower public sentiment towards the government.

Because that's how it works in other countries, and that means people get less riled up culturally about tax

I don’t think being sent a statement of account is what causes other nations’ countries to not get riled up culturally about tax. To the extent that a nation’s populace doesn’t get riled up about the taxes they pay, I think it is from a feeling of (a) representation and (b) the tax dollars being spent effectively.

In the US there is a feeling of lacking representation on both sides, which I suspect is due to corporate lobbying and the culture wars, and I think a feeling of ineffective spending, again I think due to lobbying, and also pork barrel projects.

I think the answer is to remove corporate lobbying and limit campaign spending.

Agree, as an American now living/working overseas, it is mind blowing how easy it has been to deal with taxes in my foreign country - I don't have to do anything. Taxes are withheld out of my paycheck, and this foreign government sends me a letter at the end of the year telling me how much I paid. I don't have to submit anything. So much easier. Except I have to still have to spend $ to Turbotax efile an American IRS return to tell the IRS I owe no taxes. How dumb is that.

My spouse has the same issue.

Except that a lot of tax filing companies require a bank account with an American address, so it's always an even bigger hassle.

Yep, exact same here. It's ridiculous.

Our tax system covers a lot more types of 'income' than most other countries. The USA taxes you on all earning worldwide, but they don't see anything out side of the US. Now since 1993 you are supposed to declare any foreign bank accounts too. And there are many still cash based businesses that they can't easily estimate your earnings for. It is crappy, and it is also part of lobbying to keep in complex. Both accountants, lawyers and for the lower classes the tax preparation companies all want complexity.

That kinda doesn't matter. Those things account for a single-digit (at most) percent of all taxpayers. People with complicated tax situations will have to do more work to pay taxes. But well over 50% of US taxpayers could make use of a simpler, IRS-provided system wherein they just get sent a bill and can choose to pay or contest.

This doesn't impact most people in the USA. A simple system offered for free by the IRS is good enough for 99% of folks. If you have a complex situation then that's your problem to pay for. Not mine.

paying taxes is not a voluntary thing for 90% of America. It gets taken out on your paycheck before you get it, which is your only form of income.

I think GP is suggesting that some interests want the process of filing your taxes to be annoying/frustrating/degrading/disruptive to increase anti-tax sentiment.

(I.e., most people have already been deprived of the funds for some fraction of the year; what interest is served by making them waste time finding records and jumping through hoops and potentially paying a third party to help them provide the IRS with information that it mostly already has?)

I think there's another group of people who want to more closely tie the notion that "government is funded by taxes" to "government spending programs are largely choices in the short-term and entirely choices in the long-term".

To that end, I would like taxes to be due about 4 Tuesdays before the Election Day Tuesday. If you want to vote for politicians who are campaigning on spending a lot of taxpayer money for good programs, so be it, but do it with recent memory of having paid your taxes (assuming you are in the slight majority* who pay federal taxes on net). If you want to campaign on spending a given amount of taxpayer money, whether more, the same, or less than today, your campaign should be interpreted close to taxpaying time.

I don't want it to be more onerous or annoying to pay taxes. I do want people to recognize that taxes and spending are linked (and frankly, ought to be more closely linked than they are today, IMO).

* - which until very recently was a slight minority of households who paid federal taxes on net.

Some interesting points here:

>I would like taxes to be due about 4 Tuesdays before the Election Day Tuesday.

Most people pay taxes in small increments every 2 weeks then get a refund around tax day, so your plan may not do what you think.

>I do want people to recognize that taxes and spending are linked

To your own point, they really aren't. [0]

>But do it with recent memory of having paid your taxes (assuming you are in the slight majority* who pay federal taxes on net)

To add some color on this [1]:

But, for the most part, people don’t pay income tax because they have little income. About 60 percent of non-payers make less than $30,000 and another 28 percent make between $30,000 and about $60,000.

Of the 72 million households that will pay no federal income tax this year, about 24 million, or roughly one-third, are age 65 or older.

[0]https://fred.stlouisfed.org/graph/?g=17dyP [1]https://www.taxpolicycenter.org/taxvox/tpc-number-those-who-...

Oh, right. I did skip stating an important step in the plan [so, upvoted]. I would do away with the withholding scheme (perhaps creating a parallel savings mechanism) and force income earners to write a check/do an ACH for their taxes.

Under that system, I'm totally fine if people get a $1K refund after writing a check for $15K in taxes withheld. That would still demonstrate the linkage sufficiently to inform their voting choices.

Sure, but again to your own point, the share of voting Americans who don't earn income (and therefore pay no taxes) because they are over 65 is already 1/3 and only going to increase.[0]

[0]https://www.kff.org/other/state-indicator/number-of-individu...

There will always be zero tax payers with the right to vote.

That's OK, especially since most of those who are now over 65 and retired worked and voted on reps/platforms/policies from 18-65 and earned income/paid taxes for probably ~40 of those years.

Is the status quo not fairly neutral in terms of which aspect of government spending is more fresh in peoples’ minds—the benefits vs the cost? Otherwise this just seems like it’s about biasing people in a particular direction.

Would you feel the same if you paid each restaurant bill six months after the meal, one week after the meal, or as you leave the restaurant?

I think you need to ask a more precise question, because I honestly don’t know how to answer that.

I think what you really want is a receipt of how your tax money was spent for say, anything above $1.

The problem is that would only apply to federal taxes. Not state or local income taxes, nor real estate taxes, or retail tax, or tax on gas or other things you might buy or use.

I'm not sure if you're describing something else, but tax withholding is voluntary. You can opt out and choose to pay your estimated taxes as a lump sum, but that also requires a level of budgeting that I'd argue most people don't have the financial literacy/self-control to do effectively.

I did this as a 1099-contractor, since that’s about the only way to do it as a contractor.

Paying estimated quarterly taxes four times a year wasn’t bad. I calculated my withholdings, remitted my tax payment through EFTPS, and was never surprised at tax time. I don’t think I ever got a refund or owed when I was doing it myself.

I learned that many people who have never contracted before are shocked they have to do this, lost on how it works, and had (then) no good place to go for actionable advice. I found that surprising and kind of sad in a way. We could be doing so much better with financial literacy.

This brings something up which I don't understand about US tax code. Why can't I be taxed on income which I've already earned instead of having to estimate to within ~5% (IIRC) what I should earn? I'm sure there are reasons for this, but this seems broken.

I think this is largely do to having a progressive and conplicated tax system. If work one job, earn salary, don't receive a variable bonus, and work the whole year at the same rate, it's easy enough to calculate.

But, get a raise, take a pay cut, find a new job, start or stop a second job, or a third, or fourth, get paid hourly, get sick, take time off to care for a sick family member, have a kid, go back to school, graduate, get married, get divorced, get a mortgage, pay down your mortgage, ... There are all sorts of scenarios that could change your tax situation on both the federal and state level, making it difficult to calculate how much you would owe up front.

What it really boils down to is our tax codes suck, and too many rich folk are keen on keeping it that way.

You get penalties and an angry letter from the IRS if you are over a certain dollar amount and don't pay quarterlies.

Please explain in detail the legal process that allows you to opt out of paying your payroll taxes as you go and instead pay after the tax year has completed.

An individual can't ever opt out of payroll taxes, that's an employer's responsibility. Income tax withholding, however, can be adjusted with a W-4. As others have mentioned, though, anyone making a reasonable income is going to have to pay estimated quarterly installments or get angry letters.

Setting aside the 90% thing, to your original point, paying taxes is not a voluntary thing. There is, however, at least some flexibility in how you pay them.

The flip side of this is: who cares, withholding is actually fine. For a vast majority of people, estimated withholdings is pretty close, and the few percentage points one might earn on a $1k refund in the meantime just isn't worth it.

In my opinion, the best easy tax situation would be that at the end of the year we can skip (most of) the filing step and I either get a check or a bill.

Edit/delete window is past, so mea culpa for anyone else in this thread: sibling comment from bandyaboot is right on the limited path to exemption. I was mistaken on how much withholding flexibility there was for employees (aside from increasing it), and how much W-4 allowances could realistically (or, rather, legally) have an impact. https://www.irs.gov/publications/p505

To dispense with the unnecessary snark, you can claim exemption from withholding, but only if you had no tax liability in the previous tax year and you expect the same to be true of the current tax year.

We've had the last few years of one party demonizing the IRS, insisting they're "coming after" the little guy. I suspect trust in something like this is already starting on shaky ground before it's even rolled out, which may contribute to "it's such a waste - no one uses it!". Even if a substantial of people that need this the most (people least able to afford any filing fees), this will continue to be fought. :/

What's going to happen is Intuit will end up building and running the service like Booz Allen did with recreation.gov and get to skim off the top.

I’m immediately reminded of the healthcare.gov project, starting out with a budget of ~$90 million (which is already suspiciously high) and subsequently costing ~$2 billion, before launching with so many issues that it was initially unusable.

Yes, and what came out of that? Some of the people who rescued that project with modern software development practices went on to found Nava, a public benefit corporation, to help the government do better work:

https://www.navapbc.com

I also have a friend who left Google to join numerous other high performers at 18F and know for a fact that they have done good work benefiting taxpayers:

https://18f.gsa.gov

I believe the U.S. Digital Service is better than it once was, and while it's not all rainbows and unicorns and super efficient everywhere (no doubt there are tons of huge problems with money being wasted), I do think there is improvement, and hopefully some people reading this will go help out.

I'd much rather ATTEMPT to have an efficient free-file system than not try at all.

To be fair, that's how most private sector outsourced corporate projects go as well. :)

Running over budget? Sure. But I’ve worked on much more complicated outsourced corporate projects for companies whose total revenue is only a fraction of $2 billion. Public sector inefficiency is in a league of its own.

To be clear I’m not saying it’s a bad idea either, or not worth the money. But I would be surprised if it didn’t cost billions to implement.

It didn't cost billions and it was a key incident that led to a huge revolution in how federal websites and projects get built, e.g. 18f and the US Digital Service.

https://www.theatlantic.com/technology/archive/2015/07/the-s...

In fact the IRS partnered with the US Digital Service to make this prototype in 9 months.

It's fair to be cynical, but also give credit where it's due.

> To be clear I’m not saying it’s a bad idea either, or not worth the money. But I would be surprised if it didn’t cost billions to implement.

How much is Intuit’s revenue? Is it “billions”? If so, they provide their service at a higher cost.

Still a bargain next to the private sector.

That was a much more technically difficult project than an IRS tax filing site will be.

It involved systems from multiple agencies and jurisdictions that had been developed separately and not been designed to exchange data with systems outside their own agency.

The IRS systems already talk to everything they need to talk to.

> cost a lot of money with nobody using it because it sucks.

For sure it could. Haven’t dug into the details yet but the #1 cause I’d expect if that does happen is if the government contracts the actual implementation out to…surprise, one of those same shitty firms, Intuit and H&RBlock. And they would build it to suck basically on purpose. I hope existing players in the paid tax return space will be excluded from being part of building whatever this is, as it would be a huge conflict of interest.

Just because it's true doesn't fireproof their pants. They already operate a service that is not free to build operate, and we know beyond a shadow of a doubt costs taxpayers needless additional billions of dollars.

So then why would the taxpayers not want to invest an alternative that could spend "needless billions" to save additional needless billions?

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