I.R.S. to Begin Trial of Its Own Free Tax-Filing System

HeartyBeast@kbin.social to World News@beehaw.org – 254 points –
I.R.S. to Begin Trial of Its Own Free Tax-Filing System
nytimes.com

Residents of 12 states are eligible to participate if they meet certain criteria. But the agency’s plans have already met resistance from tax preparation companies.

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A spokeswoman for Intuit, Tania Mercado, criticized the direct file project as a “half-baked solution” and a waste of taxpayer money. “The direct file scheme is a solution in search of a problem,”

That’s rich coming from a company that created a problem so they can sell their solution.

Either way, there are better software than Intuit, like FreeTaxUSA.

I liked that quote. Intuit being the biggest waste of money claiming direct filing is a waste of money. Like you said, FreeTaxUSA is at least reasonable.

Hard to argue that having a dozen companies developing IT software and systems to file taxes is more efficient them the organization that specifies the filing requirements do it once. The current system is more like a welfare program for the tax companies.

A spokeswoman for Intuit, Tania Mercado, criticized the direct file project as a “half-baked solution” and a waste of taxpayer money.

Yeah, screw you. You shouldn't have to pay to file your taxes. End of story.

waste of taxpayer money

The existence of Intuit as a company has wasted taxpayers (checks notes) $14.37 billion dollars.

8 more...

The article "conveniently" omits the names of pilot states and the eligibility criteria, so I dug them up:

The Direct File pilot is available to eligible taxpayers residing in Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.

You may be eligible to join the pilot if you live in a pilot state and report these items on your 2023 federal tax return:

Income

  • W-2 wage income
  • SSA-1099 Social Security and RRB -1099 railroad retirement income
  • 1099-G Unemployment compensation
  • 1099- INT Interest income of $1,500 or less

Credits

  • Earned Income Tax Credit
  • Child Tax Credit
  • Credit for Other Dependents

Deductions

  • Standard deduction
  • Student loan interest
  • Educator expenses

The pilot is not an option for if you:

  • Have other types of income, such as gig economy or business income
  • Itemize deductions
  • Claim other credits like the Child and Dependent Care Credit, Saver’s Credit or the Premium Tax Credit

Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming are participating.

It's a shame more aren't participating but I can see the reasoning behind staged access and iterative improvement. The real pity is that data they've already got won't be preloaded in this stage. It would have been the nail in the coffin for Intuit and other companies' predatory practices on lower income folks, at least as they exist currently.

Just New York and California alone. If the expected turnout is in the millions, one can only hope IBM isn't behind the cloud infrastructure - word to Obama care.

I think this is why they are taking it slow.

After the ACA had such a bad start, the obama admin actually opened up "innovation" departments to invite technical experts to modernize goverment infastructure. Those teams have likely done a lot over the decade or so to prevent haphazard rollouts.

EDIT: looks like they work under the title of the "US digital corps" banner and are looking for people.

Those plus Florida and Texas. Four most populous states in the country, with New York bringing up the rear.

I know Tennessee has no income tax so maybe states with income tax would rather sit and watch first?

My understanding is that this program only applies to federal taxes, so I'm not sure that the particular state's income tax laws will have much bearing on selection for participation or which stage of rollout they're added with.

Here in Australia, you can literally file your tax now for free in a few clicks using the government website. If you wait a few weeks, everything for most people is prefilled except deductions

It's absolutely awesome

Pretty much the same in the UK. Most people don't have to file their tax at all (it's automatically deducted from wages for most people), but for those that do, you can do it for free on the government's website, which is largely a matter of saying how much you earned, and any relevant deductions. The government then calculates what tax you have to pay. If your tax affairs are more complicated than that, you're earning enough that you're in the "having an accountant is mandatory" territory anyway.

...and the UK online form is really good, in my opinion.

Yeah, it's not flawless, but it's straightforward to use, which really is the thing you need for this kind of service, since it's intended to be used by normal people rather than experts. The one and only thing that our glorious Conservative overlords have done well in the last 13 years is modernising a lot of official administrative processes like this so they can be done digitally and without a load of needless complexity.

I think in most countries you dont have to file anything because it happens automatically

Finally. Intuit has been lobbying for years to keep this from happening.

Derrick Plummer, a spokesman for Intuit, said taxpayers can already file their taxes for free and there are online free-file programs available to some people. Individuals of all income levels can submit their returns for free via the mail.

A “direct-to-IRS e-file system is a solution in search of a problem, and that solution will unnecessarily cost taxpayers billions of dollars,” he said. “We will continue unapologetically advocating for American taxpayers and against a direct-to-IRS e-file system because it’s a bad idea.”

And who believes that crap anyway? Intuit markets their solution due to the complicated nature of anything outside of standard deductions and figuring out if you should itemize and how to do that.

Intuit has spent $25.6 million since 2006 on lobbying, H&R Block about $9.6 million and the conservative Americans for Tax Reform roughly $3 million.

Now if the states get on board for easy filing online, it'll be great.

Ooh, I'm in one of those states. I'll use this out of principle even though I don't have too many issues with FreeTaxUSA

I used FreeTaxUSA last year and after I entered all the info and had everything finished they said "cool we'll file federally for free but if you want us to file your state tax then it's gonna cost you like $30" and I gave in

The article is only talking about federal as well. The IRS doesn't do anything with state taxes, so that'll probably still cost money unless your state makes their own free solution.

Couple decades too late is better than never.

Americans: demand from your government the responsibility to handle your taxes directly.

I'm in the EU, from a small country, and all tax forms have to be filed through government tax authority servers, running state designed programs.

I can hire a legion of accountants, a lawyer firm and third party to represent me and still everything will still go through the same channels.

Or I can simply use that same program, through the same website, with my secure credentials, and file my own taxes for free, calling the tax department whenever I have doubts on what I'm doing.

demand that your taxes supply you with the government services it supports

I can't wait to use it, but it seems it doesn't support overseas income yet and I live full-time outside of the US (and yes we legally have to file taxes every year even if we won't owe anything).

🤖 I'm a bot that provides automatic summaries for articles: ::: spoiler Click here to see the summary The Internal Revenue Service is rolling out a free option for filing federal tax returns this year to some residents of a dozen states.

“This is a critical step forward for this innovative effort that will test the feasibility of providing taxpayers a new option to file their returns for free directly with the I.R.S.,” Danny Werfel, the agency’s commissioner, said in a recent statement.

A spokeswoman for Intuit, Tania Mercado, criticized the direct file project as a “half-baked solution” and a waste of taxpayer money.

In May, the agency submitted a report to Congress that found a majority of taxpayers would be interested in using a direct-file tool, and it began preparing for a pilot test.

Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming are participating.

“It’s exciting this is happening,” said Gabriel Zucker, associate policy director for tax benefits at Code for America, a nonprofit organization that builds digital tools to help taxpayers get access to government services.


Saved 84% of original text. :::

So I'm an American expat living in Australia. Australia has had the option to file directly to ATO, electronically, longer than I've been here. (Google suggests since 1999? So, more than 20 years.) It's an easy process if you have a straightforward tax return.

It never ceases to amaze me how far behind the rest of the world USA is in some things that just seem like really obvious solutions. Like... Why wouldn't the IRS want to get tax returns filed directly from the tax payers, skipping the middleman? At least for simple returns. More simplicity, less confusion all around if they get everyone onto the same system. Less paper to wade through, by significantly reducing paper returns. Etc.

It just seems like such a no-brainer. But I guess that's why it doesn't work in the USA. >.<

Why wouldn’t the IRS want to get tax returns filed directly from the tax payers,

I’m sure they would but some well-funded lobbyists have decided that excluding the free market would be detrimental to The American Way of Life™️