This is a longstanding question. In several countries, the tax agency or employers handle income tax filing for many individuals. In 1996, the GAO issued a report on alternative filing systems explaining the possibilities and how systems and rules could be changed to enable the IRS to file returns for a large number of individuals.
The issue was debated a bit before President Bush's Advisory Panel on Federal Tax Reform with those opposing mainly concerned about privacy matters and errors and those favoring noting the efficiencies that could be had and the benefits to individuals. Click here to get testimony from the Panel's 5/17/05 hearing on return-free filing.
Most recently, the bi-partisan tax reform proposal of Senators Wyden and Gregg includes enabling many individuals to request that the IRS file their return (S. 3018 and the sponsors' website).
As one approach to tax simplification, in a tax day op ed (here), I suggested further exploration of return-free filing. That caught the attention of Mary O'Keeffe of Union College who posted a comment on this blog and explains her concerns on her blog - Bed Buffaloes in Your Tax Code (great title! and if it were just bed buffaloes in the Code, we'd be in better shape!).
She raises some good concerns that can be addressed, such as requiring employers to send the W-2s to the IRS sooner (closer in time to when they are required to send them to the employees). If the IRS were not behind on having the best technology possible (something it has identified in its strategic plan as a priority), we'd be closer. But, I think changes can be made to help more to enabling many taxpayers to have the IRS file the return for them. Perhaps Senators Greeg and Wyden can start there with their tax reform proposal.
What do you think?
Wednesday, April 28, 2010
Can IRS Prepare Returns for Many Individuals?
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