Congress Introduces Bill to Have IRS Automatically Fill out Tax Forms

[kcjenkins]

A pair of Congressmen have introduced legislation that would allow the Internal Revenue Service to provide taxpayers with a tax form already containing information received from employers and banks to streamline the tax prep process.

The two Illinois Democrats, Rep. Bill Foster and Mike Quigley, introduced the Autofill Act of 2013 last Friday to simplify the process of filling out federal income tax forms and save taxpayers time and money.

Taxpayers spend an estimated 6.1 billion hours a year complying with the Tax Code and an average of over $200 on tax preparation fees.

The Autofill Act of 2013 would create a voluntary tax filing program that would allow individuals to log in to a secure IRS Web site and download a tax form automatically populated with information the IRS already collects from employers, the Social Security Administration and financial institutions.

“Our Tax Code is complicated enough,” Foster said in a statement. “We shouldn’t be asking taxpayers to submit information the IRS already has. It’s time to bring the tax filing system into the 21st century with a commonsense solution that reduces the burden on taxpayers and decreases the costs associated with filling out tax forms.”

The information from the populated tax forms would be available as both a printable document file and a computer-readable form that would be compatible with existing tax preparation software. Taxpayers could simply review the returns for accuracy and sign at the bottom, saving them time, money and anxiety.

The Autofill Act of 2013 is estimated to save $2 billion a year in tax prep fees and 225 million hours of time. In California, the state’s two tax filing programs, which also pre-populate tax forms, save the state an estimated $500,000 annually and 98 percent of users have indicated that they would use it again.

[Lloyd Hudson]

Are we going to postpone due dates until IRS gets the info in their system?

[Jack from Ohio]

Are we going to postpone due dates until IRS gets the info in their system?

Like August 30?

[JJStephens]

Seems to me the IRS is going to have it's hands full over the next couple years trying/failing to deal with another boondoggle called the Affordable Care Act (I never knew that health care and taxes were so naturally inter-related).

Frankly, I'd be okay if Congress put me out of biz by adopting the Fair Tax. It would be worth it to simplify my life and those of everyone I know and to put the IRS out of business (other than monitoring health care, of course ).

[Guest Taxed]

Let's go through this for a moment.

1) IRS receives W2, SSA, RRB, 1099, 1098 info.

2) At best it can crank out a 1040EZ type form with standard deduction.

I guess for my teenage son that is ok. to get his refund back but folks who itemize, have basis in assets for CG. Rental income, Schedule C etc. This will not work.

If the tax code is changes that there are no deductions other than standard deduction types then I can see it working. Our code is too complicated for a simplistic solution like that. You can not compare the Fed code to state code which tends to have much less deductions etc.

Any other views?

[BulldogTom]

I smell total mess coming:

So, taxpayer goes to IRS site on January 15th and files. Big refund and EITC. Then, the other information is filed with the IRS for the job they forgot about, and the stock options they excercised. Taxpayer gets a huge bill that they can't pay, and the IRS has to be both the "paid preparer" and the prosecutor for the taxpayer. Will the IRS be subject to penalties for not asking all the questions and obtaining the documentation for EIC? Should they have known or did they ask the taxpayer all the relevent questions? Wouldn't they be subject to gross negligence penalties?

Go government. Get me some more business.

Tom

Hollister, CA

[JJStephens]

What I heard (though not mentioned in the article KC posted) is that the IRS will populate the start of a return but the taxpayer can add certain basic things like itemized deductions, small biz (Cez?) and a few other things. I still think they're going to have their hands full for years to come with the whole health care debacle. They're already saying they're short-handed. Even if they farm out writing the software they're still going to need a small army (gov't mentality) to service something like this. It generates little (if any) new revenue. I just don't see it happening, at least not anytime soon (which probably means they're voting to approve it even as I type this!).

Even if this turns into reality I don't see it impacting most of us. I don't get a lot a 1040EZ's anyway--just a handful where the client demands I prep for their kid (even though I tell them they can pop it out for free in 10 minutes). My guess is that's pretty typical of the preparers on this site (might take a bite out of some of the big box outfits that seem to advertise for this kind of client).

[Guest Taxed]

I agree with jjstephens. The only 1040EZ or A I do is for kids of my regular long time clients and that too free! So now I can tell those kids to try this "free stuff" from IRS.

Where it may start hurting my pocket book is young couples who take the standard deduction and have no CG, or other forms other than dependent care. They could populate that form almost 90% and just ask them to put down the childcare info. Most of them max out at $600 credit anyways!

I have to go through my client list and do a query of how many potential clients I have now that could take advantage of this program. I guess I have to figure out how to add some new clients!

[kcjenkins]

Tom, you are in CA, what can you tell us about their program? Who does it cover?

[BulldogTom]

I don't know anything about it KC. Sorry.

Tom

Hollister, CA

[Tax Prep by Deb]

KC

The ones I've seen here in California are the very basic returns. Most that have brought in their letter stating all they have to do is log on are clients that only have one W-2 and who are single.

Deb!

[Lion EA]

Deb, what a cute doggie!

[TaxMan60601]

Well, if become a reality, no doubt it will truly fit the IRS plan for e-filing of ALL tax returns starting TY 2014 ...

In fact, the method is widely used all over the world and in particular in Europe - best practices - Belgium, Netherlands, Norway ...

But if you check the number of tax returns filed in these countries you will be able to answer to a lot of questions by yourself.

As far as I know, method is partially in use in Czech Rep, RSA, Korea or Japan. Some similar ideas are in India, I think ...

Either way, many questions and problems arise now, as a result ...

Ha ha ha - "and the IRS has to be both the "paid preparer" and the prosecutor for the taxpayer. Will the IRS be subject to penalties for not asking all the questions and obtaining the documentation" - very current and clever indeed!

"2) At best it can crank out a 1040EZ type form with standard deduction." - I agree with this too - there will be very basic returns produced at the beginning and a lot of attendant issues ...

It's true that the Tax Code is complicated enough, but even today, you know, (for better or worse, who knows) there are many softwares that have the Fed Code and more than 50 State Codes implemented in the background and working. This is not the issued and everyone here knows this . The key, the point is with the small things, and that's why are the accountants and tax preparers, after all, isn't it?

Two suggestions ...

The deadlines should be very clear and complied, and no exceptions! For example, in Belgium there are approx 5 mil required to file and the deadline is on case by case basis, starting June! Ends somewhere about in November and, if everything is okay, you'll get your notice/refund, next Spring!! What about NYC ... or CA or TX!?

"... and a computer-readable form that would be compatible with existing tax preparation software" AND could be imported into these softwares and used as a base for upgrading to a more complicated tax returns, as the case might be. And then ready to tax compliance check and sign.

I know this is kinda utopia, but the best option for me is prepaid service - I mean the IRS may have agreements with the tax software vendors and tax preparers including transferring of tax related information, so finally the only obligation of the taxpayer to be to ensure that all the income and deductions are fully reported! And to confirm the responsibility by signing the return. No need to worry about the compliance with the code, or for the tax prep fees

Wow, it scares even me now, lol

[Tax Prep by Deb]

Deb, what a cute doggie!

Thanks,

Unfortunately my Bonita passed away March 8th at 15 1/2 years old, making this a real tough season for me. But I'm working with a new pup now, Mickey! I will change to his picture after a while.

Deb!

[kcjenkins]

I understand totally. I still miss my "Little Bit" and keep her pic as my avatar although she's been gone three years now.

[joanmcq]

And me, my Fobbers. Fobcat. I have his memorial tattooed over my heart.

[mrichman333]

How about they stop wasting our money, reduce the debt and LOWER TAXES to save taxpayers money

[Guest Taxed]

News Flash!

Contrary to popular republican belief that the public debt of USA should be less than 90% of GDP, there is no need to do that!

That theory has been debunked because the original researchers made a serious mistake in their spreadsheet when they calculated that figure. Just like a typical American family that has more than 90% debt to earnings (mortgage), USA can have more debt and still grow! You need to spend money to make money according to the new theory! And when you spend more money there will be more tax revenue. So let's spend!

[WITAXLADY]

spend more money... I thought we were trying to run this like a business or a household and live within our means!

[Guest Taxed]

^{A business and a responsible homeowner does borrow money more than 90% of their earnings. The issue is can you make the payments without defaulting. There is no evidence that USA is close to defaulting on its debt obligations. If anything every other country wants to hedge their money in USA by buying US debt because they know that the mighty green dollar is as reliable as the sunrise tomorrow morning. No other country in the world can match that!}

^{So as Americans we must feel proud! Sorry Ron Paul, bringing back the gold standard will take that crown off!}

[mrichman333]

News Flash!

Contrary to popular republican belief that the public debt of USA should be less than 90% of GDP, there is no need to do that!

That theory has been debunked because the original researchers made a serious mistake in their spreadsheet when they calculated that figure. Just like a typical American family that has more than 90% debt to earnings (mortgage), USA can have more debt and still grow! You need to spend money to make money according to the new theory! And when you spend more money there will be more tax revenue. So let's spend!

You don't need a degree in Accounting or economics to know 16,700,000,000,000 is just too much debt.

To put that number in perspective it would be like spending $907,000 an hour every hour since Jesus Christ was born and you still wouldn’t come close to the $16 trillion total.

http://www.thegatewaypundit.com/2012/09/breaking-us-debt-officially-passes-16-trillion/

Just look at Greece and how about The government of Cyprus taking money out of peoples bank accounts because they had to bring doen the dept. Or Spain Should I go on.

[kcjenkins]

I was assuming TAXED was posting that as a joke. Just can not believe any financially literate person would seriously believe that much debt is sane.

[mrichman333]

I was assuming TAXED was posting that as a joke. Just can not believe any financially literate person would seriously believe that much debt is sane.

Your right, I read it again, all of it this time. lol

[FLORIDA TAX MAN]

MORE DEBT IS GOOD.

Just look at all my clients that used that Form 982 to say screw it.

Besides Old men need STIMULATION

MORE STEAM !

[Guest Taxed]

It was tongue and cheek! But if you think about it seriously Greece, Cyprus or for that matter any other country can't do what America can do! I don't see Americans rushing to buy Greek or Cyprus bonds but the rest of the world wants to buy our bonds. Why? Because they trust the mighty dollar as the most stable currency. America is in a position where it can print more money without significant devaluation of its currency.

I will bet my money on the good old American dollar!