As millions of Americans scramble to finish their tax paperwork this weekend, including gathering all the forms and receipts and statements, TR Reid explains that most of the world doesn’t handle tax returns this way. In most places, since the government already knows how much you’ve made and how much you’ve paid and what your capital gains were and what you paid in mortgage interest, you simply get an annual notice that reflects that information and can appeal it if necessary.
So, why do you and I have to gather so much of the same data and compile it into a lengthy return?
Questions like that have prompted some members of Congress — including Senator Ron Wyden, Democrat of Oregon; Elizabeth Warren, Democrat of Massachusetts; and Dan Coats, a former Republican senator from Indiana — to champion pre-filled forms. But their bills never went anywhere because the tax-preparation industry lobbies strenuously against them. The “Tax Complexity Lobby,” as it has been called, includes big national preparers like H and R Block and tax-prep software companies.
Intuit, the maker of the top-selling program TurboTax, has reportedly spent millions over the years to persuade members of Congress to “oppose IRS government tax preparation.” In an annual report, the company warned investors that “government encroachment” — the IRS filling out the forms for you — would be a significant competitive threat, which is why it has to fight the idea. So you do more work, they make more money.
This year, though, the president and Congress have pledged a thorough reform of America’s absurdly complex tax system. They’ve promised to make life easier for the beleaguered taxpayer. A useful step — one that other advanced democracies have already taken — would be pre-filled forms. And then April 15 would be just another sunny spring day.