A Great Tax Idea Whose Time Hasn’t Come, Yet

A few years ago when talking with a Brit friend I learned that the UK’s equivalent of our IRS, known as the Inland Revenue, filled out his tax returns automatically without even asking his permission.

Wow, I thought, this is socialism to the extreme!

But when you think about it for a second, perhaps it’s not so bad at all. This article in the NY Times by Randall Stross explains why, we in the US could learn something from other countries.

I don’t know about you, but my goal in filling out my tax forms is to work hard and make sure what I put on my 1040 form agrees with information the IRS already has. The only kind of notice I get from them can be paraphrased,

“… the information you submitted doesn’t agree with our records, so we’ve gone ahead and adjusted your return …”

Things have gotten so so out of hand, tax professionals actually recommend that if incorrect information has been submitted about you by an employer or broker that you actually duplicate that wrong information on your return, and then attach an amended return to fix the problem!

Works For Me

So an obvious (after I read Stross’ article) solution is for the IRS to just send me the 1040 and let me make any necessary corrections. It would also be really nice if at the bottom of the letter they added a  “Thank You”.

Stross doesn’t mention that in previous years one big hole in this plan was that the IRS didn’t have data on your (our) capital gains from individual stock sales. But starting this year with new tax laws, this will all be reported by your broker along with interest and dividends.

I was even more surprised to learn that California already has a pilot program, called ReadyReturn, testing this exact proposal. And guess what; 99% of the folks who enrolled in the test reported they would use it again!

There is one company, however, that sees problems with this plan. Intuit, the maker of TurboTax software, unflinchingly says,

“We’re a California company and actively participate in the political process … our position has consistently been that ReadyReturn duplicates what is already available.”

And we thought big government was all we needed to worry about.

The other thing the Brits have over us is the name of the appropriate authority. Beginning in 2005 Inland Revenue became a department within Her Majesty’s Revenue and Customs. It has a certain ring to it, even though they are still popularly referred to as “the Tax Man”.

Some things are universal.