And yet the cost of implementing a government algorithm has not yet fallen to near-zero.
Furthermore, the government has surely implemented the algorithm itself in order to verify submitted tax returns, so the implementation cost of pre-computing everyone's tax should be comparatively small.
Maybe I’m overly cynical, but creating tax returns for everyone for free would prevent the IRS from allowing you to incriminate yourself by mis-filing (intentionally or not) and then levying huge penalties and interest on you 10 years later.
Everyone is hating on TurboTax for making money, but they’re pretending the government tax machine has no such motivation, which simply is not true.
The government tax machine is in the business of collecting taxes, not running up fines. I've had several interactions where the IRS was totally with in their rights to fine me but they waved each fine because they understood it was unintentional.
The only times I've heard of the IRS going after people who unintentionally violated the rules, they were intentionally and obviously violating the spirit of the law but thought they were within the letter and were wrong.
In my experience you can make a good faith effort to figure out what your supposed to owe and pay it. In this case the IRS will treat you fairly and waive all types of fines. Or you can try to aggressively avoid taxes that you should owe in spirit. And in this case you have to be damn sure you're within the letter of the law because the IRS will try to hammer you if you color outside the lines. These seem like two fair options to me. And everyone I know who was slammed by the IRS was doing the latter.
> Maybe I’m overly cynical, but creating tax returns for everyone for free would prevent the IRS from allowing you to incriminate yourself by mis-filing (intentionally or not) and then levying huge penalties and interest on you 10 years later.
Many countries pre-fill the tax return, but require the citizen to submit it. The citizen is responsible for the submitted information, not the government.
That would expose the level of identity theft that the IRS does nothing about and actively tries to hide by refusing to provide identity theft victims with documentation.
Yeah, that's overly cynical. :) If they switched to a pre-filled system, the revenue from penalties would go down, but it's quite likely the amount they would bring in would actually go up, assuming this reduced tax fraud. In 2016, they charged $24.1 billion in penalties -- but they estimate tax fraud cost them around $458 billion. If they lost 90% of the revenue for the penalties but cut the tax fraud even by 25%, they would be way, way ahead.
We aren’t going to get anywhere in this thread, my friend. TurboTax is evil. Ignore the fact that there are a dozen other companies offering the same service and that prices have actually fallen because of that competition.
Also no mention of filling out the free 1040 form... that’s too difficult. As if the companies charging you to do that for you just existed because they were forcing people to pay them...
I haven't looked this up, but I'm pretty sure audits are way down. There was a recent an article saying the IRS was focusing on auditing poorer people because it's too expensive to audit rich people. Since their budget is completely separate from tax income (and their budget has consistently been reduced), it was driven by their local incentives even if that means total tax income was way lower.
Furthermore, the government has surely implemented the algorithm itself in order to verify submitted tax returns, so the implementation cost of pre-computing everyone's tax should be comparatively small.