By Mike Cussen
Well, here we are, three weeks into the tax filing season. Have you got your taxes done or are you still procrastinating and worrying about them?
Well, you’re not alone. About 160 million of us file individual tax returns every year and the IRS estimates that about 60 percent of us don’t really need to file because the IRS and the state already know all our income amounts.
That’s about 96 million of us who shouldn’t bother to worry and procrastinate to just come in and sign our names to numbers that are already known. Not only a huge waste of your time, but also the IRS’s and Franchise Tax Board’s time to process all this that they already know about. Your employer or your retirement trustee or the Social Security Administration already told them, not to mention the banks and investment companies that report all your interest, dividends, and capital gains. We’re all a well-known quantity to the IRS, don’t kid yourself.
And this is a real cross-the-aisle issue. President Reagan promised a return-free tax system in 1985 and President Obama’s administration followed up.
And where I prepare taxes for free, I’ve got both Trumpers and Bidenites mad at the system that drags them out every spring. But, as usual, these proposals to make our tax lives easier never get past the lobbying wall of the tax preparation industry.
Sure, you’ve got the Free File that was supposed to let taxpayers prepare their own returns on their own computers, but it never made a dent in the overall filings. Let’s face it — no matter who you are, except for some accounting nerds like me, you don’t want to mess with tax forms and the anxiety of making a mistake.
The IRS is now broken because of underfunding and that’s exacerbated by COVID-19. I actually feel sorry for the IRS. Congress has given them a horrible job and then cut the funding to do it in complicity with the adminstration in office at the time.
Don’t get me wrong, I don’t want to throw money at a ship that is already sinking. I want to see the ship dry-docked and fixed. We need to go to Return Free Filing. That would make over half the country happy and take an enormous burden off the IRS.
But, you say, what about my small business that the IRS doesn’t know the details of? Or, what about the change in life circumstances like having a kid or getting married or losing a spouse? Or, what about my charitable donations or my medical bills? Well, welcome to the other 70 million people who do need to file a return. A Return Free Filing system would allow you to opt in or out annually depending on your circumstances. Nothing would be final until you say so, but before April 15. And, even if you agree completely with what the IRS calculated, you could still file a return, if that floats your boat.
There are some objections to Return Free Filing, one of which is that when you do your tax return you understand what the government is spending your money on. Really? My experience has shown me that people just want to know what they owe or what their refund is.
Another objection is that the IRS will make mistakes and miscalculate the tax. Highly unlikely as that would be, it would be caught immediately by tax preparers such as me when you ask us to take a look at what the IRS did. Your one-hour appointment is now about 10 minutes, if you even need to meet at all.
It’s time to move on from the way we do our tax administration now and make it easier and more efficient for everyone involved. There is currently a bill in the Senate to start this ball rolling and I hope it gets enacted. Return Free Filing is the way to go to serve over half the country.
Mike Cussen is a longtime tax preparer for AARP Tax-Aide in San Luis Obispo County. He can be reached at firstname.lastname@example.org or (650) 303-4491.