To paraphrase Will Rogers, more liars were made of the American people from income tax than from golf.
But if the IRS made it easy and almost impossible to lie on a tax return, would anyone be interested?
Doug Shulman, the IRS Commissioner, recently hinted that if the IRS would prepare taxpayers’ returns the potential for tax fraud would be reduced. No-one would have to prepare their own returns at tax time because the IRS would do it for them.
The common name for this idea is a “ready return” or “simple return.” The IRS would complete the taxpayer‘s wage information and identification under this plan and send out the completed returns. Taxpayers would sign them after checking them for accuracy and correcting any mistakes, and return them.
It is already the responsibility of employers and other parties to provide income information to the IRS, so they already have most of our information at their disposal.
Completing the returns for taxpayers would be expensive, however, and the IRS does not presently have the budget nor the manpower to carry out the plan. It would mean a major undertaking to add preparing returns to the collections and enforcement they are already obligated to do. However, Shulman apparently thinks it is worth discussing.
California already has a similar, if limited, plan for their state taxpayers. Not many have signed on, though, because of limits such as no more than five dependents, income from wages only and mandatory standard deduction. Those who do use the system reported they like it. Nobody knows if the IRS will ever implement such a plan.
- The Effects Of Budget Cuts In The IRS (2012taxes.org)
- Do Not Fall For Trecherous Tax Scams (2012taxes.org)