I have just finished doing our taxes for this year. I do our own taxes and do not use a tax professional because I am not intimidated by numbers, can follow instructions fairly well, and think that I can do a more careful job. Being a kind of detail-oriented person, carefully checking the work of someone else would be as much work as doing it myself.
Of course, a lot of people do their own taxes. But I also refuse to use the commercial tax software that is available that will do the calculations for you. Instead, I have created my own spreadsheet that I update every year when there are new rules. I enter the input data and it does the rest. After the spreadsheet is ready, I download the fillable forms from the federal, state, and local governments and transfer the numbers from my spreadsheet onto the forms. I then print out the forms and then send them by snail mail to the government. It sounds tedious when I describe it but doesn’t take the long and since I have done it this way for twenty years, it is pretty straightforward for me.
Why don’t I use commercial tax software? From a mixture of caution and principle. The caution arises from the fact that I do not see why I should have to give so much of my personal and confidential information to a third party just for the privilege of having them send it on to the government.. That seems to me to be ripe for abuses such as identity theft and we know that happens. My colleague had his identity stolen because of using commercial software and it took him forever to rectify it.
The principle arises because it seems to me that since I am dealing with the government, the government should provide me with software that enables me to deal directly with them, without forcing me to go through third parties. I object to the fact that the government made a deal with the tax software companies to not offer direct filing, so that those companies could continue to charge people for the privilege of giving money to the government.
Senator Elizabeth Warren seems to think like me and is trying to fix this.
Warren’s bill, the Tax Filing Simplification Act of 2016, seeks to establish a free online tax preparation and filing service that would give citizens access to tax return information provided by third parties like employers and allow them to file directly file with the federal government. The bill is taking aim at the Internal Revenue Service, seeking to prevent it from entering into agreements with third parties that block its own ability to provide free online services.
As part of the Free File Alliance, the IRS works with private services like H&R Block, Intuit and Jackson Hewitt. A report issued by Warren’s office details the powerful lobby of for-profit tax filing companies that have opposed making tax filing easier. Estimates from the Sunlight Foundation and OpenSecrets.org found that Intuit (known for its TurboTax software), H&R Block and Jackson Hewitt have spent almost $41 million since 1998 on federal lobbying opposing return-free filing.
The bill would amend the 1986 tax code by having the secretary of the treasury establish an online tax preparation and filing software by 2018. It would also enable taxpayers to “download third party-provided return information relating to individual tax returns for taxable years beginning after 2016.” The bill seeks to give taxpayers access to information from the U.S. Treasury website in a timely fashion and in formats that can be downloaded or printed to be used later to file tax returns.
A group of 41 academics, including economists and legal scholars, have signed a letter supporting Warren’s proposed bill, describing the American tax filing system as “one of the most confusing and expensive” in the world that provokes anxiety due to its complexity.
Good for her. She is easily one of the best senators we have. But you can be sure that the lobbyists for the tax preparation companies will immediately go to the senators they have bought and try to stop this.