I do my own taxes. Over the years, I have figured out the increasing number of forms that I have to fill out. They are not that difficult for anyone who can do simple arithmetic and is comfortable with “if …, then …” logical reasoning.
I do not use a professional tax preparer since I figure I will be able to exercise more care since I know the information well and can devote careful attention to it, rather than someone who has to deal with a whole lot of forms and documents. I also do not use the commercial software out of principle. I resent the fact that the government has made a deal with these software companies to not provide their own direct online tax filing system, which would be the logical thing to do. I do not see why I should give my personal data to a private company that lobbies to keep the tax rules complicated so that more people would come to them.
I have had good relations with the IRS in the past, finding them very helpful. On two occasions, they have actually sent me money that I did not ask for because they thought I had not asked for a benefit that they felt I was entitled to. While that was a nice gesture on their part, in the first case, there was a good reason I had not asked for it and in the second case it was due to an error where I had misread the instructions and put a figure in the wrong box, so I sent the money back
Whenever there has been some ambiguity about a form, I would call the IRS toll-free number and get clarification about the issue. All this worked well. But this year, there was an ambiguity about one form and I noticed that their toll-free help line phone number took some time to find, rather than being prominently displayed as in the past. But I found one and called the IRS. I was put through the usual maddening automated phone tree of options but was surprised to be told at the end that the assistance that I was seeking was not available and the recording hung up on me.
So I called back and by punching in zero repeatedly I was able to eventually get a real human being. I told her what form and line number I wanted help with and after a period of silence, she came back on the line and said that she could not help me and that “I had to do my own research” to answer my question. I told her that I had already done a lot of research and that was why I was calling and then she said that I had to “learn how to do research”! When I told her that I had some experience doing research, she then said that I should consult a professional tax preparer. I was infuriated and hung up.
I know what has happened, of course. Congress has been cutting the budget of the IRS. This has resulted this year in them not providing forms and instructions to libraries, forcing everyone either use the online documentation or to order forms online and experience delays. But it looks like they have also cut out the telephone help line. The Republicans in Congress are clearly aiming to make people as angry with the IRS as possible so that this makes their task of getting them to think of taxes as evil easier.
Rather than being so condescending in her attitude towards me which I found infuriating, I don’t know why they don’t give a straightforward and apologetic explanation, saying that due to congressionally mandated budget cuts, they have been forced to cut out some customer services. I would have had no problem with that and would have known where to target my ire.
Given this situation, it does not surprise me that fraud is increasing scammers are taking advantage of the situation and hackers are able to intercept people’s tax information that is going through commercial tax software and claim people’s refunds. If the IRS had its own encrypted servers and direct tax submission system, there would be less opportunity for fraud.
Bruce Schneier is not impressed with the IRS either:
IRS Encourages Poor Cryptography
Hey, you need a title for this.
Salary = x
Tax code* = y
X-y
_____ X25% approx = total income tax payable
100
And my employer does this for me every month and and pays the HMRC, simples.
Its called PAYE , I’m surprised you haven’t heard about it.
* a code issued by HMRC to ones employer indicating what taxes you are exempt from or pay at a different rate.
I’ve called the IRS help line a few times in the last few years.
The person who answered didn’t know any more about the tax laws than I did, which is just average citizen level.
They did refer me to some senior question answerer who read a canned answer that was at least what I thought it should be.
I agree that it is a mixed bag. I think they are more comfortable answering fairly straightforward questions from people who find it hard to follow carefully the instructions. This still provides a valuable service for many.
But a couple of years ago I called about the form for Health Savings Accounts that was confusing and told her how I read the form. The woman immediately knew what I was doing wrong and why, and after correcting me we had a nice chat and agreed that the form and instructions were somewhat ambiguous and needed to be clarified.
In a perfect world, you are absolutely right, Mano. However, the government has a really lousy track record when it comes to trying to computerize some aspect of government. Does the Obamacare rollout ring a bell? Or the fact that Social Security numbers still don’t have any form of checksum?
I use TurboTax, and I pay a bit extra for one of the more heavy-duty versions, because I have a variety of incentive stock programs that my company provides, which are a bear to calculate by hand. I’m not too worried about them being a for-profit operation because they have a big incentive to fix bugs or else risk losing me to the competition. The IRS has no such incentive. As for privacy, well, the government doesn’t do much better than private companies in protecting you data. And tax codes don’t need any help to get more complex. They have always been a nightmare and I don’t see them getting any better in my lifetime.
The IRS used to have something called form 1040PC -- a single machine-readable form you could print out from your tax software and send in. No more. Now it’s either print out about 600 pages or do the e-file thing. (I use Turbo-Tax. I’m not all that satisfied with it but at least it knows enough to refer back to last year.)
I used to do it all with a spreadsheet, but gave up years ago.
I’m one of the people who helped spike the IRS’ early efforts to support online filing, through a system called “cyberfile” -- Marv Schaeffer and I reviewed the security architecture and processes and it was beyond horrible. It was so bad that keeping hackers out wasn’t going to be the issue; keeping toddlers out would have been difficult. The system had been designed by the usual government method: asking a beltway bandit how to do it, and the beltway bandit had spec’ed an architecture based on selling as much technology from their business partners as possible, rather than actually solving any problem. Believe me, every taxpayer should be glad that the IRS let the private sector do it. The private sector’s not great but at least they respond to consumer complaints and pressure. The system the IRS was building would have needed a complete do-over and then another do-over and another… That’s based on my observation that fixing a disaster by throwing money at incompetent bureaucracies never results in a solution, it just results in bigger incompetent bureaucracy.
Just one tidbit: the system had no mechanism for disambiguating multiple filings. Whoever filed a return first for any given taxpayer ID (i.e.: SSN) would lock out any subsequent attempts. There’s a fantastic denial of service attack there. It’s still a problem with the current system, of course, but at least there is a chance that it’ll be detected and resolved instead of some robot saying “No, you cannot submit that, you already filed. Goodbye.” over and over. If you really want to fuck someone over, file a tax return for them. The downstream consequences for them are straight out of the movie “Brazil”
A couple of years ago I had a complicated issue involving not knowing that I was a co-beneficiary on a deceased parent’s 401K until several years later. In addition to the paperwork dread, I was facing penalties for not withdrawing the money sooner, which were fairly complicated to calculate (for me, at least). I was forwarded to someone in the IRS legal department who clearly loved his job. When I described the situation, he said “ooh! Hold on a second! Let me look something up!” in a really upbeat fashion. After a brief pause (I think I had interrupted his attempt to eat lunch at his desk), he then proceeded to step me through the penalty calculations, which form to fill out, what to fill in for each line of the form, and what to say in an attached letter to the IRS (including quoting specific tax law!) to indicate that I shouldn’t be subject to the penalties. Wow.
I’ll send you a cake with a file in it.
I’m thinking .pdf but I could put a .bin in there if you would rather have that.