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What role should the IRS play in calculating taxes?

| Apr 15, 2015 | Tax Controversy |

Who would you trust more: the IRS or tax preparation services like TurboTax?

This question is at the heart of an ongoing debate over how our taxes should be calculated each year. Currently, the U.S. has the most complicated system for preparing taxes of any industrialized country in the world. Some tax experts say there is a better way to do it. Makers of tax services don’t want to hear it. For taxpayers, it may come down to who you have more faith in.

We all know how time-consuming and complicated the process is now. First, the IRS collects financial information from your employer, banks and others. Then these same people send you very similar papers to use when filing your taxes. You calculate your taxes according to the extremely complex Tax Code and file it with the IRS. The IRS then compares its information with yours. If everything matches, you likely won’t hear from them until next year.

Some tax experts are saying that this process could be made much more efficient. They suggest letting the government handle the calculations. The IRS can tell you what you owe and you pay. They are calling it return-free filing. Another proposal is to link tax preparation programs to government databases. Since the IRS has your financial information anyway, why bother trying to decipher W-2s and other forms?

Tax preparers, of course, are not accepting this as a viable alternative. Arguing that letting the government do the calculations limits the taxpayer’s say, they are doing everything possible to keep anything close to return-free filing from happening. Intuit, maker of TurboTax, is the concept’s biggest opponent.

What do you think? Is the IRS trustworthy enough to calculate our taxes accurately and without its own interests in mind? Or should we stick with the process we have now?

Regardless of what happens, the possibility of running into trouble with the IRS will still exist. Whether there is a dispute over how much you owe or you have been accused of tax evasion, the best way to protect yourself is to work with an experienced tax attorney.

Source: The New York Times, “Would You Let the I.R.S. Prepare Your Taxes?” Farhad Manjoo, April 15, 2015

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