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How the Maker of TurboTax Fought Free, Simple Tax Filing

This investigative report by propublica.org is what I thought was going on but had no proof. Basically I've always said that since the IRS gets all the data from our employers and financial institutions electronically, why can't they present our tax forms partially or completely filled out? We should be able to subtract our deductions and that's it. Obviously we should get all the data so we can examine it or hire a tax accountant to examine it.

Anytime someone said "yeah, but the people that prepare tax returns would try to stop any legislation like that" I would say, "oh, don't be a conspiracy theory crazyperson". Well, it turns out the exact bill has been introduced and it has been lobbied against by Intuit, makers of TurboTax.

I think the way to break the gridlock is to start with a half-measure. A law that says if you provide someone their tax data as a PDF, you have to also provide it as an XML file. You would collect all the XML files, important them into TurboTax, and be done. This would make things easier for people and probably save TurboTax a lot of customer support. It would be difficult for Intuit to make a case against this. Yet, after a few years of having tax info in XML files (I propose the extension be ".irs") it would be pretty damn obvious to everyone that the next step should be the option of having a program like ReadyReturn.

Other countries do it. We should too.

This is not rocket science. We should have this service.

Posted by Tom Limoncelli

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2 Comments | Leave a comment

Hi Tom,

This is called rent seeking

http://en.m.wikipedia.org/wiki/Rent-seeking

Alex

Having the government "do your taxes" is just a Bad Idea IMHO. Pretty soon they'll just send you a 1040 postcard:

How much did you make? ___
Send it in.

From the first article on "ReadyReturn" iin my StartPage search:

"ReadyReturn isn't really free because when governments develop or update software, they often do so at greater cost than private firms like Intuit. And government employees who use that software to fill out people's tax returns are paid more than the average private certified tax preparer. So the cost is in compulsory taxes instead of a voluntary payment of about $30 for software."

Article title and URL:
"ReadyReturn" a Bad Idea That's Hard to Kill | Tax Foundation
http://taxfoundation.org/blog/readyreturn-bad-idea-thats-hard-kill

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