For Many, Forms Could Be a Lot Less Taxing—A Commentary by Ian Ayres ’86
This commentary first ran on American Public Radio/Marketplace on April 16, 2007.
For Many, Forms Could Be a Lot Less Taxing
By Ian Ayres ’86
TESS VIGELAND: It's April 16 — do you know where your form 1040 is? If not, you've got about 24 hours to find it, fill it out, sign it, stamp it and mail it. Unless, of course, you're filing electronically.
No matter how you do your taxes, it's rarely a pleasant experience. One reason why Democratic presidential hopeful John Edwards recently suggested that the IRS fill out the forms for us. Commentator Ian Ayres says, yeah!
IAN AYRES: Imagine if Visa required us to keep copies of all our charges, and then told us to fill in a blank form reporting how much we spent.
No, customers expect Visa to start the ball rolling by sending them a bill. But the IRS requires us taxpayers to keep copies of our W-2 and 1099 forms.
That's crazy. The IRS already has all the information it needs to fill out the complete forms for millions of wage income taxpayers who don't itemize their deductions.
Of course, we wouldn't force anyone to use the IRS's pre-completed form. They could revise it, or they could just throw it away and start from scratch.
But as many as 50 million Americans wouldn't need to change a thing. And there are 50 million more where the IRS could make a darn good start. The Feds even know enough to complete your state form for you while they're at it.
This isn't some pie-in-the-sky idea. California's Ready Return Project already shows that it can work. In 2005, over 11,000 Californians used tax returns that the state had filled out for them in advance.
Of course, the tax preparation industry stands to lose a bundle, and that's why it's fighting the idea. Intuit, the maker of Turbo Tax, poured more than $1 million into the California comptroller's race last year in an attempt to seize control of the state's Franchise Tax Board.
They succeeded in killing the program for 2006 returns, but the program will expand to up to a million prepared returns in 2007.
Almost all the Californians who tried the program loved it. They wrote in personal comments, like "Fantastic service," "Go Governator," and "Finally, government is doing something to make our lives easier for a change."
Now, isn't that the least the IRS can do?
VIGELAND: Ian Ayres teaches law at Yale Law School.