Paul L. Caron

Friday, July 28, 2017

The Tax App: Eliminating Tax Returns Entirely

David S. Miller (Proskauer), The Tax App: Eliminating Tax Returns Entirely:

Congress could very easily achieve return-free filing — without IRS involvement or any substantive changes to the tax code — by simply requiring all tax information providers (such as employers, banks, stock brokerage firms, and charities) to make the tax information they hold (e.g., IRS Forms W-2s, 1099s, 1098s, and charitable donation information) available electronically in a single accessible format so that a taxpayer could receive all of his or her tax information electronically.

A smartphone app could then access this information, complete the taxpayer’s tax return, file the return, and pay any tax or receive any refund, all electronically, and automatically.

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There is a huge amount of fraud in the self-employment tax (the companion to FICA).

Posted by: James Edward Maule | Aug 8, 2017 1:50:38 PM

And where do small businesses, lots of farmers and owners of a few rental properties fit into this?

Posted by: Steve Odem | Jul 29, 2017 5:46:06 AM

When I worked for IRS (as a special agent), we used to argue about the best way to collect taxes fairly and efficiently. And without the huge amount of fraud in the current system. Look at FICA- withheld at the source, no need to file (unless self-employed), no deductions or credits, very little fraud compared to the mess we have now. Sure, it ignores interest, dividends, other income---but it also eliminates all the refundable credits which are a magnet for fraud. And no one seems to feel it is unfair, especially compared to the present system.

Posted by: Smitty | Jul 28, 2017 7:22:48 PM

So ignore the under $600 and other non-reportable transactions? Ignore casualty losses? Ignore dependency exemption deductions? Another theory that encounters practical reality. (And I notice that the author didn't cite -- and probably didn't read -- any of my writings on the issue, which perhaps would have been enlightening in terms of practical concerns that overshadow theoretical concepts).

Posted by: James Edward Maule | Jul 28, 2017 6:17:39 AM

So we would have to give our SS # to every charity we make a donation to, in order to ensure proper matching of charitable donations with taxpayers? No thanks!

Posted by: Andy Patterson | Jul 28, 2017 6:10:32 AM