I figure that the source code is not the hard part of the IRS making this available to the public, but the interoperability with the revenue system, and its verified adherence to the current tax code. Couldn't those things still be killed by the administration even if the source code is available publicly?
"Direct File interprets the United States' Internal Revenue Code (26 USC) as plain language questions, the answers to which should be known to taxpayers without need of external instructions or publications. Taxpayers' answers are then translated into standard tax forms and transmitted to the IRS's Modernized e-File (MeF) API, which is available for authorized public use."
So in theory it's useful now, but as you say it could easily change.
The tax code is riddled with euphemisms like EITC that don't mean what it says on the tin. There's no way normies can manage that without instructions.
I thought OP's point is that normies who have no idea what EITC is can simply answer a series of simpler questions that don't mention EITC, and the software figures out whether they can claim the EITC.
There are also ambiguous edge cases that can't be answered until someone is audited and the IRS and the Tax attorney hash it out in court.
For example I installed Solar panels many years ago and read the exact wording on the Solar Tax Credit to try to figure out if you could include roof repairs under the panels in the credit. The wording was something like "all costs associated with a solar install". Every installer I talked to said yes, but it seemed dubious so I tried calling the IRS help line to get the answer and the help line was no help at all. A few years later and some court battles lost and that answer is now firmly a "no", making me glad I ignored the installer's advice.
How is tax prep software supposed to handle a situation like that? Some of the for pay options include "audit protection", but I don't know how far that goes. I guess you can attempt to pass all liability on to the customer, but even that seems a bit risky.
And definitely the IRS has its own jargon that doesn't always make sense to the layperson. Why, for example, is a form that you fill out once per tax year called a "schedule"? It doesn't organize anything by date or time!
Some countries have residents' taxes "filed" automatically, you get a letter once a year saying what your withholding is and only need to do anything if you don't like the totals. Majority of citizens are fully automated.
It's almost as if Republicans weren't actually pushing for a smaller, cheaper, government.
Yes but there are plenty of companies or people that may want to know how the code works and would be motivated enough to read through the code to understand it and having it there in the public makes that possible.
Piggybacking, I think the "hard part" also includes the decades of success that the tax prep lobby's had in protecting its business interests at the cost of US citizen's welfare. Although the number of states that provide free direct filing has grown from last year -- which I only remember to be substantially less than the 25 who do so today -- it's unclear what the problem is with the remaining 25 including DC where I live
Right, politicians and officials working on behalf of the tax-filing lobby could introduce lots of changes to the tax code with a view to making this software useless.
The point of open sourcing from a dying ship is that the groups that can modify this software and resell it all start from it as a baseline. Is TurboTax all lean mean code available at a low enough price while still meeting profit expectations if it needs drastic changes?
Intuit can spend all the money they can convince investors to lose relative to last year and expectations, but they'll have a yggdrasil of companies to buy out from a turn-key solution and all their costs fighting OMB will amount to nothing if they screw one buyout up and get an updated software drop for a new round of $5 filers.
The companies Intuit will have to buy out don't have to make any profit per filer, they just have to take filers away from Inuit.
I mean… in some sense, it might be nice is the company doing your tax preparation is not too lean and mean, their whole point is to eat the hit if they screw it up, right? The math is not actually hard.
But, realistically, I guess if a self-service tax prep company messed up your taxes, they’d make sure you end up in arbitration.
The form you sign to authorize efiling says "I declare that I have examined a copy of the income tax return ... and to the best of my knowledge and belief, it is true, correct, and complete." If you think Intuit is going to cover you, you haven't really seen the things they do.
Imagine this source code becoming the unit tests for the legal code. Future tax-code changes would be accompanied by corresponding changes in GitHub. Inconsistencies would surface as new code and tests break the old ones. As courts introduce new nuances to the law's interpretation, new unit tests would follow.
This wouldn't replace human judgment; nobody in power would allow that. But even the capriciousness of politics can be expressed as Boolean logic (var isDeductible = taxpayerIsMe && !taxpayerIsYou). The tests could at least memorialize all the pork.
good luck with that; interpretation make things like this very difficult, if not impossible.
I agree that this would be nice, however. as a non-lawyer and someone who considers themself to be not a "real" developer (even though I write software every day) I have often wondered how alike law and code are, really, when it comes to defining intent via a keyboard.
The interpretation aspect isn't solvable in code, but it's representable. That's what I was getting at with the Boolean comment. A branch point might be "bool answerUnanswerableQuestion()" and the unit tests would mock it as true and then false. Even if the question isn't deterministically answerable in real life, at least the code can show what happens when it is answered.
You're conflating determination of factual and legal questions (out of scope) with modeling the decision tree (in scope and useful).
The function you ask about would be "getDeductiblePercentage()," and the unit tests would return various hard coded numbers. Actually determining that value for a real taxpayer is still hard.
Being able to show how information flows through the US tax code would be useful, even if it doesn't solve all the problems that arise from its intricacy.
> Taxpayers' answers are then translated into standard tax forms and transmitted to the IRS's Modernized e-File (MeF) API, which is available for authorized public use
The interoperability with the revenue system is provided by a different project, and this API is also used by turbotax and the like. It won't be going away.
It could easily go away, if there are claims of people abusing the API, or using "unlicensed software to use the API" causing errors. By licensed, I mean "approved to use the API".
There could also be pushes to monetize the API, "Why is this service free!?". Meaning they'd likely require a need to be incorporated, setup a commercial account with them, and have payment method on file, and on and on.
My point is, I can think of dozens of sneaky ways to make that pesky API go away, and I'm not even trying.
I wouldn't say interop is a huge deal, the main time and cost sink is translating the recursive Gordian knots of tax law into a logically cohesive structure that can be evaluated programmatically. And then you (ideally) must prove its correctness.
Imagine pair programming with a tax lawyer. I'd rather eat my own hands.
DirectFile wasn’t meant to handle complicated edge cases. Most filers have a w2 and a few 1099s, use the standard deduction, and claim a few common credits (e.g., child and earned-income). They could file for free in a few minutes with directfile.
IRS should send me an itemized bill using every piece of information it already has, I then take that to my accountant that generates a diff based on information they don't have, and then done.
Just, as a person outside of the US: the idea that you would need an accountant at all for a private person that isn't a billionarie, is like, crazy.
I have a reasonably simple personal economy and it takes me all of five minutes to file my taxes in Sweden. My parents have a much more complicated setup (small private business, own a couple of properties, several deductions, etc.) and it basically is pretty straight-forward for them as well, certainly they don't need an accountant.
TurboTax, Intuit and anti-tax Republicans has really fucked with the US expectation of how complicated taxes needs to be.
As a person who lives inside the US, I'm perfectly happy that the government doesn't have perfect information about me, and that I can spend $100 on an accountant who will help save much more money on taxes
If all your income is in a W2, then sure. I have a business that's about the second simplest corporate structure (I'm a single-member LLC, which is probably only slightly more complicated than a sole proprietorship). It would take very little imagination to come up with funny games one could play if one were inclined to evade taxes (I'm not, and I don't)
Just think what someone with a gazillion dollars, some trusts, and "charitable foundations" could do.
With the risk of sounding a bit redundant: privacy is important for private stuff
But if by law something needs to be known by the government: just go for it
A silly analogy: your medical info is private, but it's in your best interest that a condition like 'diabetic' or 'allergic to something' have a lower level of privacy
> With the risk of sounding a bit redundant: privacy is important for private stuff
> But if by law something needs to be known by the government: just go for it
This seems a bit flipped, the only reason something needs to be provided to the government “by law” is that we’ve passed a law that says it needs to be. That it is required by law is not a reason for it being required of course, that’s circular. The reason the law was passed is because we decided it was in the public interest for the government to collect that data.
If we decided it was in the public interest to collect more income info about wealthy people, then we could make that required by law. I think the comment you responded to is suggesting that we should change what is required by law.
Your analogy is better. There’s a reason you might be ok with less privacy there.
The idea is that normal people shouldn’t have to pay to do something the government requires everyone to do. I’ve heard multiple non-Americans express amazement that people with simple jobs have to do anything other than confirm or perhaps update the data which the tax collectors already have because they weren’t thinking of it from the perspective of being a useful marketing tool for fearmongering about the government.
I have told this story before here, but it's relevant.
In 2021, I filed my 2020 taxes, and a few months later I get a letter from the IRS saying that I owed $8000 because I forgot to report a large stock transaction. I owed $7000 + a $1000 fine.
I wasn't mad at all about the $7000, I definitely owed that and it was just an oversight on my end, these things happen, and I was able to get the fine lowered by calling the IRS [1], so that wasn't a huge deal .
What did annoy me was why do I have to do anything? If the IRS knows about the transaction and is able to complain about me not paying enough, that suggests that they already have the information that I'm sending them. Why make me buy software and copy information from a piece of paper into that software, just for the IRS to check it against the numbers that they already have?
I understand that you might need to issue corrections, and maybe the software should exist for something like that, but it doesn't seem like it should exist otherwise.
[1] Who at least in my case was actually really polite and helpful! I had heard horror stories but that was definitely not the case for me. The people I talked to were very sympathetic and nice.
I’m 100% with you on that big point - the process just be “here’s what we have for you, do you have any missing data?” and 99% of people can just click “ok”. Your comment about the agent reminded me of a former coworker whose mother was an IRS auditor: she commented that most people assumed it was going to be some horrible ordeal and were surprised a) that she was a normal suburban mom rather than the Gestapo and b) ended up finding deductions such that close to half of the people she talked to came out ahead.
>What did annoy me was why do I have to do anything?
There are two reasons. 1) Because Intuit owns enough reps to keep their business existing. 2) They have a fairly easy time doing that because the Republican party explicitly believes that taxes should be painful to discourage America from having functioning taxes.
All the "IRS might not know everything about you" is distraction. That's not a problem in any of the countries that have no trouble sending you a preliminary document for you to amend or accept. It's FUD.
For a long time the IRS was literally barred from doing what TurboTax does.
> If the IRS knows about the transaction and is able to complain about me not paying enough, that suggests that they already have the information that I'm sending them.
You mistakenly assume that simply knowing what is on the 1099-B form is sufficient to determine your tax on the gain. They don't know if you are married or single or head of household (filing status) in the current tax year. They don't know what some of your itemized deductions and other income not reported to them might be (which in turn, along with filing status, determines what marginal tax bracket you are in). They don't know if you are actually just a nominee for someone else's income. These are just a few examples. They don't know any of this stuff until you tell them by filing your complete return.
> They don't know if you are married or single or head of household (filing status) in the current tax year. They don't know what some of your itemized deductions and other income not reported to them might be
I think you're misinterpreting the GP's point. Clearly, at least in our current system, it is essential to tell the IRS the parts of the return that they don't already know such as what are your expenses, deductions, marital status, etc.
But the absurd thing is that the capture of the IRS by the paid tax prep scammers has prevented them from simply showing you what's on your tax transcripts and having you click "Agree" or "Modify" for each one. Instead, you get your own copy of the 1099-B, 1099-DIV, 1099-INTs, and are administered a pointless "honesty test" to see if you'll type in the same numbers they have, or be automatically punished.
Obviously, Direct File was ideally situated to offer this feature since IRS has the data themselves, and simply populating the numbers is a highly efficient way of ingesting the data into your return.
It’s not an honesty test, it’s a result of how the US income tax system evolved. Originally the IRS had far less data and everyone filed paper returns. For example, it was only in 2008 that Congress required brokers to track and report cost basis on 1099s to cut down on people overstating their basis to decrease their cap gains.
Under Biden, the IRS tried to make w2s and 1099s available. If you log into the IRS website with your information, you can download the w2s and 1099s the Service has in your name.
Antitax activists have fought these steps every step of the way because the less annoying tax filing is, the less people will buy their antitax arguments.
The IRS isn’t captured by these predatory tax preparers, Congress is. The IRS can’t do a lot on data without Congress specifically authorizing it. And the Republican Party is in bed with the antitax activists who are in bed with the tax preparation companies.
Transcripts are for previous returns. I was saying you can grab the w2 and many of the 1099s the IRS received for you this tax year before you file your return by logging into the IRS website.
I'd be surprised if they don't know that I'm married, considering I've mentioned that I'm married on every tax return for the last nine years, so they could send me a form with all the stuff that they do know about and ask if they need me to correct anything, or if I have anything else to declare. They could ask "Are you still married? Are you still married to the same person?" and update stuff.
It might be that if they sent you the "here's all we know, please add anything else" thing, people would not add things that costs them more tax, safe in the knowledge that they don't know about it.
If it’s for shares bought before 2011, they don’t even have the basis.
(They can detect that you had a sale for which they got a 1099-B but you didn’t list on your Schedule D. That doesn’t mean they have enough information to fix it.)
They probably know less than you think. (Are you selling stuff at the farmer's market for cash? Did you gift your coin collection to your grandkids?) Making everyone file reduces fraud somewhat – but whether that's worth the country's time and effort is a different story.
Sure, hence why I would be perfectly happy for them have a system where I can amend stuff. I'm just saying that the default should be to "send me letter in mail, I verify it looks fine, I sign it and send it back". The entire process for most people could be like ten minutes.
It took me two hours this year, and my taxes are generally pretty simple. I had exactly one W2 job last year, I have a mortgage, my wife does school, I sold some stock, I had some T-Bills, and I declared my wife's education.
I'm not doing anything clever to try and lower my tax burden, it's an extremely straightforward "run it through tax software" process, and it still took me two hours.
