Let the IRS Be Your Accountant

Why aren't these guys the ones filling out all the forms? Photographer: Andrew Harrer/Bloomberg

For millions of American taxpayers, the uncelebrated unholiday known as Tax Day is spent in an anxious scramble. April 15, the deadline for filing taxes, doesn't have to be this way.

Most Americans have relatively straightforward finances, taking only standard deductions without itemizing. What's more, tax data from their employer, their bank and any other relevant financial institution has already been supplied to the Internal Revenue Service long before April 15. In essence, their tax filing merely confirms what the IRS already knows.

So why not take the next logical step and let the IRS actually prepare people's tax forms? Instead of taxpayers paying for tax preparation services or doing the work themselves, the IRS could send millions of American taxpayers a pre-filled return. They could review the document and sign off. If they have objections or amendments to the IRS version, they could file their own.

The service would be simple. It would be efficient. It would be voluntary. It would be free. What's not to like?

Plenty, if you happen to make a living in or from the tax-preparation industry. Intuit, maker of the popular TurboTax software, recognizes simple returns as a threat to its business and has raised alarms accordingly. And the usual suspects in the anti-tax movement oppose simple returns on the theory that if taxes are easier to pay, fewer people will object to paying them.

It's an admirably resourceful argument, if not a very persuasive one. No one need worry that Americans will someday feel as warm and fuzzy about taxes as they do about, say, Canada. At any rate, the proposal is hardly revolutionary. Several European nations offer government-prepared tax returns. California's well-reviewed ReadyReturn program, which figures state taxes for residents, has been around for about a decade, though lately it has been stymied by opponents in Sacramento. Meanwhile, in Washington, Democratic Senator Ron Wyden of Oregon and Republican Senator Dan Coats of Indiana introduced a bill in 2011 that would allow the IRS to prepare tax returns. It has gone precisely nowhere.

Oliver Wendell Holmes Jr. famously said that taxes are the price we pay for civilized society. But we can still make the tax-paying itself a little more civilized. There is no reason Americans with simple tax bills -- and without a tax preparation business or an ideological crusade -- should continue to be denied the option of a simple federal tax processing system.

--Editors: Francis Wilkinson, Michael Newman

To contact the editor on this story:
David Shipley at davidshipley@bloomberg.net