Only Taxpayers Know How Much They Really Owe in Taxes | Citizens Against Government Waste

Only Taxpayers Know How Much They Really Owe in Taxes


As tax season comes into full swing, taxpayers across the country are preparing to pay what they owe.  The filing deadline is April 18, 2022, when payments are also due, but taxpayers may delay the filing for up to six months to October 17, 2022.  There are many reasons for these delays, including failure to receive or losing a W-2, death or illness in the family, natural disaster, accruing funds for a retirement account, or any other reason, since the IRS does not ask for one if the extension is filed on time.

The IRS also does not know how much taxpayers owe from year to year as they fill out their taxes.  People get married and have children (sometimes more than one at a time), and they also get divorced.  When they are married, they can file taxes separately or as a couple.  Sometimes people share a household without getting married.  Americans change jobs frequently, particularly when “the Great Resignation” led to tens of millions of people dropping out of the “traditional” workforce to retire, start their own business at home (where they can take a deduction for a home office), or start driving for an app-based company like Instacart, Lyft, and Uber (when they file as independent contractors).  And now that gas prices are near record highs, some of those people may return to the more traditional workforce.  Millions of Baby Boomers are (unfortunately) receiving inheritances, some of which are large, from their deceased parents.  People buy and sell their primary residences and buy and sell investment properties.  Businesses start, grow, hire and fire employees, and go broke. 

Every tax return is based on individual circumstances and full of information that only the taxpayer knows.  The use of that information allows taxpayers to determine how they can pay no more than they legitimately owe under the tax code, whether they fill out their taxes themselves, consult a professional, or use the Free File system that is available through the IRS.

Yet many members of Congress continue to beat the drum on having the IRS complete a taxpayer’s return for them and send a bill for what is owed based mostly on the previous year’s tax return.  Paying taxes is stressful enough without the IRS acting as judge, jury, and executioner, and giving the agency the authority to pre-determine a taxpayer’s income and tax liability by filling out all possible forms and sending a tax bill.  The IRS would only be playing a guessing game based on outdated information. 

The burden of proof would be shifted as the taxpayer would have to prove that the IRS is wrong rather than now when the IRS has to prove that the taxpayer is wrong.  It would end up creating a flood of appeals and litigation for an agency that already has a backlog of nearly 24 million tax returns from 2021.

This recurring proposal is known as “return free filing,” and has previously been introduced in both the House and Senate as the “Tax Simplification Act,” a misnomer for misguided legislation.  In 2019, Sen. Elizabeth Warren (D-Mass.) and Rep. Brad Sherman (D-Calif.) introduced it with a different name, The Tax Filing Simplification Act of 2019.  Sen. Warren claims that every year taxpayers spend 11 hours preparing their tax returns and pay around $200 for tax preparation services.  She believes that is too much time and money, and that the IRS should instead be in charge.  The IRS would use only what it knows rather than what the taxpayer knows, fill out whatever forms it believes are related to the taxpayer’s income sources and status, and send a bill or refund.

But the idea that taxes are costly and time-consuming is inaccurate.  Since 2001, taxpayers have had an alternative to doing their taxes themselves or paying someone else to do it for them  by using the IRS Free File program, which contracts with private companies to help taxpayer file their taxes.  In 2021, up to 70 percent of taxpayers were eligible to file their taxes for free using this program.  Given the dozens or even hundreds of variances that impact each person’s individual tax status, control over how and what to file should always remain with the taxpayer.

This is why Citizens Against Government Waste (CAGW) has been supporting the Free File Alliance since 2004, and frequently cited longstanding problems with IRS information technology systems, including weak data security, as additional reasons for not allowing return free filing to be enacted into law by Congress. Taxpayers should use what only they know to fill out their taxes and the IRS should never get the power to file a tax return on behalf of an individual taxpayer and send them the bill.



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