This Company Is Fighting to Keep Your Taxes Complicated

We are less than a week away from the tax-filing deadline. Wouldn't it be great if you didn't have to submit anything, your taxes were done for you -- for free -- and you just had to make sure nothing was wrong with them?

It's not a dream. That's the idea behind "return-free filings," where the IRS would prepare your tax filing for you. While not everyone would qualify, those with simple taxes wouldn't have go through all the hassles that come about every tax season.

One of the groups leading the charge against "return-free filings" is Intuit (NASDAQ: INTU  ) , maker of the popular tax preparation software TurboTax, an investigation by ProPublica found.

In the below video, Motley Fool contributor Dan Dzombak explains return-free filings and the arguments for both sides.

Taxes aren't the only thing that need to be made simpler. Warren Buffett recently referred to another sector as "the tapeworm that's eating at American competitiveness." To find out more, check out The Motley Fool's free report: What's Really Eating at America's Competitiveness. Besides learning more, you'll  discover an idea to profit as companies work to eradicate this efficiency-sucking tapeworm. Just click here for free, immediate access.


Read/Post Comments (7) | Recommend This Article (9)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 10, 2013, at 10:43 PM, Kummin wrote:

    Just ONE example of why the 15% flat tax will never happen. How many companies, lawyers, accountants, and others have a vested interest in keeping the tax system the way it is? Tens of thousands. And what is the vocation of many elected officials? Law and accounting!

  • Report this Comment On April 10, 2013, at 11:11 PM, Blknblue wrote:

    I am blown away anyone could argue to allow the IRS fill out your return. Money magazine several years ago sent out 40 fictional sets of identical info for tax prep, four to the IRS. Not one including the IRS came back the same. And with a 74,000 page tax code how the heck would you ever know if they filled it out right. This is the stupidest idea for the tax payer but you can bet internal studies have show major gains to the IRS for the "free" service!

  • Report this Comment On April 10, 2013, at 11:12 PM, tristinstone wrote:

    Anything In the USA that has to do with Taxes, insurance, or medical is 100% crooked! and always will be.

  • Report this Comment On April 11, 2013, at 2:24 AM, QuandoInQuando wrote:

    Why have an income tax at all? Switch to a consumption tax (aka VAT or Sales Tax). Tax everything except basic food items and the cost of a primary residence. Luxury items would be taxed at a higher rate than ordinary items.

    If all that you can afford is the very basic items then you would pay negligible taxes.

    Way fewer IRS workers needed. No tax preparers or software required. No tax returns to file either. Tax shelters would be a thing of the past.

    Tax is paid as the money is spent. Over our lifetimes we Americans eventually spend all of our money anyway so the tax would still be paid. And the folks who now do not report their income would then have to pay taxes when they spent the money.

    No taxation method will be 100% perfect but I believe that a single consumption tax would be the least unfair and have the lowest operating cost. Better for the citizens and better for the government.

  • Report this Comment On April 11, 2013, at 3:01 AM, Richard233 wrote:

    1) Washington will never give up making complex tax laws. There are people that give them campaign contributions to either spare them or to inflict them on their competition.

    2) Creating a VAT will not work only because they would only use that tax on top of the other taxes rather than as a replacement.

    3) A lot of people make a lot of money helping you pay Uncle Sam, don't count on them being quiet if things start getting simpler.

    4) We can't even get them to eliminate the carried interest rule which allows the big fund managers to save BILLIONS in dollars by treating their compensation as investment income rather than salary (which is what it is). It won't happen because they would just take a portion of the money they would lose to fuel the campaigns of anyone who promised them not to mess things up for them.

  • Report this Comment On April 16, 2013, at 8:16 AM, velstra wrote:

    I favor the flat tax - filing is obviously much simplier, tax code is simple (maybe 2 rates - a poverty rate and then the std); smaller government as 80% of IRS workforce could be employed elsewhwere. Contact your congress people. They have a stake in keeping it complicated as they have much more opportunity to profit themselves so it will take a lot of public force to make them change.

  • Report this Comment On April 22, 2013, at 11:53 AM, alzbeta wrote:

    As an AARP Tax Aide, I work three months a year for taxpayers, helping them file tax returns. What we primarily do is carefully enter taxpayer information into the return from W-2s, brokerage statements, 1098s and 1099s. The IRS already has copies of these documents on file. When the return is submitted, they compare the information on the return with what they already possess to see if it matches. If it does, they accept the return as filed and assess the fee or pay the refund. The only times we have to do any original work are when the documents the IRS has in their possession are incorrect. Examples would be when the employer has an incorrect social security number on a W-2, a name is spelled wrong, or the taxpayer has moved, so the address on the documents is not the current address. Our expertise is used in filling out correct forms for unusual cases such as injured spouse, single proprietor businesses, or itemized deductions. For most returns we file, the IRS computers could do them just as accurately in a fraction of the time,

    However, I believe it is important for the taxpayer to have recourse in the case of incorrect documents. Most people have not looked at their W-2s with the same jaundiced eye the tax volunteers do. I can see a substantial potential for errors in a fully automated system.

    For retirees whose only income is from social security, pensions, interest, and brokerages, automated returns would be a real boon. They would save time, travel, and worry. They would also be accurate.

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