Stanford Professor Loses Political Battle To Simplify Tax Filing Process
FWIW, here&#x27;s an email I sent to Prof. Bankman last April:<p>---<p>I read with interest your letter about the Tax Filing Simplification Act of 2016, and your article &quot;Simple Filing for Average Citizens: The California ReadyReturn.&quot; I agree that the tax filing burden on taxpayers is far too high, and I am encouraged that legislators are trying to do something about it.<p>But I am concerned about the details of actually accomplishing this given the complexity of the federal tax code, even for what appear to be &quot;simple&quot; situations. For the past five years I have volunteered with the IRS&#x27;s Volunteer Income Tax Assistance program and helped low-to-moderate income taxpayers file their taxes. One of the first things I learned was how frequently a taxpayer&#x27;s total tax is affected by factors other than what is on their W-2 or otherwise reported to the IRS. Examples include:<p>- complex calculations of &quot;support&quot; to determine whether a live-in relative is a dependent<p>- exact payments, and nature of payments, made to schools (generally not accurately reported on the 1098-T)<p>- business expenses<p>- which months the taxpayer had health insurance (often not reported correctly, or reported to a different person) and, if no insurance, whether an exception to the penalty applies<p>- what portion of the property taxes paid by the mortgage company on behalf of the taxpayer was for ad valorem taxes (the only kind that is deductible)<p>- what gambling losses are there to offset the gain reported on a W-2G?<p>- [litany of qualification questions for various education benefits]<p>- which exceptions apply to an early distribution from a 401(k)<p>Although each of these individually sounds like a corner case, my experience is that in aggregate a large percentage (perhaps more than half?) of the tax returns involved information that the IRS has no way of knowing.<p>So for advocates of IRS-prepared returns, of which I understand you to be one, I wonder what the response to these issues is? I can think of three:<p>1. The IRS should assume whatever results in the maximum tax liability, and it is up to the taxpayer to determine whether they can reduce their liability further.<p>2. The IRS should guess based on some combination of factors, and the taxpayer is responsible for verifying the guess (and is assessed penalties if they don&#x27;t fix an incorrect guess?).<p>3. We should drastically simplify the tax code so these issues go away.<p>Each response has some obvious problems.<p>Anyway, this is just something that has been on my mind, so I hope you don&#x27;t mind this email out of the blue to try to solicit feedback from someone who might have given the issue some thought.<p>---<p>He never responded, so I am still left wondering the same questions.