Tax season is not an enjoyable time of year. Our current tax system forces taxpayers to navigate complex tax issues, fill in various forms and hope they did not mess the whole thing up. But does it have to be this hard? Other countries do not require such a difficult tax process. In Australia, taxpayers do not even know the date of Tax Day. There is no complex form to fill out and mail in, the whole process is simply easier.
So why not make it easier here? Wouldn’t it be a good thing to remove this contentious relationship taxpayers have with the government?
A professor from Stanford University came up with an idea. He put together and ran a pilot in California for a simplified tax filing system. He developed a “Ready Return,” a return with prepopulated information on the taxpayer’s income and tax obligations. The taxpayer would review the form, make corrections as needed and send it back.
The pilot group approved of the Ready Return. Taxpayers sent in numerous positive comments and the system had a 99 percent approval rating. The professor took the idea to lawmakers and tried to get it passed for use throughout the state. Critics took notice. These critics included big business and tax lobbyists. Both had a strong argument: having the Internal Revenue Service or state tax agency fill in your tax form was a conflict of interest. These critics argued a pre-populated form would make it easy for the government to sneak in tax hikes and make it difficult for taxpayers to challenge the increase.
Use of a simplified tax form like the Ready Return continues to come up in political debates. Both Bernie Sanders and Elizabeth Warren have brought up similar suggestions during presidential bids.
A simplified Ready Return is unlikely to become reality in the near future. Unfortunately, for the time being, taxes will remain difficult and a single misstep can result in an audit. Taxpayers getting audited can face serious penalties. As a result, it is wise to contact an attorney to help better ensure your legal rights are protected.