“Congress Is About to Ban the Government From Offering Free Online Tax Filing. Thank TurboTax.” (ProPublica) is about a bipartisan effort to prevent the IRS from making it easy to file taxes. The IRS is in a unique position because it alone has records on what Americans have earned via W-2, 1099, and K-1. Even if TurboTax has better software, for example, it can never start with the authoritative data. (Consider the taxpayer who runs a small Schedule C business and simply loses a 1099 form or the taxpayer who is involved in a bunch of partnerships and loses a K-1; even if these folks are diligent and accurate about rekeying the information from pieces of paper they receive in the mail, they will get flagged for a correction or an audit.)
Given the mournful history of computer (in)security, though, and the lack of Estonian-style electronic authentication for citizens and other residents, I wonder if the hypothetical IRS systems that people are conceiving would ever be practical. What would stop a clever hacker from getting in and downloading information on what every American has earned for the preceding year?
Would the IRS in fact have to rely on mailing printouts to taxpayers’ previously filed addresses? Maybe the hardcopy would contain a generated random key for logging into a web site to enter corrections and tweaks. But what other secure way does the U.S. Government have of reaching residents?
Obama set up something called the US Digital Service, which is a crack team of IT experts. It is led by Matt Cutts, the head of search quality (anti-spam) at Google. They advise and do interventions mostly, like helping the VA save hundreds of millions by eliminating the need for expensive new storage systems, but they also did the web app for USCIS, which I used to renew my green card and process my naturalization. It’s a very smooth and painless experience, better than most commercial websites. If they are asked to do an IRS self-file system, I’m sure it would be equally well designed.
https://www.usds.gov/
It’s funny to think that anything government produces could be better than what commerce does – but the USCIS web developers don’t have to upsell you Citizenship Premium Plus (w/ free Hulu trial) for just 1% more tax.
…Yet.
This is how taxes work in Ireland. In fact the forms are filled out and filed automatically; you can log in and edit them if you want. Authentication used to be handled by payroll offices; now you go to a govt office (like a post office but handles misc govt business) and set up two-factor authentication.
It is super convenient and I’ve not heard of any abuse.
“What would stop a clever hacker from getting in and downloading information on what every American has earned for the preceding year?”
One would suspect that horse has already left the barn, why would the hackers need to wait for an online tax filing system?
I did my 1040 last week. At first I was looking at the array of free filing options (weird that lots of them don’t want to touch 60+ people?), then decided I didn’t want to trust any of them. So I went with freefilefillable forms, which for the first 15 minutes I thought was actually an IRS website. Not that the trust level was too high with them either: it starts by creating an account and they conveniently offer to generate a strong password for you. But then their password rules require a special character, which isn’t included in the generated password.
Those of us who have to use the nightmarish Department of Labor free filing system for Form 5500 I am sure would rather pay anyone a few dollars for decent software rather than getting this for free. Free IRS software would be infinitely worse.