Its not corporate lobbying, it’s the complexity of the tax code.

So much information you need for a moderately complex return isnt sent to the IRS.

A good example is cost-basis for RSUs. I have to calculate that myself or i get taxed with a cost-basis of $0.

Of course it’s lobbying.

If you are dealing with RSUs you are not part of the 60 million that could be done automatically.

All you have to do is look at the 1040 to see that it couldn't be done automatically for a lot of tax payers - hence lobbying may be a factor, but the tax code is a bigger issue because the government doesn't have the information it needs to complete the return.

Are you a dependent [see instructions for criteria]?

Are you blind?

List all dependents [see instructions for critera] and whether or not they qualify for Child Tax Credit.

Tip income not reported.

It goes on, and on and on. Unless you have the most basic return possible - W2 income and nothing else, the tax code requires information from the tax payer that the IRS does not have access to.

I've lived in countries that automatically complete tax returns for you. It works great because it's simple - all your income is added up, then you get a couple deductions based on information automatically shared with the government and that's it.

The US tax code would either: a) have to be radically simplified and/or b) more information would need to be collected by parties and shared with the government.

Sure, but these sorts of questions are a one- or two-page web form that people could fill out on the IRS's web site, click Submit, and wait a few seconds for that information to be used (along with all the rest of the info the IRS has) to fill in their return.

For some of this stuff (like number of dependents or being blind), it would remember what you said last year, pre-fill, and let you edit (like if you had another kid, or if one aged out of being a dependent).

And this is the thing that annoys the shit out of me about all the naysayers like yourself about automating this stuff. It does not have to be 100% automated! Even 50% would be valuable, but for the majority of taxpayers I expect it would be close to 100%, with the average level of automation in the 80%-range (or even better; I'm being conservative with my guesses here). That would save people so much time and so much money, and it would absolutely destroy the revenue of the greedy, make-work tax-prep industry, which is fantastic.

You mention looking at 1040 to make this determination, but I look at it from looking at the TurboTax or TaxAct prompts. The vast majority of what I'd have to do on TurboAct (I use a CPA now, but used to use TaxAct) is either a) verifying that last year's information hasn't changed, or b) uploading or manually typing in data from documents that the IRS already has. I would gladly let the IRS do that all for me, and give me the opportunity to do the 10% or 20% of the work that the IRS can't automate. I wouldn't need a CPA anymore, for one thing, and I could knock out my taxes in under an hour, and feel confident that they're correct, much more so than if I were to try to do them 100% myself now.

OK, so now take all those examples I gave and multiple them by 10 if you have an even slightly complex tax return. Calculate your own RSU tax basis, track whether or not you're eligible for a Roth IRA contribution based on a 5-factor test, etc, etc.

Kinda sounds like what I'm already doing now. Sure, a nice slick government interface instead of TurboTax would be nice, but let's not kid ourselves that the work load would suddenly drop to something negligible.

You say I'm a "naysayer", I say I'm just being realistic based on how complex the tax code is.

Simplified tax form:

1. How much money did you make last year? ______ 2. Send it all in.

I mean that's basically what it's doing: giving an accurate answer as a single value here requires you go through the same work. A lot of the extra is classifying what type of "earn" you did to reduce the tax burden. Simpler tax systems tend to basically reduce the options for you futzing with what "type" of income it is.

For example, the US apparently includes deductions to compensate for money spent on special classes of medication (based on comments in these threads), but in countries with functional healthcare systems that's handled by virtue of you paying a discounted price for the state funded meds (or nothing at all).

My very vague impression is that a lot of the tax differences are because rather than simply subsidizing some things, or paying for them directly, the US gov lets you reduce your taxes at the end of year instead. There are many problems with this (and this policy is applied to things other than just medication) approach where "make this manageable" is wrapped up into tax returns rather than just being handled at PoS. But to be clear this is a very general impression I've developed, and it's certainly not something I'd be willing to say "this is absolutely there state of the world" about, as I left NZ before I really had professional (e.g. not near zero :D) income and I've not personally had any medication, treatment, etc the the US gov has carve outs for.

> The majority of people who couldn’t be handled automatically currently are that way pretty much entirely due to corporate lobbying.

You're replying to the wrong comment. This is about the people who are not in that 60 million.

No, when your RSUs are granted the trading company is told the effective cost basis, which is included in the tax docs they provide you and the IRS.

But yes, the US tax code is absurdly complicated. A significant part of that is the result of lobbying by the likes of H&R Block, etc - because their business model depends on people being functionally forced to use tax prep companies.

I don't think that's always correct. Quoting from the cost basis portion of one of my combined 1099 packets:

> Note: This information is not reported to the IRS. It may assist you in tax return preparation.

They give me a 1099B that's all zero cost basis, then in a different part of the paperwork bearing that disclaimer give me a "supplemental" 1099B that includes cost basis. Dunno why, but the CPA I asked said it was all above-board and to calculate cost basis off of the supplemental info.

The cost basis for my RSUs is not reported to the IRS.

There was no corporate lobbying behind that, just bad tax code that doesn't force brokers to report it.

Huh, I'm fairly sure the IRS isn't just blindly trusting what people report as the cost basis, but maybe that only comes up during audits.

But you understand that a lot of the documented reasons the tax code is bad, is lobbying by the tax prep industry, right? Their business model is built on it being more dangerous to do taxes yourself, than to pay them $50+, so they lobby against simplifications to the tax system, and similarly lobby to support laws that increase penalties, and ensure that new reductions aren't automatic.

The IRS does trust your cost basis, but I have no doubt there is some backend check that flags things that are wildly off of what is expected.

But I don't think the tax prep industry lobbied for how RSUs cost-basis is captured. That's just a byproduct of the US tax code and requirements for reporting on 1099s from brokerages.

> A good example is cost-basis for RSUs. I have to calculate that myself or i get taxed with a cost-basis of $0.

I've often wondered why this is the case. My brokerage that handled the RSU grant knows the FMV of the shares on the vest dates. They even provide separate documents listing them all. Why don't they just set the cost basis properly? I assume there's some legal reason, but laws can be changed.

But I think you vastly overestimate the number of people in the US who are in this boat. And even for those of us who have been in that boat, getting 80% of my taxes automated would be very valuable to me, even if I still had to manually adjust those cost bases.

And the reason I can't have that is absolutely due to corporate lobbying and Grover Norquist.

Where do you think that complexity comes from? Everyone loves a tax exemption for their industry.

> Corporations didn't lobby the IRS to make the 1099B cost-basis wrong on employee stock options. They didn't lobby the IRS to make ISO/AMT calculus practically impossible.

They absolutely did. The reason that stuff is so complex is companies want to be able to give stock options at artificially low values so that their employees can defer or avoid paying taxes on them.

I think "corporations" there is referring to the tax-prep lobby, not to random companies who want to give their employees equity comp in tax-advantaged ways.

I don't think Intuit and their ilk specifically lobbied to make it so brokerage firms didn't have to report adjusted/correct cost bases to the IRS for these sorts of things. But they have certainly lobbied to keep the IRS from doing our taxes for us. They're not the only problem in that regard, but they're a significant one.