Opposition Blocks Return-Free Tax Filing In U.S.

Transcript

DAVID GREENE, HOST:

Imagine a world with no tax returns.

(SOUNDBITE OF MUSIC)

GREENE: OK, it's just a fantasy. But actually, in some countries taxpayers can sign up to receive simply a bill. The government sends you a tax bill, you pay it and, voila, that's it.

Now, there was an effort to bring return-free filing to the United States, but that effort came up against stiff opposition. And to find out why, we called Liz Day of ProPublica. She's been digging into this issue.

Liz, thanks for joining us.

LIZ DAY: Yeah. Thanks for having me.

GREENE: OK. So the idea of not having to file a tax return; you just kind of get a bill from the government and you approve it. Sounds really simple and it actually was sort of proposed in the United States? What happened?

DAY: Well, it has a long history. President Ronald Reagan supported it and talked favorably about it in 1985. And President Obama has spoken also favorably about it on the campaign trail in 2007. The idea is that you would get a pre-filled return from the government, using the information they already have, to send a pre-filled return to you that you could either accept or throw away. It's completely voluntary.

GREENE: What are the actual benefits of return-free filing, I guess for individuals and also for a nation?

DAY: Well, overall, it could make tax filing much easier and cheaper for a lot of people. You would save the time of filing your taxes and gathering all of your forms - your W2, your 1099...

GREENE: Paying for a tax preparer, in some cases.

DAY: Exactly. It can save you a lot of money. It could also have a lot of benefits for the IRS. They could get more accurate returns and, you know, theoretically have to do less audits.

GREENE: And I presume that if your tax return is really complicated, I mean this might not work so well.

DAY: Exactly. This is not for everyone. It's mainly for people who don't itemize, who have straightforward wages and income and the government already has all the information for those types of people.

GREENE: Well, who didn't want this to happen?

DAY: Well, there were different types of people who didn't want this to happen, and some have recognizable names. Intuit, the maker of TurboTax, who is the leader in online tax filing, has not surprisingly, not supported return-free tax filings.

GREENE: They might lose some business.

DAY: Yes. There also has been some opposition from conservative tax activists, like Grover Norquist, who has seen this as sort of a way for the government to raise tax revenues. There are also some tax experts that bring up problems with this, such as people might just accept a government-filled tax return and not check it for tax credits or for accuracy. And also, you know, the IRS is a pretty burdened agency. Should we really be asking them to do more work?

GREENE: And you taught me - among many things in your story - that the state of California actually does have return-free filing.

DAY: Yes. They call it Ready Return, and it started as a pilot program in 2005. And, according to press reports at the time, you know, encountered a lot of stiff opposition from Intuit, maker of TurboTax. But it still survives today. Not many people use it. About 90,000 people used it last year. But according to the tax agency it's, you know, a success.

GREENE: So you've mentioned we had a Republican president, Ronald Reagan; a Democratic president, Barack Obama, support this idea; it's in California. Are we getting close to this being an option for all Americans or is that day far from here?

DAY: It's tough to say. You know, tax filing is not many people's favorite subject.

GREENE: True.

DAY: Most of the time legislation is focused on tax credit reform, not tax filing reform. But among people that know about it, a lot of them really like it.

GREENE: Interesting stuff. Liz Day, thanks so much for joining us.

DAY: Thank you.

GREENE: She's director of research with ProPublica. Transcript provided by NPR, Copyright NPR.