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Why Filing Your Tax Returns is Such a Pain in the Butt

Why isn’t it easier to prepare and file your tax returns?

Because, according to new report (pdf) from the office of Sen. Elizabeth Warrren (D-Mass.), the tax preparation industry has successfully lobbied the Internal Revenue Service (IRS) to keep it that difficult, ensuring corporate profits and unfair expenses and hassle for taxpayers.

This tax season, the report states, “[t]axpayers will spend, on average, 13 hours preparing and filing their returns, and will pay $200 for tax preparation services—a cost equal to almost 10% of the average federal tax refund.” Using these services also means sharing personal information with third parties.

But a better way—one that would make the filing process take just minutes, not to mention save money, is possible, especially for those with a simple tax situation.  And it could help as many as 60 million households.

Though the IRS was supposed to implement a “return-free” filing system—one that would use taxpayer information employers, banks, and other entities already submit to the agency so the government can pre-prepare and users can verify or edit the return—by 2008 , “the IRS has time and again acquiesced to industry demands” to block it, as it would be “a fundamental threat to [the industry’s] operations.”

The industry, which has “a vested interest in a more complex, more expensive tax filing system,” has spent “millions of dollars lobbying Congress against return-free filing and mounting fake ‘grassroots’ campaigns against return-free filing,” and has even had the help of supposed anti-tax groups for who champion a simpler process, the report states.

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