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by anonymousiam 1805 days ago
You cannot depend upon the IRS to send you an accurate bill. Anyone who has ever dealt with IRS will know that they seem to arbitrarily inflate the amounts they ask for. When this happens, you need a tax attorney to point out to them that they got it wrong. Rinse and repeat a few times and they will eventually get it right after several years and many iterations.
3 comments

Every proposed legislation I’ve ever seen on this would let the individual tax payer still fill out a Form 1040 and send it in, if they disagree with the IRS prepared numbers.

So this would still be an option.

Same thing as we do now, with 2 extra steps.
For the majority of taxpayers, the proposed legislation would introduce about two-dozen fewer steps.
No, if taxes are actually going to be non citizen-hostile, the IRS needs to get it right the first time. If everyone knows you need to find an appeal to get the real tax rate, you haven't made any progress, just moved the annoyance to the appeal stage.
But it’s not an appeal. It would be the exact same process as if you filed your taxes for the first time.

And for most people the tax bill that arrives would be correct. The parts that wouldn’t be correct would be if there are deductions you’re eligible for, that the IRS may not have any documentation of.

You need to ask why it wasn’t right. It’s not that their computers can’t do basic math - usually it comes down to incorrect data in (e.g. your payroll processor or broker listed something incorrectly) or missing data. In most cases, supplying the complete records will solve that problem.
Most people don't hire lawyers to fight protracted legal battles with the IRS, so it's a bit ridiculous to suggest that we optimize the system for that path. Besides, nobody is suggesting we take that option away from you, or from anyone else who finds it worthwhile.
I've never been audited by the IRS but I've been hounded by the CRA (Canada) 3x now and each time it's been a huge pain, one time dragging on more than a year partially because it was so hard getting CA FTB to send me my tax transcript. Every time they've audited me they've ended up having to refund me more, did that stop them?

Right now the IRS thinks I'm using a fake American address for some good forsaken reason despite me paying almost 100k in taxes the last few years under the same name/address. And for what?! Half a penny in taxable intrest?!

I never suggested that the system should be optimized for the < 10% path. I was simply pointing out that the current IRS culture is not based upon accurate accounting. They seem to "accidentally" make errors in their favor, and then send notices out to taxpayers.

I am all for a flat tax. It would be fair and easy.

I dispute your suggestion that IRS culture tends to make errors accidentally in their favor. First, it is not my experience at all. To me it just sounds like lemons.
> Anyone who has ever dealt with IRS will know that they seem to arbitrarily inflate the amounts they ask for. When this happens, you need a tax attorney to point out to them that they got it wrong.

The people I know who weren’t cheating or in very complicated scenarios did not have this problem. It’s certainly possible but remember that our impressions are skewed by a large, well-funded media operation promoting the idea that the IRS is horrific for political and business reasons. Intuit alone makes billions from that idea.

A retired IRS auditor mentioned that around half of the cases they processed ended up finding deductions which benefited the taxpayer more than the discrepancies.

Well you don't know me. I usually leave off a few deductions just in case I get audited. That way the IRS will end up owing me money after the audit. Despite this, there have been a number of screw ups. The latest was in 2017 when they "lost" the cost basis (submitted by me and my brokerage) for my investments and then sent me a bill for over $200k of capital gains.

I have known people who could not be bothered to file their taxes. The IRS would bill them and they would pay. If somebody pays the IRS without question, it seems to set off a red flag and the IRS will immediately follow up with another bill. Also, if you do not file, you get zero deductions and they will base their bill on that.

> Well you don't know me. I usually leave off a few deductions just in case I get audited. That way the IRS will end up owing me money after the audit.

So you’re saying that you give the government a donation every year just in case you get audited so you might get it back that year? This does not seem like a financial win.

Again, I’m not saying that the IRS are perfect — only that it’s not wise to base your opinion on anecdotes. This is both a political issue and one where a lot of people have an incentive to blame the government for catching them, while everyone else has little reason to say they haven’t had problems. It’s like learning about feminism at a bar favorited by middle-aged divorced guys.

I choose to not claim several deductions to which I am entitled. E.g. Use of vehicle for business, Home office deduction, etc. I could easily defend these deductions, but claiming them would increase the odds of an audit. I don't want to waste my time and money dealing with an audit, so I pay a little more and decrease my odds of having one. I do not view this as a "donation".