Should IRS calculate taxes and send a bill?
The current tax filing system in the USA
The current tax filing system in the USA requires taxpayers to file their individual income tax returns by April 15th each year. Taxpayers are responsible for calculating their taxes owed and paying them by the due date. The IRS checks the returns for accuracy and completeness during processing. Taxpayers who do not file their returns on time may face penalties, including late filing penalties and interest on unpaid taxes. To avoid penalties, taxpayers should estimate and pay any owed taxes by the original due date, or file for an extension if necessary.
Taxpayers are also responsible for paying estimated taxes throughout the year if they have income that is not subject to withholding. Estimated taxes are used to pay not only income tax but also other taxes such as self-employment tax and alternative minimum tax. Taxpayers should make estimated tax payments in four equal amounts to avoid penalties. However, if they receive income unevenly during the year, they may be able to adjust their estimated tax payments accordingly.
The penalties for late or incorrect filing can be significant. For example, taxpayers who file their returns late may face a penalty of up to 5% of the taxes owed for each month the return is late. However, in some cases, penalties may be waived or reduced. For instance, in 2019/20, HMRC waived the initial £100 late submission penalty for online submission of self-assessment tax returns. Additionally, the IRS may waive the late filing penalty if the taxpayer has a reasonable explanation for filing late. It is crucial for taxpayers to understand their responsibilities and the potential penalties associated with late or incorrect filing to avoid unnecessary fees and interest charges.
Arguments in the poll for the IRS calculating taxes and sending a bill
One argument for the IRS calculating taxes and sending a bill is that it would simplify the tax filing process for taxpayers. Currently, taxpayers are required to estimate their taxes owed and make payments throughout the year. However, the Tax Filing Simplification Act proposes that most Americans should receive a pre-prepared tax return from the IRS, based on the information the agency already has on file. This would eliminate the need for taxpayers to calculate their taxes and reduce the likelihood of errors in the filing process. Additionally, simplifying the tax filing process could potentially encourage more individuals to file their taxes, leading to increased compliance with tax laws.
Another argument for the IRS calculating taxes and sending a bill is that it would reduce the chance of errors and fraud in the tax filing process. Taxpayers may make mistakes when calculating their taxes or may intentionally underreport their income to avoid paying taxes. However, if the IRS were responsible for calculating taxes and sending a bill, there would be less opportunity for taxpayers to make errors or commit fraud. Additionally, the IRS has the authority to correct math or clerical errors on a return and may accept it even if the taxpayer forgot to attach certain tax forms or schedules. This would ensure that taxpayers are paying the correct amount of taxes and reduce the burden on taxpayers to correct any errors.
Lastly, another argument for the IRS calculating taxes and sending a bill is that it could potentially lead to cost savings for both taxpayers and the IRS. Taxpayers may incur penalties and interest for late or incorrect payments, which could be avoided if the IRS were responsible for calculating taxes and sending a bill. Additionally, the IRS could potentially save money on resources needed to process and review tax returns for accuracy. This could lead to a more efficient use of taxpayer dollars and potentially reduce the burden on taxpayers to fund the IRS.
Arguments in the poll against the IRS calculating taxes and sending a bill
One argument against the IRS calculating taxes and sending a bill is the potential for privacy concerns and data breaches. Any breach of personal information could have a significant impact on a victim's tax accounts with both states and the IRS. Data breaches can have serious consequences, leading to identity theft and financial losses. Tax information is among the most zealously guarded secrets in the federal government. If the IRS were to calculate taxes and send a bill, it would require taxpayers to provide sensitive financial information, which could potentially be compromised. Thus, taxpayers may prefer to maintain control over their tax information and filing process to ensure their privacy and security.
Another argument against the IRS calculating taxes and sending a bill is the lack of flexibility in taxpayer situations. Taxpayers may have unique circumstances that require specific deductions or credits that the IRS may not be aware of. Taxpayers may also have changes in their financial situation throughout the year that may not be reflected in an IRS-calculated bill. Taxpayers have the right to pay only the amount of tax legally due and to have the IRS apply all tax payments. By allowing taxpayers to file their own taxes, they have the flexibility to ensure that their taxes accurately reflect their unique financial situation.
Another argument against the IRS calculating taxes and sending a bill is the potential for increased government control over personal finances. The Fifth Amendment to the United States Constitution protects citizens from being compelled to be witnesses against themselves in criminal cases. Allowing the government to calculate taxes and send a bill could be seen as a violation of this constitutional right. By requiring taxpayers to file their own taxes, they maintain control over their financial information and avoid the potential for the government to have increased control over their personal finances.
So please take participation in the poll Should IRS calculate taxes and send a bill? And also write your opinion in the comments.