As I'm completing my taxes for this year, it dawns on me that although there have been great strides made in software solutions to help a taxpayer file their taxes, there is still a long way to go.
For example, we receive all of the taxable events that were reported to the IRS via different forms from the tax reporting entity (it could be your employer, your bank, etc). These forms are generated by different payroll companies and/or financial institutions. Many of them now offer the ability to pull their records directly into tax programs such as Tax Cut and TurboTax, but there is still a need to know which entity reported the taxable event for you, and then there is the need to authenticate every company's website.
Wouldn't it be easier to directly interface with the IRS and be able to pull all of the tax liabilities that have been reported to them for the tax year? From that point, you would be able to reconcile all of your income that has been reported and then work to itemize your deductions against those reported events.
I find that managing your paper work that has been sent to you and then having to attempt to download it if you're lucky from your broker, your bank, your employer, and potentially your mortgage company is tedious at best, and a exercise in futility at worse.
I don't know what the risk to pulling all of your financial data from the IRS would be, if they can provide a secure method in getting access to your data, then this would be a huge timesaver and avoid unnecessary auditing of all records and the extra time to manage all of the different sources of tax forms that you have to work with.
1 comment:
That is indeed an interesting idea. It would be nice to be able to peek into the IRS records and see what exactly they have received for me. For the IRS to offer that as a service though, I think is a little unrealistic. My reason is it would cost money to offer the service without a return to them. There may be some return in terms of bettter prepared and accurate personal tax returns, but I suppose one would have to do a cost benefit analysis to determine if it would be enough to support the initiative. However, another thought I had was what if a 3rd party entity was created to perform that service instead, and charge the consumer for access? A possible business plan idea??? The entity would need to have a partnership with the IRS to gain access to the information (probably paying some sort of fee). This also might be a key add-on type of functionality that Intuit or HR Block might look to add to differentiate themselves in the tax preparation software market. I guess the unknown here is just how accessible the information is at the IRS?? I have to hope they receive the majority of it in electronic format, but there is always going to be some on paper. It would be an interesting plan to research out. Got any contacts at the IRS???
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