Auto-Tax
Sunday, December 4, 2011 at 07:22AM You have to wonder about the IRS. In the same week they announce a plan to discuss a real time tax system that would provide feedback on your return before you file, they also acknowledge $153 million in refunds that they can’t get to people because they don’t have a correct mailing address. The US found Osama Bin Laden, but they can’t find taxpayers who filed and overpaid taxes?!
The average size of the undelivered refund check this year is $1,547. I’m thinking that means at least some of these people are actively trying to get the checks that the Service can’t get to them. According to the IRS people who e-file get their checks – it’s just snail mail that creates a problem. If you are one of the folks whose refund has gone missing, the Where’s My Refund tool on the IRS website has an address updating feature. Don’t know if that will solve the problem, but it’s probably worth checking.
This brings us to the crux of most IRS problems, which is that they have different information about you than you have about you. Somehow they’ve decided that automating that disinformation will make the situation better. Like much of the “logic” around the tax code, I don’t follow that line of reasoning.
This new system would pre-populate key information on your return, so you would know if your view of what you earned matches the IRS records before you send in the return. According to the Commissioner, the average taxpayer has between 10 and 15 information returns associated with their tax filings, so this is a big chunk of information. Given the current state of affairs, this would at least let taxpayers know when and where there’s an issue. What it wouldn’t do though is give you any way to solve the problem.
Right now not every information disconnect results in a problem with the IRS. Under the proposed system, every mis-step would be flagged. This might solve the nation’s unemployment problem, as the IRS would need to hire lots more people, but net at the end of the day I’m not sure that more taxes would be collected. My guess is pharmaceutical companies that sell sedatives and psychologists would also benefit should this new system be implemented. We’ll see…