'Return-Free' System Creates Conflict of Interest for IRS

From the ATR website.

The IRS essentially held a secret meeting on Dec. 8th, to discuss a change in tax policy that was ostensibly to help taxpayers. If it’s good for taxpayers, why hide it?

The hearing was required by law, as the IRS was proposing new legislation, but the IRS did everything in its power to keep it from the public. It only announced the meeting on the 7th, one day earlier, and only allowed people who signed up in advance to attend. Even then, they were not allowed to speak.

The hearing was on the issue of “return-free,” or “simple-return” filing, a proposal under which the IRS would file taxes for the taxpayer and send them either a return or a bill. The Obama Administration has argued that this method would simplify things for taxpayers and increase efficiency. That still leaves the question, however, of why the IRS would need to hold a secret meeting on an issue that purportedly benefits taxpayers.

The reason for the secrecy is that a “return-free” system creates a significant conflict of interest for the IRS. As the current mission of the IRS is to increase tax revenues, giving it the ability to determine how much people owe leaves them with the incentive to come out in their own favor.

The administration has argued that $300 billion in tax revenue has been missing, and so it believes that it has found a way to collect it. In other words, “return-free” filing is simply a back-door method of raising people’s taxes, and this kind of secret meeting is just the use of bare-knuckle tactics to get it passed.

Fortunately, voters are aware of these tactics and are not having any of it. In a Public Policy Polling poll, 71 percent of voters stated that they do not trust the IRS to prepare their taxes for them. Additionally, 80 percent of voters said that they would be less likely to vote for a candidate that supported allowing the IRS to file taxpayer taxes.

Even if the IRS is perfectly honest, there is no indication that they are perfectly competent.

A sample set of returns by the IRS in 2009 revealed that 29 out of 49 requests filed by the IRS were inaccurately filled out.

Ultimately, there is no excuse for holding secret meetings, especially when it is supporting legislation under the pretense of benefiting taxpayers.

The administration and the IRS must drop the idea of “return-free” filing and work towards real tax reform. Real tax reform means lower rates, simplifying the tax code so people can easily file themselves, and flattening the tax code.