Tax facts, fake vs. real
3 tax tasks to take care of on Tax Day

Fix the tax code, not just the tax-filing process

Tax returns are due tomorrow. Most of us have filed. But there are around 10 million procrastinating holdouts.

Frustrated woman dealing with taxes

Part of the reason we put off taxes is that it's a pain in, well, just about every body part.

Sen. Elizabeth Warren (D-Massachusetts) wants to make the process easier, especially for folks with simple returns. She's introduced the Tax Filing Simplification Act of 2016, which would require the Internal Revenue Service provide these taxpayers with prefilled 1040 forms, based on their tax documents that also are copied to the IRS.

The process would be even easier next year, when a provision in the budget law enacted last December will requires third-party payers to get W-2 and 1099 form copies to the IRS at the end of January, the same time that they send these tax statements to workers. Previously, the IRS got copies at the end of February.

Once taxpayers get the prefilled returns, they could approve the IRS-completed form, or make changes as needed, and be done with filing.

It's not a new idea. Every year similar bills are introduced, including two back in April 2015 by other members of Congress. 

State filing test: California also tested prefilled state tax returns in its Ready Return pilot program.

Golden State tax officials then integrated many of the program's "best features in our other free online filing application, CalFile," according to the California Franchise Tax Board's website, and closed ReadyReturn.

California is a big state with its own complicated tax system, so it's a good testing ground for a national program.

That said, I don't see Warren's proposal, despite the attention it's getting -- yes, even from me here and also last week at my other tax blog -- as going very far.

I detail in my Bankrate Taxes Blog post some problems with the prefilled proposal and other tax filing changes the pro-consumer senator wants to make, so I won't rehash them here.

Treat the illness, not a symptom: But I will add a new one. Warren is treating a tax symptom, not the tax illness.

Filling out tax forms and getting them to the Internal Revenue Service isn't a major problem. Figuring out what goes on those forms is our biggest obstacle.

That's why taxpayers love TurboTax and H&R Block and TaxACT and all the other packaged tax preparation programs. They walk us through the ever-growing intricacies of the increasingly intimidating Internal Revenue Code.

Millions of us are more than happy to go on, and even pay for, that stroll.

And with Free File, a lot of folks get to use some companies' tax software versions for, as the name indicates, free.

IRS data complete through April 8 shows that almost 42 million returns were self-prepared and e-filed by taxpayers; that's 2.3 percent more than at the same time last year. 

When 2015 tax filing was done, self-prepared/e-filed tax forms numbered more than 50 million, a 5.1 increase over 2014. And in 2014, the IRS got almost 48 million software prepared and e-filed returns directly from taxpayers, a 6 percent increase over 2013.

You get the idea.

Focus on tax reform: If Congress would focus on real tax reform instead of Tax Day grandstanding -- annual introductions of tax-related bills and tax-writing Ways and Means Committee hearings on proposed tax law changes -- we taxpayers would be happier.

Streamlining the tax code is possible. It happened back in 1986. It's way past time to start pruning some of the out-of-control tax law growth.

Then more taxpayers wouldn't have to rely on so much software, provided by private industry or, as Warren wants, by the IRS, to complete their annual tax tasks.

Bankrate Taxes Blog logoTax procrastination: Also last week at Bankrate Taxes Blog, I looked at tax-filing procrastination. And yes, I made my annual confession that I'm one of the 10 million or so taxpayers who puts off filing until the summer … or fall as the October extension deadline nears.

Whether you've already filed, are filing a 1040 tomorrow or getting Form 4868 (and any taxes owed) on the way to the IRS, stick with me here at the ol' blog and over at Bankrate for continuing tax news and tips.

For now, you usually can find my Bankrate posts on Tuesdays and Thursdays. If you miss them then, check here on the weekend for highlights and links.

And happy tax filing!


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