Tax season just got a little more complicated for individuals and business owners in West Virginia.
Amid the COVID-19 pandemic, accompanied by chaotic stimulus check and Payroll Protection Program loan rollouts, Americans face a plethora of long-term tax liability complications.
To make matters worse, some members of Congress think the solution is to implement a return-free filing system. Despite what advocates have to say about the benefits of such a system, it ultimately would have disastrous implications on tax filing for West Virginians.
It’s a proposal that would place the Internal Revenue Service directly in charge of determining how much taxpayers owe, allowing for even more oversight from the federal government, as if there weren’t enough.
This means that the IRS would complete all tax calculations without assistance from accountants or tax services that individuals have become accustomed to for years. Effectively, this change would render the work of many tax-based businesses and their employees obsolete — made irrelevant by the encroaching role of the federal government.
One of the most problematic aspects of a return-free system is the amount of additional power it grants the IRS. And with great power comes great responsibility — a responsibility the IRS is ill-equipped to shoulder.
This year, in particular, the IRS struggled to fulfill its own obligations of meeting the April 15 deadline for tax returns and had to move it to May 17. In addition, a report released by the Government Accountability Office revealed that the agency recently paid $3.03 billion in interest on refund delays to taxpayers. Why would anyone think it’s a good idea to give the IRS more responsibility?
If anything, it would make the tax system incredibly inefficient and place burdens on Americans and West Virginians during a difficult time.
With the IRS’s growing authority, individuals would become less involved in the tax filing process, and less educated on financial planning as a result.
Former Sen. Bob Kerrey, D-Neb., who previously worked on tax policy matters, spoke on this very issue in a Progressive Policy Institute podcast on return-free filing.
“Perhaps the worst aspect of the simple return is that it reduces or eliminates one of the most important activities that occur during the tax-filing season: individual financial review and planning,” Kerrey contended. “Calculating how much we owe in taxes is an unpleasant activity, but it is also central to understanding our personal financial situation and planning our financial futures — and often the only time all year that the average family looks at its finances.”
A return-free system also raises more privacy and national security concerns.
In his discussion with PPI, Kerrey broached this subject, as well, stating: “So, all of a sudden, not in an audit form, [the IRS has] to affirmatively go out and collect information — and they’ve already been hacked [in the past]. So, do I want to give them more information and put at risk the possibility of more? I would say no. I would be very uncomfortable asserting to anybody that they don’t have to worry about privacy.”
There is no doubt that the American tax system — much like any system of government — is flawed. But implementing a return-free system would just compound the problems. Not only would the failures of the system affect West Virginian taxpayers, it also would weaken the American economy at a time when it’s still recovering from the COVID-19 pandemic.
There must be a bipartisan effort from Congress to reject a return-free filing system if proposed as legislation.