Let the IRS fill out our tax returns for us? That's a horrible idea
As a leader of the Hispanic Chamber of Commerce and a lifelong taxpayer, I know firsthand how difficult and stressful tax season can be.
Families struggle to organize all their documents and receipts. Businesses constantly face the threat of audits and enforcement actions that could hit their bottom line in an unstable economy.
That is why I am concerned about an upcoming study examining whether the Internal Revenue Service (IRS) should prepare and file tax returns on behalf of all taxpayers.
Based on the study’s recommendations, Congress could even begin considering legislation to enact this proposal into law.
IRS-led system has horrible odds of working
As a business leader, I have learned the hard way to only pursue ventures that have a reasonable chance of success.
A recent study from the National Bureau of Economic Research found that a government-run tax preparation system would work less than half of the time.
Specifically, only 42% to 48% of all returns could be accurately prepopulated using only current-year information returns and the prior-year return.
Career government bureaucrats should take a lesson from the private sector: Accuracy rates below 50% are losing odds.
According to census data, there are nearly 6 million Arizonans that claim Hispanic ancestry. Many members of Arizona’s Hispanic community are immigrants who may not have full legal documentation.
These individuals and families are rightfully hesitant to trust a government agency with additional personal information and data, which could be handed over to immigration enforcement agents under a different presidential administration.
Low-income families could miss out on credits
Having the IRS act as tax preparer and collector is also a clear conflict of interest.
The IRS is tasked with maximizing revenue for the federal government, and therefore does not have the best financial interest of taxpayers at heart.
Every year, millions of Arizonans use low-cost online software or hire accountants to prepare their taxes because these private sector services have a fiduciary responsibility to maximize deductions and refunds.
Schweikert bill: Aims to ease small businesses' tax paperwork
They ensure that taxpayers get every penny that they are owed.
A recent report from the Tax Policy Center found that many families depend on credits like the Child Tax Credit and the Earned Income Tax Credit to help cover bills, put food on the table and pay for child care.
A government-run tax preparation system would make it much harder for low-income families to claim crucial tax credits and deductions they depend on.
A new system could hurt Hispanic taxpayers
Further empowering the IRS is clearly a bad idea if you look at the agency’s history of targeting low-income Americans.
A 2022 report from Syracuse University found that the Internal Revenue Service was five times more likely to audit families making less than $25,000 a year than everyone else.
That'd include many Arizonans. As recently as 2018, the latest figures available, more than 1 million tax returns, or 40% of Arizona filers, listed adjusted gross incomes of $30,000 or less.
The public certainly doesn’t think much of the idea.
A 2022 poll found that an overwhelming 78% of Arizona voters oppose legislative proposals to give the IRS authority to prepare and file tax returns on behalf of taxpayers.
Additionally, 58% of Arizonans said that they would be less likely to support an elected official who wants to increase the IRS’ authority.
We call on Arizona Sens. Krysten Sinema and Mark Kelly to oppose a government-run tax preparation system that would disproportionately hurt the Hispanic community every tax season.
Phillip A. Austin is a founder and vice chair of the East Valley Hispanic Chamber of Commerce. Reach him at attyaustin@gmail.com.
This article originally appeared on Arizona Republic: IRS wants fill out our tax returns for us? Seriously?
