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[P]
IRS TeleFile: A Replacement for the Dreaded Form 1040?

By ubernostrum in Culture
Fri Feb 22, 2002 at 11:41:02 AM EST
Tags: Technology (all tags)
Technology

Tax season is one of the most dreaded times of the year for Americans, and while we tend to abhor taxes in general (supposedly that's one of the reasons why we fought that war for independence a couple centuries ago), many of us reserve a particularly exquisite form of loathing for the dreaded IRS Form 1040. But this year, our Internal Revenue Service has made a move toward replacing (for some people) the 1040 with a shiny new method that lets you file your return over the phone: TeleFile.


That Crazy American Tax System

First, for those unfamiliar with American tax customs, let me explain a little about how we do things. Like people in many other nations, we Americans annually fork over varying percentages of our incomes to our government, because governments generally run better when they have money and an income tax can be a pretty effective way to get them money (although that mostly would be in an ideal world where economists know both A) what the Laffer Curve actually looks like and B) where the assorted nations of the world are located on it at the present moment). But Americans have a special place in their bile ducts for the income tax system, and this may seem bizarre to those who haven't experienced it firsthand.

It's probably because our tax system seems at times to be like the rules for Brockian Ultra Cricket, and indeed, some of us are surprised the U.S. tax code hasn't undergone gravitational collapse already. And just as the Hitchhiker's Guide to the Galaxy says the best way to assemble a good team for Brockian Ultra Cricket is to find one good player and clone him a few times, many Americans find our tax system so daunting that they decide the best way to handle it is to hand over responsibility to someone who's already good at it.

Most of this is because the IRS Form 1040 (the form most Americans traditionally fill out which computes both their "official" income and the amount of tax they owe) can be a headache at times - I've filled out a couple misleadingly-named "1040EZ" forms, which are the dumbed-down version for those of us who don't like math or don't make much money, and I hate the things. You have to collect your W-2 forms (you get one of them from each of your employers, listing who they are, that you worked for them, and how much they paid you, along with some other pertinent information), figure out how much actual money you made, how much money you got from various other types of income, how much you spent on allowed expenses, how much you're allowed to ignore because you gave money to charities or politicians or any of ten thousand other things, and then if you've got kids you can probably figure some deduction for them...you get the idea. There are so many things you possibly can add, deduct, or fiddle with that it makes strong men weep. So it's no wonder that Americans turn in droves to the easy solution and create a nicely-paying industry for folks who are willing to figure out their taxes for them.

But the IRS is no longer the cold monster it used to be - for a while now they've been trying to be a "kinder, gentler IRS", and this year they've introduced TeleFile. It's probably not part of that whole "kinder, gentler" thing, but anything that simplifies the income tax process is a kindness in the eyes of many Americans.

How TeleFile Works

So what is this thing? Well, according to the FAQ, TeleFile is

"completely "paperless"; there are no forms to mail. It is an interactive computer program that automatically calculates your tax and begins the electronic filing process over the telephone."
Isn't that neat? I didn't know about this until I got my tax booklet in the mail. At first I was a little startled, since I was expecting the usual headache I associate with filing my taxes. Instead, I found I was supposed to fill out a short (four lines!) worksheet and then call their toll-free number to do everything else. So I said, "Why not? Anything's better than slaving over the 1040!" and picked up the phone.

I was greeted by a cheerful, sing-song kind of recorded female voice, which welcomed me to the IRS' TeleFile system and warned me that if I wanted to file my state income tax return as well as my federal income tax via TeleFile I could, but would have to do both during the same call. I didn't want to do my state taxes just yet, so I ignored that. Then it asked me for some identification; I entered my Social Security number and date of birth, and then was prompted for an additional (unique) five-digit number which appears in my TeleFile booklet. Once that was through, I performed the telephonic equivalent of marking a few checkboxes (things like whether I wanted to donate $3 of my tax payment to a fund for Presidential election campaigns, whether I was claimed as a dependent on someone else's return, etc.) and waited for the hard part to start.

But the actual filing was pretty simple; I punched in three relevant numbers from my W-2 form, verified they had been entered correctly, and then was asked to wait a moment while the computer calculated my tax. About three seconds later, it read me some numbers which I was asked to write down, and identified them as my taxable income, tax owed, and refund. It then asked if I'd like to have my refund (if any) deposited directly into my bank account. I suppose it would have asked for some bank information, but I didn't want that so I don't know. The final step was to make it official and let the computer file my return for me with the numbers it had just generated. This is the part where, on a traditional 1040 form, one finds a statement of the form "I swear on penalty of perjury that the information provided in this return is accurate to the best of my knowledge", and it asks for your signature agreeing to that statement. The recording read me the statement, but in lieu of a signature, it asked me to press "1" on my telephone if I agreed to the statement and "2" if I did not, warning me that this would constitute my legally binding signature (which was slightly surprising, but more on that in a minute). So I pressed "1", and it gave me a ten-digit confirmation number. And then I hung up, done with my income taxes for another year.

Pros and Cons of TeleFile

The benefits of TeleFile as an option to file your tax returns are pretty obvious. With TeleFile, us poor taxpayers no longer have to struggle through the Form 1040 (or at least some of us don't; there's a checklist on the front of the booklet that you go through to figure out if you're eligible for TeleFile). Where filing a traditional Form 1040 could be a real hassle, involving figuring out the right calculations to perform, the right numbers to put into them, and a quick prayer that you hadn't overlooked anything, TeleFile removes most of the difficulty, simply asking for a few pertinent numbers and doing all the math for you.

However, there are also some pretty obvious drawbacks. For example, there's security: the service checked my ID by asking for my Social Security Number, my date of birth, and a five-digit number that was printed inside my TeleFile booklet. While that is three different numbers, two of them are obtainable by just about anyone; the only number that uniquely identifies me is really the five-digit code in the booklet, and using that assumes that the U.S. Postal Service is reliable. Not to criticize the fine men and women of the USPS, but more than once the neighbors have gotten my mail and vice versa. I'm not sure I'd trust some of those people with the five-digit key to my tax return.

Also, there's the possibility of glitches in the program. I'd sure hate for the software that computes the tax return to have bugs in it. But of course, there's already plenty of tax software on the market, so I guess that's a problem people have already accepted.

The idea that pressing a number on my touch-tone phone could constitute my legally binding signature really threw me for a loop, though. I'm accustomed to click-through licenses on software, but I really don't like them, and it worries me that my government is giving recognition to the idea that I can "sign" something by pressing a button and have that constitute a binding agreement. I'm not sure that the convenience of TeleFile outweighs the problem of making this sort of "signature" legitimate, and of all the concerns I have over TeleFile, this one is the most pressing and most significant.

And of course, there's also the logistics problem - this whole idea is very nice, but can it be expanded beyond the bounds of the current program? Right now you can only use TeleFile if you fall into a carefully-defined segment of the populace whose tax returns won't be too complicated. Could the system could be expanded to serve everyone? I'm not sure, but I do know that the American tax system is incredibly complicated (for example, the H&R Block website, linked above, has a banner claiming there were 440 changes in U.S. tax law in the past year alone), and I wonder if it would even be possible to program a system that could take all of the options into account and calculate the correct tax figure - the sheer number of possibilities must be staggering.

Conclusion?

TeleFile is obviously a very convenient system, which could eliminate a lot of the frustration felt by American taxpayers each year as they file their income tax returns. There are, however, some issues with the system at the moment, and it is still in only its first year of (limited) implementation. So for the time being, it's pretty hard to make a concrete judgement about TeleFile overall; I think that whether the IRS can iron out the problems (and, more importantly, whether the IRS chooses to iron out the problems) will be an important point, and that whether TeleFile will work, and whether it (or something similar) could possibly replace the traditional income tax return is something only time will tell.

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Poll
Would you use TeleFile or something similar to file your tax return?
o Yes. 38%
o No. 19%
o Not at the present moment. 9%
o I don't file income tax returns. 32%

Votes: 31
Results | Other Polls

Related Links
o Internal Revenue Service
o Laffer Curve
o Brockian Ultra Cricket
o someone who's already good at it
o "kinder, gentler IRS"
o the FAQ
o plenty of tax software on the market
o Also by ubernostrum


Display: Sort:
IRS TeleFile: A Replacement for the Dreaded Form 1040? | 45 comments (39 topical, 6 editorial, 0 hidden)
Not new (4.14 / 7) (#1)
by Teehmar on Thu Feb 21, 2002 at 11:30:10 PM EST

This has been available for around 6 years to most people that qualify (less than $50k taxable income, and filed a 1040EZ last year). It's still a neat system, and if I wasn't using an online service for doing my (easy) taxes, I would have used it again this year. I prefer more than 12 buttons on my data entry device.




Interesting (none / 0) (#4)
by ubernostrum on Thu Feb 21, 2002 at 11:33:44 PM EST

The way it was described in the booklet the IRS sent me, I got the impression TeleFile was something new for this year...I'll have to do some more snooping...


--
You cooin' with my bird?
[ Parent ]

References for age. (none / 0) (#5)
by Teehmar on Thu Feb 21, 2002 at 11:45:20 PM EST

I did some more digging, and here's a review from the Jan 1997 Daily Bruin.

It gives some date info like this: Telefile made its debut last year in California, but has been tested for a number of years in smaller areas, Kimball said.

[ Parent ]

Noooo....it's definitely NOT new.... (none / 0) (#7)
by yankeehack on Thu Feb 21, 2002 at 11:54:38 PM EST

It's mostly aimed at folks who are taking the standard (non-itemized) deduction. If you have a higher income, you're most likely owning a home and/or do things like give to charity, have career expenses, have progeny, etc. that you would want to try to deduct off of your taxes.

And like the parent poster said, it's been around for a more than a few years. I know that my taxes were filed that way before I owned a home (which you should not take a standard deduction for).

Thousands of reasons why we are fighting a just war.
[ Parent ]

Standard deduction with homeowning (none / 0) (#14)
by fluffy grue on Fri Feb 22, 2002 at 12:51:55 AM EST

I own a home, and it still worked out better for me taking the standard deduction rather than itemized, though that could be because I only paid interest for 6 months. Next year with a full year's worth of interest might change that.
--
"Is not a quine" is not a quine.
I have a master's degree in science!

[ Hug Your Trikuare ]
[ Parent ]

Yep... (none / 0) (#6)
by Danse on Thu Feb 21, 2002 at 11:54:02 PM EST

I've used it for the last 2 or 3 years now. I'm not sure how to get them to change my address though, as I've moved and that makes me inelligible to use it since it has the wrong address printed on it. I moved a year and a half ago, so I am wondering why they don't have my new address.






An honest debate between Bush and Kerry
[ Parent ]
oh yeah.. (none / 0) (#8)
by Danse on Thu Feb 21, 2002 at 11:56:00 PM EST

What sort of online service are you using? What does it cost? How long for refund, etc? I was thinking about using TurboTax online, but I'm not really sure yet.






An honest debate between Bush and Kerry
[ Parent ]
online service (none / 0) (#45)
by Teehmar on Sun Feb 24, 2002 at 12:56:30 AM EST

I've been using turbotax's online service. I get 25% off by following a link from my bank's website, so it cost $11 to do my fed and state taxes. It gives me a pdf file of the returns for my records.
Last year it took a bit over a week to get my refunds. They say 10-14 days I think.
I figure as long as they owe me money, I might as well get it quickly from them. If you owe them money, and want an instant 2 month extension with no penalty, check out the "We'll figure your tax for you option", buried in the instructions. Send your return on April 15th, and they'll take 2 months to send you a bill, due net 30. I'm not sure if they've closed this loophole lately, as it's been a few years since I've worked at a company who had a bookkeeper that couldn't figure the withholding correctly.

[ Parent ]
Amusingly, H&R Block threatened me today... (4.81 / 11) (#3)
by seebs on Thu Feb 21, 2002 at 11:31:36 PM EST

Actually about an hour ago. I sent them a bitchy note about a busted form on their web site. I freely admit that my language was inappropriate.

Their response, however, is priceless.

Reproduced without permission; I think this is fair use.

---
We express regret for any inconvenience you may have experienced while using the TaxCut\xae software. Unfortunately, due to the language expressed in your E-mail, we are unable to address your particular concerns.

The Communications Decency Act of 1996 (CDA or "the Act"), which constitutes Title V of the Telecommunications Act of 1996, was signed into law by the President on February 8, 1996.

(1) Telecommunications Act of 1996, Pub. L. No. 104-104, #502, 110 Stat. 56, 133-35, Section 223(a)(1)(B), provides in part that any
person in interstate or foreign communications who, "by means of a telecommunications device," (5) "knowingly...makes, creates, or solicits" and "initiates the transmission" of "any comment, request, suggestion, proposal, image or other communication which is obscene or indecent shall be criminally fined or imprisoned". (Emphasis
added).

In accordance with this statute, we are sending a "Cease and Desist" response giving "fair and clear" warning that we cannot accept such communications and any further such communications may be referred to our legal department for processing. If you are in need of assistance with one of our products, please send us an E-mail clearly stating the problem in a concise and non-obscene manner.


Thank you for choosing TaxCut\xae from H&R Block and we look forward to serving you in the future.
---

Of particular interest are the following observations:

1. The Supreme Court of the U.S. threw out most of the CDA on June 26th, 1997. (My birthday, no less!)
2. It is unclear that swearing at people is "obscene". It was not designed to appeal to purient interests, for instance.

Anyway, I share this in the hopes that everyone will consider the implications of a company whose stock in trade is accurate representations of law, who are citing a law that was thrown out more than four years ago.


CDA (4.00 / 1) (#16)
by cameldrv on Fri Feb 22, 2002 at 01:42:16 AM EST

I believe this provision was thrown out, but while your comment was not obscene, it probably was indecent.

[ Parent ]
Full Disclosure (4.75 / 4) (#17)
by truth versus death on Fri Feb 22, 2002 at 01:42:24 AM EST

Any chance you could reproduce that email you sent them?

"any erection implies consent"-fae
[ Trim your Bush ]
[ Parent ]
LoL - wiping liquid from screen ... (5.00 / 1) (#20)
by fhotg on Fri Feb 22, 2002 at 01:57:27 AM EST

Now show us,show us the original message. Can you reproduce that ?

[ Parent ]
I suppose I could. It's not very interesting. (5.00 / 2) (#32)
by seebs on Fri Feb 22, 2002 at 11:39:20 AM EST

I sent this in under the subject "What a *delightful* customer service experience".

It was certainly inappropriate, but I don't think it was the kind of inappropriate that merits legal threats, especially under a long-dead law.

Sorry for the formatting.

> Wonderful. I spend five minutes filling out your form, and it's rejected,
> because I didn't select "problem detail".
>
> FROM A BLANK FUCKING LIST.
>
> *JAVASCRIPT DOES NOT WORK*.
>
> It is not stable.
>
> It is not reliable.
>
> It crashes.
>
> It blows up.
>
> It does not work.
>
> If your web site can only be used if my JavaScript implementation *HAPPENS*
> to be having a good day, and *HAPPENS* to be precisely equivalent to the
> Internet Explorer release from week-before-last, but it won't work with the
> current security update, or it won't work with some other browser....
>
> YOUR WEB SITE IS TOTALLY AND COMPLETELY USELESS.
>
> I bought software from you. It doesn't work. The installer fails with
> a cryptic error message ("insufficient permissions", or something to that
> effect), but does not bother to tell me *what* file it was trying to install,
> or *where* it was trying to install it, so there's no way for me to diagnose
> this. All I know is that TaxCut State won't install, full stop, and that
> I am not *ALLOWED* to fill out the fucking customer service form because
> my browser happens not to have *exactly* the set of JavaScript bugs you're
> depending on.
>
> FOR FUCK'S SAKE, PEOPLE, USE A GODDAMN TEXT FIELD FOR PROBLEM ENTRY.
>
> Do not depend on a form which rewrites itself based on previous pop-up
> menus. *IT DOESN'T WORK*.
>
> I am the one person in a thousand who bothers to complain. The rest just
> said "gee, this web site doesn't work", and called in or gave up.
>
> I am *so* mad at you right now. I paid money, I got a product that doesn't
> work, and *there is no way to reach technical support*, because you won't
> put up an *email address*, you want me to use a form, and the form *DOESN'T
> WORK*.
>
> Why don't you just put up a page that says "we don't like your browser enough
> to do business with you, go away"?
>
> -s

[ Parent ]
Thanks (none / 0) (#37)
by fhotg on Fri Feb 22, 2002 at 01:17:14 PM EST

Well, that's a description why you're unhappy, that should be readable by the layman.

I might use it as template for similar cases.

Bit disappointed, yes, because they refer to "obscene and indecent". So I expected something more juicy.



[ Parent ]

Yeah, exactly. (none / 0) (#38)
by seebs on Fri Feb 22, 2002 at 01:17:56 PM EST

It's not really a very good example of "obscene" or "indecent". I suspect they sent me a form letter that hasn't been updated since 1997.


[ Parent ]
Are you sure? (3.66 / 3) (#9)
by skim123 on Fri Feb 22, 2002 at 12:14:14 AM EST

[TeleFile] is still in only its first year of (limited) implementation

Are you certain? I could have sworn I used TeleFile like four years ago. It was nice, called in, punched in a few buttons, entered my checking account's routing/account number, and had my refund in a few weeks.

I agree with you (as I think anyone would) that the tax code is way too difficult. I wish they would simplify it by:

  1. Removing tax shelters
  2. Going to a flat tax
I think those two options would be good. People argue a flat tax hurts the middle class, but if you removed the tax shelters the wealthy use, I think it would all balance out in the end.

Money is in some respects like fire; it is a very excellent servant but a terrible master.
PT Barnum


You'd be surprised.. (none / 0) (#12)
by Damia on Fri Feb 22, 2002 at 12:31:03 AM EST

...how few tax shelters there really are for the upper class. The difference is that they can afford someone who has read The Code enough to find the deductions. There are plenty of tax credits middle and lower class families can use, they just don't realize it. That's why the IRS is now airing those advertisements on the Earned Income Tax Credit, so that people can take advantage of what the law has given them.

I believe the reason the rates are progressive is because of the equity issues that are argued every 10-15 years or so in Congress, by ALL socioeconomic groups. At least they try. Can you imagine if you lived in another country where taxes take up 66%+ of your income?

[ Parent ]
Flat Tax/Tax Shelters (none / 0) (#15)
by cameldrv on Fri Feb 22, 2002 at 01:39:48 AM EST

Most tax shelters out there that are legal use corporations to shuffle around the money. Unless you want to outlaw corporations, there's not much to be done about them. As for the flat tax, I don't think that the progressive rates are really what makes your taxes hard. After all, you can just look up your AGI on a tax table and you're done. The major deductions that are out there (Earned Income, Mortgage Interest, Charity, Per Child, Education, IRA/401(k)), are there for a social reason that congress has deemed to be important. Whether you agree with them or not, I think that they are judged to be far more important than spending a few hours preparing your tax return. These deductions are what really make your taxes more complicated, and they're not going away. Furthermore, most of them are aimed at the middle class, and so they would get a double hit under a flat-tax system. The flat tax is designed to shift the tax burden from the rich to the middle class. That is not politically feasible.

[ Parent ]
Yay! (4.25 / 4) (#11)
by Damia on Fri Feb 22, 2002 at 12:25:56 AM EST

First of all, the H&R Block employees that are advertised ("tax preparers") are not exactly tax professionals. Most of them are people who get a 1-week training course with very little prior accounting or tax experience. I do have to admit, there are plenty of H&R Block people who really do have experience, but the target audience for the company are those who don't make enough money or transactions to require upper-level tax planning.

Second, to be good at taxes doesn't require anything more than patience and the ability to add, subtract, and multiply. You just have to take the time to read through it and get the info together. (Heck, if I can do it, ANYONE can.)

Third, I'm really glad to see an article on the tax system/IRS. The IRS and other tax professionals have tried in recent years to make our tax system a lot easier to swallow. The changes to the IRS website alone prove that. Their e-file program also shows that they are entering the 21st century with everyone else. Your Pros/Cons of the Telefile system are pretty accurate, unfortunately. Rally, though, you could steal identities with e-file and paper filing, too. I know of some people who scammed the IRS by saying their cats were actual children, and yes, they actually were able to get SSN's for them.

Cat People (5.00 / 1) (#30)
by Elkor on Fri Feb 22, 2002 at 10:09:24 AM EST

I have two friends who have managed to convince people (unwittingly) that their cats are real people.

In the first case, my friend received a credit card from Purina in the cat's name. It was an actual, active credit card, and he even used it to make on-line purchases for the cat (never for his own personal use, though. That wouldn't be right) He kept the card posted on his fridge with a pawprint on the back for the signature line.

In the second case, my other friend received an invite to one of those "entry level opportunities" to attend a FREE seminar and learn about the FAST PACED and GROWING field of Vending Machine operation. Upon being informed that she had mail, the cat proceeded to sit on it for a couple of hours. He considered RSVPing to the seminar and attending as the cat's guest (the invite said the attendee could bring one (1) guest.)

These were both people who didn't intentionally try to get any of this. They just put the cat's name down on some list somewhere, and some brain dead person made them into real people.

As opposed to real cats. :)

Regards,
Elkor


"I won't tell you how to love God if you don't tell me how to love myself."
-Margo Eve
[ Parent ]
Sounds similar to Canada's TELEFILE (5.00 / 2) (#13)
by Trepalium on Fri Feb 22, 2002 at 12:32:06 AM EST

Although I've never used it, it seems quite similar to Canada's TELEFILE. Personally, I've used the Netfile method to file my taxes the past couple years. The only downside is you need to either buy a certified software package, or use one of the online services. Using the software packages isn't too difficult, and usually just entails entering the information from your T4, etc.

My only complaint is that certain things that affect many people are completely missed by the software. For example, in Manitoba, there's a cost of living tax refund, where you enter the amound of rent, or property tax payments you've made over the years. Unless you know it's there, the software will never prompt you to enter it, or at least it never has for me.

While it is easier (4.00 / 1) (#19)
by Delirium on Fri Feb 22, 2002 at 01:56:51 AM EST

it's probably not as much easier as you to make it out to be. One of the main differences between your paper filing and telephone filing stories was calculating your income. With the paper method you mentioned having to add up and deduct various things (charitable contributions, dependents, etc.), while you didn't on the telephone. You could avoid doing this on the paper version too - just take the standard deduction rather than itemized deductions. For most people it'll end up actually being a better deduction (or at least not much worse). Of course if you donate significant amounts of money to charities, you'll want to itemize.

Why Americans hate tax (3.33 / 3) (#21)
by MugginsM on Fri Feb 22, 2002 at 05:07:53 AM EST


I have a theory that Americans hate paying tax so much
because it's shoved in their faces.

When I visited the US I was astounded to find prices in
shops weren't the price you actually pay - you had to
stand and calculate two or three different taxes on top
of that to get the final amount.

It seems that you're made painfully aware of every cent
you pay.

Here in NZ, shop prices include any relevant taxes, it's not
explicit. Most people have their employers deduct their
income tax automatically before being paid. The banks
automatically deduct the various interest taxes. Sure,
come the end of the tax year, we have to work a few deductions, but it's pretty straightforward for all but the self employed.

And although of course none of us *like* paying tax, there
seems to be a lot less animosity about it.

How do other countries vary?

- MugginsM

Sales taxes (4.00 / 1) (#24)
by wiredog on Fri Feb 22, 2002 at 08:21:00 AM EST

I suspect New Zealand uses a VAT which is the same across the country. The US is different. In Utah you have the base price of the item. Plus state sales tax, plus a county sales tax (different for every county), plus, possibly, a city sales tax (again, different for every city).

Peoples Front To Reunite Gondwanaland: "Stop the Laurasian Separatist Movement!"
[ Parent ]
Question (none / 0) (#33)
by linca on Fri Feb 22, 2002 at 12:04:07 PM EST

How does that prevent the actual shop from advertizing the real price instead of the base one?

[ Parent ]
Couple of reasons.... (none / 0) (#35)
by Elkor on Fri Feb 22, 2002 at 01:07:39 PM EST

In the US, certain organizations are exempt from paying Sales Tax (churches and non-profit organizations come to mind). Sales Tax is intended to only be collected when the item is sold to a consumer. So if another company purchases stuff to resell, they don't have to pay sales tax for the inventory they acquire.

Additionally, many of the items are priced such that the sales tax ends up being a fraction of a penny.

So, for a 4.5% sales tax, a $1.00 item costs $1.045, which is rounded up to $1.05.
However, two $1.00 items would cost $2.090.
So, if they listed the item as $1.05 each, they would be collecting an extra penny. Essentially charging more for the second item.

Doesn't sound like much, but you know us US Americans. We are a wacky bunch when it comes to our laws.

Regards,
Elkor


"I won't tell you how to love God if you don't tell me how to love myself."
-Margo Eve
[ Parent ]
NPOs (4.00 / 1) (#44)
by pietra on Sat Feb 23, 2002 at 04:56:31 PM EST

are not necessarily exempt from paying sales tax. The laws vary heavily from state to state (for instance, North Carolina only allows exemptions on sales of Bibles sold by non-profit church organizations. Seriously). Do *not* do what a client of mine once did, and blithely assume that if you've registered as a non-profit with the IRS, you don't have to pay sales tax ever ever ever, and then operate in 40 states for 45 years. I bring this issue up only because some poor accountant like me will then have to research the @!#$%@ individual state codes and figure out how gruesome your penalties will be.

[ Parent ]
Taxes. (none / 0) (#36)
by Alarmist on Fri Feb 22, 2002 at 01:14:24 PM EST

How does that prevent the actual shop from advertizing the real price instead of the base one?

You have to realize that we're a touchy lot when it comes to taxes. We've had a war and a rebellion or two over them.

The store doesn't typically list the tax price for two reasons:

First, tax rates change fairly often, and rather than change the signage to reflect the new tax, it's easier to list the base price and let people figure out at the register what the tax will be.

Second, it allows the store to say, "The evil government is making us charge you all of this extra money. This price is what we would charge you if we didn't have sales taxes. The government sucks."


[ Parent ]

PAYE-like Systems (3.50 / 2) (#22)
by BobaFatt on Fri Feb 22, 2002 at 06:59:36 AM EST

Is there any particular reason why the USA hasn't introduced a Pay As You Earn system, similar to that in the UK or other countries. My Income Tax is seducted from my earnings before I get them, and I need never hear from the tax-man again. Very convenient.

The Management apologise for any convenience caused.
It has (5.00 / 1) (#25)
by wiredog on Fri Feb 22, 2002 at 08:23:11 AM EST

It's called "withholding" over here. The forms have to be filled out because the withholding rarely exactly matches the actual tax. So at the end of the year the taxayer either owes money, or gets a refund.

And, every damned year, Congress fiddles with the tax code. Wish they'd only do every five years or so.

Peoples Front To Reunite Gondwanaland: "Stop the Laurasian Separatist Movement!"
[ Parent ]

I filled out the 1040 this year. (none / 0) (#26)
by wiredog on Fri Feb 22, 2002 at 08:26:24 AM EST

My income was too high for 1040ez or 1040a. Doing my Federal and State (Va) taxes took about an hour. Wasn't difficult at all. I ended up owing $650 total, but I prefer owing. Owing tax means that the money was in my bank account, earning interest for me, rather than in the IRS's accounts, earning interest for them.

My total federal and state taxes came to around $12,000 this year.

Peoples Front To Reunite Gondwanaland: "Stop the Laurasian Separatist Movement!"

You woun't catch me doing this (4.50 / 2) (#28)
by porkchop_d_clown on Fri Feb 22, 2002 at 09:16:43 AM EST

For a simple reason: I want a paper trail. Last time I checked, the IRS requires you to keep paper records for seven years. So, WTF do you do if our loving Treasury department screws up your tele-filed return??


--
When using a nigh-omniscient computer to run your evil empire, do not install Windows. Also, be sure to disable the AppleTalk protocol - woul

Bah. Join the developed world (3.00 / 2) (#31)
by Scrymarch on Fri Feb 22, 2002 at 10:34:49 AM EST

And submit your tax forms online.

Confusion about US Tax System (none / 0) (#34)
by Elkor on Fri Feb 22, 2002 at 01:00:53 PM EST

A couple of people have expressed amazement about US denizens filing taxes at the end of the year.

To (hopefully) clear up confusion, our employers withold our income tax from our paychecks and pay it to the government, much as I imagine most countries do. At the end of the fiscal year, we are given a summary of how much we made, and how much of it was paid to the different taxes (Federal, State, etc).

At this time, it is our "duty" to make sure that the proper amount of tax was witheld during the year. If we calculate that we paid too much, we request the government to give us a refund. If we didn't pay enough, we have to send a check to the government to make up the difference.

The hypocrisy is that you are only REQUIRED to file the paperwork if you owe more money. The government will quite happily keep any excess money if you let them.

Regards,
Elkor


"I won't tell you how to love God if you don't tell me how to love myself."
-Margo Eve
No, you still have to file. (4.00 / 1) (#43)
by FredGray on Sat Feb 23, 2002 at 12:07:48 PM EST

The hypocrisy is that you are only REQUIRED to file the paperwork if you owe more money. The government will quite happily keep any excess money if you let them.

This isn't true. The only people who aren't required to file a return are those who didn't earn enough to owe any income tax at all. (For example, a single person under 65 with no dependents who is not a dependent of someone else who earned less than $7450 last year.)

Otherwise, the government will quite happily keep any excess money AND ALSO bill you for a large failure-to-file penalty. If you still don't file your return (within a few years), they'll eventually show up at your door with handcuffs.

[ Parent ]

The American Revolution (none / 0) (#39)
by broken77 on Fri Feb 22, 2002 at 02:32:09 PM EST

Was not about taxation. It was about "Taxation Without Representation" (and other stuff of course). FYI.

I'm starting to doubt all this happy propaganda about Islam being a religion of peace. Heck, it's just as bad as Christianity. -- Dphitz

I'm aware of that... (none / 0) (#40)
by ubernostrum on Fri Feb 22, 2002 at 03:59:36 PM EST

At least, that that's the "official" story...I do so like the explanation given by a visiting British professor of history (IN JEST, mind you, so you don't need to go dig up links to debunk the poor man):

"American businessmen decided that they didn't want to pay taxes anymore, so they hired the French to fight England for them. It was a good plan, and was only almost foiled by the fact that the French showed up several years late."

Please note the sarcasm in my historical references; I'm aware text as a medium doesn't convey that sort of thing very well, but I did pass several high-school courses in American history with more than passing marks, and could probably lecture on the Revolution at greater length and with greater accuracy than most of my countrymen. I just choose to engage in the rhetorical devices of humor and/or sarcasm from time to time, and do not mean to be misconstrued.

Although by now I should be used to it...my sophomore year in high school we had an assignment to imagine we were writing treatises either in favor of or against declaring independence, and I wrote a little proposal in the manner of Jonathan Swift, arguing that it was, of course, wrong and immoral to declare independence from our mother country and that we should stay with England to the end...oddly enough the teacher actually took it at face value, and that was the last time I ever tried writing satire in a high school class.


--
You cooin' with my bird?
[ Parent ]

More on Why Americans Hate Taxes (4.00 / 2) (#41)
by epepke on Fri Feb 22, 2002 at 05:23:54 PM EST

I used to live in Florida, which has no state income tax. I used to wonder why people complained about income tax so much. Then I 1) moved to Georgia, and 2) worked in detail with the payroll system of a company that did business in most states and Canada.

Americans pay three types of Federal taxes minimum: Federal Income Tax, Social Security Tax, and Medicare Tax. On top of this are, in most states, State Income Tax. There also can be County Income Tax, City Income Tax, and even School District Income Tax. All of these can be on the basis of residence or work or both.

While our Federal Income Tax alone is less than in most of Europe, when you add up all the little taxes together, for many people it comes to about the same or more. Furthermore, it gives one the feeling of being nickled and dimed to death.

Georgia is even trying to pass a commuter tax that will tax people based on living in one county and working in another.

Of course, it should go without saying that all these different little governmental entities have the right to levy extra sales tax, as well. There's no Federal sales tax like the English VAT, but typically a person will have to pay state and city sales taxes. Private transactions are also subject to the sales tax. Interstate commerce does not have a sales tax up front unless the business has an office in your state, but people are supposed to pay the sales tax of their residence state when it doesn't.

So, it really does get a bit ridiculous here.


The truth may be out there, but lies are inside your head.--Terry Pratchett


Laffer Curve (3.50 / 2) (#42)
by PresJPolk on Sat Feb 23, 2002 at 09:49:27 AM EST

What, an article mentioned the Laffer curve, and didn't get voted down?

There's hope for kuro5hin yet. :-)

IRS TeleFile: A Replacement for the Dreaded Form 1040? | 45 comments (39 topical, 6 editorial, 0 hidden)
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