Tax Filing Simplification Act : The Proposal that Might Change Everything

Tax Filing Simplification Act : The Proposal that Might Change Everything

Washington, DC (April 13, 2016) — U.S Senator Elizabeth Warren (D-MA) introduced a proposal legislation which will oblige the government to do the taxpayer’s returns for free. The main agenda of this act is to provide ease in processing tax returns, thus making tax filing simple for most taxpayers.

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There was an Idea…

The idea was first proposed by Ronald Reagan during 1985, and was also mentioned by President Obama during his campaign in 2008. There are countries like Chile, Spain and Sweden which offer pre-populated returns to residents. Even countries like Japan have precise tax withholding processes, in which citizens doesn’t need to file returns.

In a written statement, Sen. Warren said:

“This year, taxpayers will spend an average of 13 hours preparing and filing their returns, and will pay $200 for tax-preparation services – a cost equal to almost 10 percent of the average federal tax refund”

Presidential hopeful Bernie Sanders, one of the cosponsors of the proposed legislation, stated that the act would bring an end to what he call “absurdity” when it comes to tax processing, where taxpayers are paying private companies just to pay their taxes.

Even Sander’s opponent Hillary Clinton also supports the act, saying that this will help America in building “a better, fairer tax system”.

Scope of the Act

Under the proposed act, taxpayers with simple tax situations will have a return-free option, in which taxpayers doesn’t need to submit tax returns, instead receive a finished return being prepared by the Internal Revenue Service (IRS). The government agency will base the returns on the data being provided by employers and financial institutions. This is believed to be the solution on getting rid of struggles in tax filing for almost 70% of taxpayers who doesn’t itemize deductions.

For filers with complex tax scenarios (ex: itemize deductions, claim dependency exemptions), the legislation act will oblige the IRS to create an online tax preparation and filing service program where taxpayers can file their tax returns without the help of third party tax software or even services of tax return preparers.

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Several taxpayers saw the Tax Filing Simplification act, if implemented, as a great help that will kill all difficulties in filing taxes. Not only it’s fast and easy, but the service will also be free for them. Another factor is the concept of the government having all the information needed in processing a tax return. They have w2s and w4s as well as 1099 information which will be sent to filers.

For filers, this might also be the key for them to never experience identity theft in tax returns, which is one of the biggest problems of the IRS.