Freedom Line Blog

In recent weeks, we’ve highlighted the pernicious effort to make the Internal Revenue Service not only the nation’s tax enforcer, but also its tax preparer:

This IRS scheme is part of a broader, ongoing campaign to socialize the tax preparation business in America entirely, which would ultimately make it the nation’s one-stop-shop tax preparation service.   That would obviously create a conflict of interest with the IRS serving as both tax preparer and tax collector, and it would surely result in higher tax calculations to facilitate wasteful federal spending.”

Believe it or not, however, some continue to assert that it’s an idea whose time has come.  Because, according to ProPublica, Barack Obama supports it and the Europeans do it.  And allegedly, the notoriously tax- and bureaucracy-loving Ronald Reagan was also an enthusiast.

But Ryan Ellis of Americans for Tax Reform, one of the most informed and cogent tax experts in contemporary public discourse, throws cold water on the idea in a new commentary entitled “Top Seven Reasons the IRS Shouldn’t Do Your Taxes for You”:

The basic argument is always the same: the IRS has all this information on you anyway, so wouldn’t it just be easier and better if they simply prepared your taxes for you?  Wouldn’t that be better than having to pay some rent-seeking middleman?  This flawed line of thinking fools many a reporter this time of year, but it’s refuted pretty easily once you scratch beneath the surface.”

In trademark fashion, Ellis details those seven reasons in clear, convincing form.  It’s well worth the quick read on an issue that is becoming increasingly important.

But his conclusion is worth particular emphasis:

The bottom line. These tired, annual articles from white collar lefty pseudo-academics living in the Beltway all ignore the really big story here: namely, that it’s a giant conflict of interest for the IRS to determine your tax liability, and then to be able to seize your wages and assets in order to collect that tax liability.  To ignore that is to be criminally-naive about the way the IRS goes about its business.  It betrays either a lack of knowledge of how the tax system actually works, or it’s a giant con job by people whose common cause with the IRS is growing the size of government.

Demonizing the tax prep industry doesn’t change any of the arguments from above.  It does, however, provide a thin shield of self-righteousness for what is otherwise a fool’s errand.”

It’s April 15th – the date that millions of Americans who waited till the last possible day to file their tax forms with the IRS can wait no longer to feed the insatiable appetite of federal (and state) tax coffers.  If you are like most of us, you try to struggle through the filing yourself — coffee and documentation at the ready — ultimately giving up and hiring an accountant, a tax-filing firm or downloading an online program.  In any event, it is an annual chore.  A monumental pain.  And an expensive one, at that — especially if you get it wrong and end up owing penalties.  Well, guess what, fellow tax-payers?  You are not alone!

The Hill newspaper reports that “few members of Congress prepare their annual tax returns, instead relying on professional preparers…”  The article details how even Ways and Means Committee members — the very ones responsible for writing the tax code — need professional help to file their annual taxes. Of the 28 respondents, only one — Got that? One — Member of Congress said he did his returns by himself (and he was an accountant for 12 years).

During an interview on C-SPAN’s “Newsmakers” program back in January, IRS Commissioner Douglas Shulman announced that he doesn’t prepare his own tax returns either.  Why?  Because, at least in part, he finds the tax code to be “too complex” to prepare them himself.

If that is not a case for tax reform, we defy you to find a better one.