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Friday, April 9, 2010


Here's irony for you: TurboTax screwed up and is getting audited by the IRS.

It can happen to anybody. The complexity of the U.S. tax code is a national disgrace, and actually trying to complete a return can be a deeply humbling experience, even for a tax pro. But you would think an outfit that makes bazillions promising that its program will get it right would... you know... get it right.

One of these days Congress is going to wise up and pass an official computer tax software program instead of a tax code. Whatever the program says should be final. If somebody wants to translate the software into statutory language, plain English, or any other language, fine. But since everybody's using the software, the computer's verdict should be conclusive.

What we have now is the opposite -- Congress passes legalese, which then has to be translated into computer code for everybody to use. But if the computer code is wrong, as it was in this case, under the current system, the legalese prevails.

The whole thing is pretty nutty, which is why it's a perfect career for some of us.

Comments (11)

I am not a "tax pro." But I know how to fix the tax code. Dump it and the income tax and adopt a consumption tax. Everybody pays!

The problem with Turbo Tax is that under certain situations it takes a double deduction for medical expenses for some government employees. They call this a flaw, I call it an enhancement.

Those of us who are tax practioners could design an income tax system that was simple and fair (at least fair according to my standards of fair). A consumption tax has major problems such as enforcement, regressive nature, shifting of burden from high income to low income individuals. Most people ignore the enforcement issue, but work with any state sales tax officials and you see it is a major problem.

Jack's solution, an official tax software program is great, but will never become reality.

Jack: If you were king, what would you do to the tax code? Are you in favor of a flat tax? This isn't a trap question for me to launch into an argument. I'm just curious to hear the opinion of someone whose profession it is to deal with the subject.

Jack's solution for the government to have an official tax software package is a terrible idea. No government seems to be competent to run software development projects starting with PDX's water bureau and ending with the Federal Bureau of Idiots Virtual Case File System. The replacement for that failed system called Sentinel now appears to be failing as well:


If you want a royal software snafu get the govt involved.

Chris, I support what Mike Graetz has proposed: a value-added tax (VAT), with an income tax for the top 3% to 5% of earners. It would be flatter, and therefore less fair, than what we have now. But it would eliminate the maddening complexity that we all struggle with this time every year. 95% of the population would never see a tax return form again.

What's your take on the pilot program that California ran where they sent people a pre-filled-out tax form based on the information they'd received from banks, employers, etc. People were free to pitch it, revise/correct it, or simply sign it. Apparently it was quite popular until Intuit went berserk at the thought of their rice bowl being broken. I've always thought the feds should do exactly the same thing and tell Intuit to go stuff themselves.

That was a great, great thing that California did, and the federal IRS should get on the same program. In probably 40-50% of cases, the government already has all of the information that the taxpayer needs to report. If that's the case, let the IRS prepare the return and save the taxpayer the headache.

Intuit is a parasite on the country. As is H.R. Block, and to a lesser degree, all of us who make a living off the income tax.

The law contains a lot of algorithms (taxes, apportionment of House seats) that might be better described in computer code (or psuedocode) instead of English sentences.

Jack, the tax code is software, written for execution by meat cells instead of silicon chips. Even if Congress starts legislating in computer code, the ambiguities might be fewer but the clarity would not improve.

If you think the federal tax code is complicated now, wait until the value added tax code is added to the income tax code. Paul Volcker has planted that seed in fertile Progressive ground.

Speaking of taxes, a pithy Krugman blog post here is pretty good on point:


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