A Vox report explained that most Americans have taxes that are so simple that they could be done automatically from the IRS.
The IRS already has the paperwork and they know the data if you have a W-2, 1099, 1098 mortgage interest payment or tuition. Yet, Americans are on the hook for filing the paperwork and paying to use online service sites.
Having the IRS simply run the reports themselves, "isn’t a purely hypothetical proposal," said the report. "Countries like Denmark, Belgium, Estonia, Chile, and Spain already offer such 'pre-populated returns' to their citizens."
Four economists penned a new paper that estimates that at least 41 percent of American families, or "some 62 million tax-filing units" could have their taxes automatically handled.
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The 2019 effort came from an agreement by the IRS to allow the researchers the data to "pre-populate returns" for taxpayers using the information in the system. They ran the match to show how it could work for an individual. The most conservative approach to collecting and tabulating the data showed that 62 million Americans could have their taxes done this way.
There are many Americans who don't pay taxes because they make too little money. Many don't even file their taxes, even when it means they could access benefits and returns. It results in 22 percent of Americans who don't take the tax credits they're owed.
"So the authors of the automatic filing paper estimated how many non-filers could get tax benefits under an automatic filing system," the report explained. "They estimate that 7.2 million tax units who aren’t required to file are owed refunds, averaging some $411 each. Those units would be likelier to get their refunds under a pre-populated filing system."
