The Taxman Cometh… but Why?

Written on April 14, 2008  |  by RP Mickler  |  Leave a Comment  | 

As a technology professional, I’m always dumbfounded by this time of year.

I know that my corporate income, sales, and payroll taxes are processed electronically. I know that my suppliers’ and my customers’ taxes are processed electronically. I know what W-2′s that I earn are processed electronically; my 1099′s are processed electronically. My mortgage payments and interest charges are submitted electronically. The number of deductions that I’m willing to claim in employment relationships is already stated on my W9… income is seen through deposits made into my bank accounts. All other deductions could be pulled from my company’s credit card receipts which are, by the way, electronic.

I guess the need to “file” taxes seems antiquated to me. We’re not telling the government something they don’t already know – hence, their ability to track down people who commit tax fraud – so why so many hoops? Why can’t I, on January 1, already know taxes owed because everything to everybody is already electronic, and April 15 could be a limit on claiming deductions for the prior tax year? More transparency, greater collection ratios, less fees going out the door to accountants… I mean, my tax software on my personal computer does this for me – why can’t government mainframes?

Revising the tax code seems appealing, but what seems more appealing and attainable is _automating_ the tax code and building in electronic controls that prevent fraud and shrink overhead processing expenses for the tax payer. Why am I telling Uncle Sam something he should already know…?

R