This blog is a way for me to share hard learned lessons about money with those who are just starting out on their own. I hope it's a way for you to avoid making the mistakes I made, and to benefit from my experiences

Monday, March 12, 2007

IRS gets it bass ackwards

Every year this irritates me, as if having to spend hours preparing my taxes isn't enough. I'm talking about the IRS's E-File program. What is the purpose of the E-File program? Why was it even created? Was it to help taxpayers get their refunds faster? No! That's the incentive to encourage people to e-file.

The E-File program was created to accomplish two goals. To reduce data entry error and to eliminate the extra labor and hassle of handling paper returns. For every paper return filed, the IRS has to deal with handling the mail, opening it, scanning the forms, seperating out the checks, W-2s, etc. On many it has to do manual data entry. It's much more efficient and accurate to have them filed electronically.

So why does the IRS insist on making those who have the largest returns pay a fee to efile? If you've got a simple return, like a 1040A or 1040EZ, it's usually 1 or 2 pages, and it's pretty much free to file. If you have a return like mine this year, it's 8 pages, with a lot of numbers. Wouldn't it be in the best interest of the IRS to make longer more complicated returns Free to file?

If I wasn't getting back very much, or god forbid had to pay, I wouldn't pay $16 to e-file. And my home state of California is just as bad. In their case, I'm not getting much back, so I am not paying the additional $16 to e-file with them. So what if it takes an extra couple of weeks to get my return. They can just do the extra work in dealing with my paper return.

None of this makes sense. They've got a program in place, and it works! Now they just need to implement so all want to participate and save the government money. But we're supposed to pay for the privilege of saving the gov't money when doing the most hated of gov't requirements. Screw that! But I guess that shouldn't surprise me, because it's the government.

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