A small victory for ordinary taxpayers


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California's Franchise Tax Board recently approved a permanent Ready Return program, which provides fully filled-out tax returns for taxpayers with simple returns. Although the program was wildly popular with taxpayers who used it, Intuit, makers of Turbotax and chief lobbying force against free on-line filing, had lobbied the legislature to end the program.

Intuit took a well-deserved hit on this issue after it poured $1 million into a campaign against John Chiang (D), recently elected Controller and a current member of the FTB, who supports Ready Return and free on-line filing. Intuit has also spent hundreds of thousands of dollars in a lobbying effort (hiring the same firm that represents big tobacco) to eliminate the CalFile program, which allows taxpayers to go on-line and file their state income taxes without going through private sector filers like Intuit and HR Block. They even promoted a bill which said that any on-line filing system would not be allowed to perform arithmetic and tax-table look-up functions!

Fortunately, and unlike at the federal level, California and many other states continue to have free on-line filing, in which taxpayers can fill out their information, the program calculates the tax or refund, and the return is sent electronically. Ready Return takes that a step further: it says to the taxpayer, here's the information we have, is it correct? If so, send it back, either electronically or through the mail, and your taxes are done. 96% of taxpayers who used the system were highly positive about it.

Meanwhile, as previous blogs and Taxpayer Advocate Nina Olson have noted, the federal "Free File Alliance" program continues to be a mess. It's not free if your income is over a certain unspecified level, it charges to file state taxes as well, and often charges for "upgrades"--that is usable programs rather than the minimal, unusable programs offered for free.

A small step by the new Democratic Congress could require the IRS to move to direct on-line filing, as many states already provide. (Estonia, much admired by Bush for its flat tax, apparently also provides on-line filing). At minimum, truth-in-advertising requires removal of the word "free" from the IRS website.

Lenny G

Thank you for visiting Tax Justice Blog. CTJ and ITEP staff will soon retire this domain. But ITEP staff are still blogging! You can find the same level of insight and analysis and select Tax Justice Blog archives at our new blog, http://www.justtaxesblog.org/

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