You sign in online after satisfying security checks. You review an income tax return that is partially filled out for you, based on information sent in by your employer and financial institutions. You make adjustments — listing additional income, claiming deductions. When you’re done, you click submit. There is no fee.
That’s essentially what a California system called ReadyReturn offers for people who need to submit a state income tax return. If their tax situation is straightforward, and they meet certain conditions — such as having a single employer — they can likely use ReadyReturn. The system is in its infancy, only a fraction of eligible people use it, and its restrictions lock out many other people with relatively simple tax situations. But it’s slowly gaining traction, despite detractors, such as the income tax preparation software industry.
As I get ready to fill in the blanks for my relatively uncomplicated tax life, copying numbers from various T forms into the proper spaces, I’m thinking that the California way might be a better way.
The Canada Revenue Agency already receives information from my employer, financial institutions and charities. It could easily transfer that information into the proper blanks for me. I would then supplement and adjust and perhaps correct. If there is a concern about shutting out software vendors, the agency could work out deals to stream tax infomation into privately-sold software after we give authorization.
It’s silly that we’re required to fill in the blanks with information the government already has, and then get into trouble because we forgot something, put something in the wrong blank, or make a math mistake.
This wouldn’t be a system for people with complex tax affairs, and it would be optional.
There are plenty of technical and privacy hurdles. But a variation on ReadyReturn is worth a try — and other jurisdictions have proven that it can work.
The California ReadyReturn website has testimonials from anonymous users:
• “I was able to do my taxes in less than 5 minutes. Thank you.”
• “Going online and finding my prefilled return, all I could say was WOW!”
• “Amazingly simple.”
The enthusiastic user says 5 minutes; the ReadyReturn website estimates 15 to 30 minutes.
ReadyReturn’s website is here.
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A research paper done for the Brookings Institution in the U.S. says simple returns, where the government helps to fill in forms, have been implemented in Denmark, Sweden, Finland and Norway.
The paper argues that such systems greatly reduce the number of filing errors, which cuts costs for tax agencies. Tax filers are spared from having to spend hours gathering information slips and wading through their tax returns — hours that could be spent doing more productive things. Plus there’s billions of dollars that do not have to be spent on tax preparation fees (but that, of course, is not necessarily a good thing in some eyes.)
The Brookings research paper is here.
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