State of California to Prepare Income Tax Returns
San Diego, CA (PRWEB) April 25, 2006
The State of California will be testing a new tax return system in which state tax authorities automatically complete tax returns for those with simple taxes. The program is unlikely to be repeated at the federal level, despite its potential for success.
For the past two years, the “Ready Return” system has prepared over 50,000 state tax returns for taxpayers. The returns were pre-populated, based on financial records held by the government. All the taxpayer needs to do is review the return, sign it and send it back.
To qualify for the program, the taxpayer must be single with no dependants and only one job for the year. Also, they must not have earned interest on investments, a home mortgage, stock holdings or itemized deductions.
Californian authorities say that the program cost $ 211,000 last year.
According to Austan Goolsbee, a University of Chicago economics professor, the scheme could reduce errors and shorten the amount spent by the IRS on compliance.
The Bush administration is opposed to the idea of the government preparing income taxes.
“We aren’t tax-preparation people,” Treasury Secretary John Snow told Congress. “There is a private market out there that does that and does it well.”
Companies in the tax preparation industry would likely oppose the program if it was taken to the national level. Over half of the 135 million tax returns filed this year were prepared by a professional preparer. If the program was extended nationally, approximately 55 million returns would qualify for the program.
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