Because you could have gotten married, been blinded, and started a business grossing $900k but only netting $100k a year and they would know none of that outside of a couple of 1099s.
What they did for you though is look at your return, and saw you didn't declare investment income that they knew about from a 1099.
But your point is wrong. In 87% of the cases, the IRS does have all the information. Even if you have donations or other deductions it doesn't matter, because 87% of people take the standard deduction since it's more than their itemized deductions.
And marriage and death records are public, as are probate. So they would have all of that too.
That's not what they said at all. Most people are not changing marital status or starting businesses every year.
The IRS could send a tax bill for what they do know, with an option to agree that is all you owe and pay, or an option that you will need to file the taxes yourself because they are missing information.
For the vast majority of Americans, option 1 will cover them.
I think it’s likely the IRS uses some kind of database of US vital statistics (including marriages) as part of efforts to detect tax fraud. Other federal agencies do, eg the State Department’s passport office uses a proprietary database called EVVE of birth and death data. [0]
Sure, but couldn't that be done on a case-by-case basis, and the fed just sends you a refund/bill at the end of the year that you're responsible for amending?
I'm not saying a company like Intuit adds zero utility, I'm just saying that I think a lot of taxes are simple enough to where it would be relatively easy to just give people a default thing. If the IRS gets something wrong, or is missing some info, then I think a software like TurboTax makes a lot of sense, but isn't that much more of an edge case? Fundamentally, the complexity of my taxes didn't really change in the last five years.
When the 1040EZ was a thing, only 16% of filers used it. Those would be the candidates who could safely have the IRS do their return. With anyone else, there's all kinds of information the IRS has no clue about.
Most people don't use the EZ because even the most common deductions (that the IRS knows about, like your mortgage and state taxes and your stock investments through a firm, etc.) couldn't be put on there.
But the IRS still knows about them.
Also they could put a website where you could spend five minutes entering the most common information they don't already know, and then spit out your bill.
It's not that hard. Most filers situations aren't that complicated.
>Also they could put a website where you could spend five minutes entering the most common information they don't already know, and then spit out your bill.
