Taxes, The Internet, and the Government: Be Afraid: Page 2
Privacy problems raised by government-run tax preparation services do not end with solving the security problems. Beyond the fears of hackers and unplanned security breaches, the idea of the tax collector looking over your shoulder while you prepare your taxes should rightly be unnerving.
Privacy advocates have long railed against commercial web sites whose ability to track and monitor your online activities as you surf their sites. Yet various privacy laws coupled with the companies own privacy promises work to keep commercial firms from getting too far out of step with consumers expectations.
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But as Ive seen from looking at some of the government-managed tax preparation services, I have to believe that taxing authorities will find it nearly impossible to restrain themselves from cataloging, cross-referencing, and eventually auditing every edit and adjustment you might make that lowers your tax bill.
And theyll have every incentive to spy on you at every step of preparing your tax return. The traditional argument against more wide-spread IRS audits is that the cost of investigation only makes sense for investigators to pursue relatively wealthy individuals. But if they can quickly get an electronic roadmap to your every adjustment, correction, and recalculation, the cost of combing through millions more tax returns just got a lot more affordable.
In case you think Im getting a bit overly conspiratorial, you can judge for yourself whether theres a cause and effect between the launch of Californias online tax prep service and a sharp increase in audit rates.
While you can bet the taxman will be scrutinizing every keystroke, one thing you can count on being absent from a government-run tax preparation service is any useful advice on reducing your tax liability. Among the most valuable benefits of private tax preparation services is getting advice on deductions and tax-reducing strategies to save you money. Taxing authorities have every incentive to keep you from discovering deductions and loopholes that you might have overlooked.
In a time when we are watching major corporations felled by financiers whose conflicts of interest proved too tempting to pass up, placing the tax collector in the position of also assisting you with tax preparation is a disaster waiting to happen.
If tax preparation firms, accountants, and financial advisors mistreat customers they lose business, and can even be sued. Yet governments have to give you permission to sue them, and when as Congressional investigations have found, when the IRS abuses a citizen, the tax collector gets promoted.
Streamlining citizens interactions with government through technology is a laudable goal as long it is done properly. The government may tell you its tax service is free, but when citizens are given the opportunity to compromise their privacy for the promise of convenience, we should all be afraid.