ReadyReturn

ReadyReturn was a tax preparation program initiated by the California Franchise Tax Board (FTB) as a pilot in 2005,[1] tax returns for the 2004 tax year, based on their 2003 tax data, went out to 51,850 taxpayers receiving a "pre-populated"[2] form based on financial information reported to the FTB by employers and banks. Recipients were single, no-dependents, standard-deduction, only-wage-income, one-employer, with a maximum adjusted gross income of $139,917[3][4] The purpose of ReadyReturn was to make it easier for taxpayers to file their returns, and to make the filing process more accurate and faster.[5]

More than 20 other countries implement pre-populated returns for some of their taxpayers.[6][7] Denmark, began a pre-filled return program in 1988, and has a 80% participation rate. Chile, Finland, Malta, New Zealand, Norway and Sweden have similar programs available to most taxpayers. Singapore, South Africa, Spain and Turkey have similar programs available to at least 30% of taxpayers. Australia, Estonia, France, Hong Kong, Iceland, Italy, Lithuania and Poland have similar programs available and are used by some taxpayers.[6][7][8]

In the 1990s Michigan offered return-free filing, but dropped the program due to lack of participation,[9] Louisiana planned but dropped implementation due to Y2K problems,[9] and Minnesota proposed but did not enact return-free filing.[10]

Origins

In 2004, California Franchise Tax Board staffers told Joseph Bankman,[11][12] a leading scholar in the field of tax law, a clinical psychologist,[13] and Professor of Law and Business at Stanford Law School that they realized that they had all the data they needed to fill out Californians’ tax returns for millions of Californians whose entire income came from one job.

In 2005,[14] Joseph Bankman worked with the State of California to create ReadyReturn, a pilot study with a completed tax return prepared by the state (not an individual or tax professional) that was available to single, no-dependant, standard-deduction, one-employer, wages-only taxpayers for the 2005 filing season.[15]

When the California Franchise Tax Board launched the ReadyReturn website, Intuit sued and lobbied California legislators to kill the program.[11][16][17][18][19]

Methodology

In the pilot, taxpayers were allowed to file the return as given to them, to modify and then file it, or to ignore it and file however they normally would.[20] Of the 50,000 participants in the pilot, 38,500 chose to ignore the return, and approximately 11,500 filed it.[21] A survey of pilot participants found more than 90 per cent said they saved time using ReadyReturn, and that it was more convenient than the system they had used previously. 99% said they would use it again the next year.[22] 0.3% of ReadyReturn filings contained errors, versus 3.1% of non-ReadyReturn filings.[23]

Opposition

Between 2001 and 2010, Intuit Inc., maker of the tax-preparation software TurboTax, spent more than $1.7 million on lobbying in an attempt to kill ReadyReturn.[24][25][26][19][27] A bill to provide explicit statutory authorization for ReadyReturn, and to make the program permanent died without a vote in the 2006 session of the California legislature.[28][29][30][31] California Controller, Steve Westly. said he was stunned by the response from taxpayers who used the program as part of the pilot project, about 96% of whom said it is a service government should provide, and one they would use again,

"I absolutely have come to believe that ReadyReturn is the right thing to do".
—California Controller, Steve Westly[32]

No ReadyReturn forms were used for the 2006 tax year,[33] but the California Franchise Tax Board revived it on their own for the 2007 tax year, expanding it to cover one million Californians.[34][32][35]

Reception

In 2012, 88,652 California taxpayers used the system, and with paper returns costing more than seven times a ReadyReturn return to process, it saved the state an estimated $125,000.[36] 99% stated they were satisfied with ReadyReturn, 97% stated this is the type of service government should provide, 96% stated it was more convenient than how they filed in the past, 95% stated it saved them time, and 98% stated they would use it again.[37][36][11][38][39][40]

CalFile and ReadyReturn at one point co-existed for different taxpayer categories.[27][41]

In 2015, ReadyReturn's best features were included in CalFile, and ReadyReturn was no longer a separate program.[42][43][44][45][46]

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References
  1. Staff, WIRED (May 1, 2006). "Crushing Competition" – via www.wired.com.
  2. Bankman, Joseph; Hemel, Daniel; Ventry, Dennis. "Why filing taxes isn't easy". The Agenda.
  3. "State program fills in tax forms for simpe returns". April 14, 2006.
  4. Small, Julie (13 April 2010). "California's ReadyReturn reduces taxpayer angst for a small number". KPCC. Retrieved 25 December 2011.
  5. Mikesell, John L. (2010). Fiscal Administration: Analysis and Applications for the Public Sector, Eight Edition. Boston, Massachusetts: Wadsworth. p. 366. ISBN 0-495-79582-8.
  6. "Spreadsheet: Tax Administration 2013: Comparative Information on OECD and Other Advanced and Emerging Economies". oecd-ilibrary.org. doi:10.1787/9789264200814-en.
  7. "Tax Administration 2013: Comparative Information on OECD and Other Advanced and Emerging Economies". oecd-ilibrary.org. doi:10.1787/9789264200814-en.
  8. Erb, Kelly Phillips. "Fix The Tax Code Friday: Should IRS File Your Return For You?". Forbes.
  9. John Rappa, Chief Analyst. States Allowing Income Tax “Return-Free Filing” Office of Legislative Research, Connecticut General Assembly January 24, 2017
  10. Analysis of SF 665 (Rest) and HF 843 (Benson), Minnesota Department of Revenue (March 2, 2007)
  11. Mayyasi, Alex (March 22, 2017). "The Stanford Professor Who Fought the Tax Lobby". Priceonomics. Retrieved April 24, 2017.
  12. Joseph Bankman “Mr. Smith Gets an Education: Why it is so Hard to get Easy Tax Filing.”
  13. https://law.stanford.edu/2018/04/09/tax-time-really-need-painful-anxiety-ridden-process/
  14. Klotsche, John (March 30, 2017). "Opinion: Americans shouldn't be responsible for filing tax returns, the government should" – via washingtonpost.com.
  15. Wright, Kathleen K. (February 5, 2008). "California Income Tax Manual 2008". CCH – via Google Books.
  16. "Will the Simple Return end April 15 tax agony?". April 15, 2008 – via Christian Science Monitor.
  17. https://icepp.gsu.edu/files/2015/03/ispwp0630.pdf
  18. "ReadyReturn | calitics".
  19. Ventry, Dennis J. (21 July 2010). "Intuit's end-run". Los Angeles Times. Retrieved 25 December 2011.
  20. "What was the experience with return-free filing in California?". Tax Policy Center.
  21. Mikesell, John L. (2010). Fiscal Administration: Analysis and Applications for the Public Sector, Eight Edition. Boston, Massachusetts: Wadsworth. p. 366. ISBN 0-495-79582-8.
  22. Furman, Jason, Jason E. Bordoff (2008). Path to prosperity: Hamilton Project ideas on income security, education and taxes. Washington DC: Brookings Institution Press. p. 300. ISBN 0-8157-3013-6.
  23. University of New South Wales Australian Taxation Studies Program (2010). International Tax Administration: Building Bridges. Sydney, Australia: CCH Australia Ltd. p. 181. ISBN 978-1-921701-29-0.
  24. "Turbo Tax maker Intuit, again, is mired in political turmoil". Capitol Weekly. September 24, 2009.
  25. Elliott, Justin; Kiel, Paul. "Inside TurboTax's 20-Year Fight to Stop Americans From Filing Their Taxes for Free". ProPublica.
  26. Day, Liz. "How the Maker of TurboTax Fought Free, Simple Tax Filing". ProPublica.
  27. Ventry, Dennis J. Jr. Intuit’s Nine Lies Kill State E-Filing Programs and Keep ‘Free’ File Alive
  28. Jim Sanders, Tax-Return Bill Dies in Assembly, Sacramento Bee, June 2, 2006, p. A4
  29. "Bill Text - SB-1355 Income tax returns: ReadyReturn pilot program". leginfo.legislature.ca.gov.
  30. "Bill Text - AB-1046 Income tax: ReadyReturns". leginfo.legislature.ca.gov.
  31. LA Zelenak. Justice Holmes, Ralph Kramden, and the Civic Virtues of a Tax Return Filing Requirement 2007.
  32. "Second life for state tax program". Los Angeles Times. December 5, 2006.
  33. "Calif. Tax Board Okays Return of ReadyReturn". Accounting Today. December 6, 2006.
  34. Graetz, Michael J. (2010). 100 Million Unnecessary Returns: A Simple, Fair, and Competitive Tax Plan for the United States. New Haven, Connecticut: Yale University Press. p. 49. ISBN 0-300-16457-2.
  35. Gledhill, Lynda (December 5, 2006). "SACRAMENTO: Tax board votes to extend ReadyReturn pilot program - Software firms, rights groups say move is illegal". SFGate.
  36. ReadyReturn: Your California tax return ready and waiting for you, California Franchise Tax Board (January 17, 2013)
  37. "Why doesn't TurboTax want your taxes to be simple?". Easy Money by Policygenius. March 1, 2016.
  38. Day, Liz (March 26, 2013). "How the Maker of TurboTax Fought Free, Simple Tax Filing". Mother Jones.
  39. Mejia, Robin (March 2013). "Taxes Made Tolerable". Mother Jones.
  40. Washington, 1440 G. Street NW; Skype, DC 20005 202-742-1520 Call with (April 15, 2013). "Tax preparers lobby heavily against simple filing". Sunlight Foundation.
  41. Wright, Kathleen K. (February 5, 2008). "California Income Tax Manual 2008". CCH – via Google Books.
  42. "Page not located". Franchise Tax Board. 2019-12-08. Archived from the original on 2019-03-15. Retrieved 2019-12-08.
  43. "ReadyReturn". California Franchise Tax Board. 2014-05-02. Archived from the original on 2014-05-02.
  44. "Calfile: File directly with us — for free". California Franchise Tax Board.
  45. "Using California's free online programs for your taxes". February 1, 2008.
  46. "California ~ Corporate, Personal Income Taxes: Self-Employed Health Insurance Deduction, ReadyReturn Elimination, and More Discussed". Wolters Kluwer Tax and Accounting. January 8, 2015. The FTB now includes ReadyReturn’s best features in its other free online filing application, CalFile. Now that CalFile offers ReadyReturn features and more, the FTB no longer offers ReadyReturn. All 540 2EZ filers and many 540 filers qualify to use CalFile.
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