Eliminate Filing Routine Income Tax Returns

2. Determine ways to eliminate the need for filing routine income tax
returns.

The Secretary of the Treasury should eliminate or reduce the need for
filing routine income tax returns by January 1998.

The entire IRS filing process must be reengineered to be less
paper-intensive. Most of the required financial information is already
reported by business and financial institutions to the IRS. The IRS, not
the taxpayer, should prepare or process the tax information. Taxpayers
should only be required to file exceptions to the norm, e.g., unreported
income or transactions, unusual deductions, etc. An annual closing
statement could then be prepared and provided electronically to the
taxpayer for review, validation, and acceptance or reconciliation. The
primary emphasis would be on reconciliation before the fact rather than
enforcement and penalties after the fact.

Taxpayers could access the IRS data files by kiosk or by home personal
computer to confirm that tax computations are accurate. They could then
settle their accounts electronically by either paying taxes due by a
credit card or automated teller machine card or by directing the refund
to a designated account using electronic funds transfer.[5] At any time
during the year, the taxpayer would have the ability to determine if
withholdings track with projected year-end tax obligations.

Endnotes

5. Enabling legislation for federal agencies to accept electronic
payments via credit or debit cards is included in H.R. 13, which was
introduced January 5, 1993.