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From January to March, we get statements in the mail showing the income that we earned in the prior year from employers, banks, mutual funds, and other sources. These statements are generated by computers, and the numbers on them are also sent to computers at the IRS.

We file those year-end statements until the time we start to prepare our tax forms, hoping we don't misplace any of this important mail. When we think most of the tax mail has arrived, we carefully read our statements, picking out the amounts we think need to be reported to the IRS. Whether we write these amounts on tax forms, type them into a computer tax calculation program, or give the numbers to a tax preparation service, it is a tedious process. It is also time consuming, and prone to mistakes.

At the same time, the IRS computers are automatically picking up this same data from employers, banks, etc. and sorting it into our individual tax account files. Unlike our tedious manual process, the IRS is doing this same work quickly by machine. To calculate what income tax we owe, the IRS only needs some additional information from us, like number of dependents. Many of us do not itemize deductions (which tend to prompt an IRS audit), so the additional information actually needed by the IRS to calculate our taxes is minimal.

Many studies have shown that the calculations of income taxes owed by a specific individual often vary widely. This variation is noted among professional tax preparers, and even in the advice given by IRS employees. The differences stem from clerical errors, forgetting to use a piece of income information, and from different interpretations of the complex IRS code. However, there is one income tax calculation that has more authority for correctness than the others - the calculation done by IRS computers. One has to wonder why we taxpayers have to spend so much time and money on income tax preparation, when the IRS already does it, and does it more accurately than we do with our manual inputs.

Each spring, the IRS would mail taxpayers a short questionnaire, asking for tax calculation information (like number of dependents) that does not come to the IRS automatically from employers, banks, etc. Citizens could return the questionnaire, request the IRS send then a completed tax calculation for the prior year, and also ask for a bill. Or taxpayers could ignore the IRS questionnaire and use current filing options open to them (more time consuming.) . The IRS bill option would not be appropriate for tax returns with itemized deductions, employee business expenses, or other complex information.

But the majority of us could be freed from the burdensome tax preparation process. For those requesting it, the IRS would add our annual information on number of dependents, etc. to the income information it gets automatically - and prepare a tax bill for us. We would pay it like any other bill, after reviewing it for accuracy. How simple! Those of us who chose this system would be very unlikely to get a dreaded IRS letter and the "gotcha" feeling that it generates. We would not have to pay penalties and interest due to our clerical errors or forgetting a miscellaneous income form. April should be a time for enjoying the spring weather, not spending hours at a desk reading, sorting, and calculating with complicated tax forms. Let the computers do all that work!

The wording above was revised to incorporate these suggestions from a Stanford Business School classmate:

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Comments to: VanSloan@yahoo.com

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