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Will the Simple Return end April 15 tax agony?

Thousands of Californians will use the program, which provides taxpayers with filled-in statements.

By Staff writer of The Christian Science Monitor / April 15, 2008

Tax help: Carmine Sodora (l.) prepared Peter Marafioti's tax documents at a N.J. tavern April 9, 2008.

joshua lott/reuters

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Oakland, Calif.

Every year, Americans spend millions of hours filling out tax forms that show the federal government what it already knows: income, interest earned, and interest paid.

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If it's all in government databases anyhow, why not save taxpayers the hassle and give them forms with that information already filled in and calculated?

That's the idea behind the Simple Return, and as today's tax-filing deadline arrives, thousands of Californians will have completed a version of it. It's a system gaining its advocates, among them presidential hopeful Barack Obama: his chief economic adviser is one of its architects.

Simple Returns could be used by 40 percent of Americans who have basic tax liabilities, saving them 225 million hours of preparation time and more than $2 billion in tax-preparation fees, proponents estimate. Convert that time into money, and the savings jump to $44 billion over 10 years.

"Think of a tax return like a Visa bill. Visa doesn't send you a blank piece of paper and say, 'Write down all your transactions.' They send you a printout and they say, 'Look it over,' " says Joseph Bankman, a Stanford University law professor who helped devise the ReadyReturn, California's version of the Simple Return.

Opponents including members of the tax-software industry and small-government conservatives warn that the Simple Return weakens taxpayers' position vis-à-vis the tax collector.

"It shifts the initiative. If the first step in doing your taxes is having the IRS send you the bill, it's pretty clear who is in the driver's seat at that point," says Ryan Ellis, director of tax policy at Americans for Tax Reform, an antitax advocacy group in Washington. "You've got the taxpayer, this isolated person, having to fight the IRS on a battlefield of the IRS's choosing. That's just not right."

A straightforward beginning

The idea so far has been envisioned only for simpler types of returns, the ones least open to the adversarial negotiation that Mr. Ellis wants to keep in balance.

California's ReadyReturn is available only for residents filing as a single head of household, with only one employer, no dependents, no itemizing, and no special credits. The state estimates that about 1 million Californians are eligible. The program is voluntary and free of charge.

If there were a TurboTurboTax, this would be it. A resident can go to the state's website, plug in their name, Social Security number, and answers to security questions, and if they qualify, staring at them will be their state tax return with the bubbles, boxes, and lines already filled in.

Yes, Virginia, line 14 has been subtracted from line 13, and if line 14 was more than line 13, zero was entered – though if anything looks amiss, a taxpayer can make fixes to the form.

That simplicity reflects some tax-filing systems abroad. Denmark and Sweden have used systems like Simple Return for at least a decade.

"There are lots of countries with an income tax, and lots with basically our system. But we make the filing part harder than any other country," says Mr. Bankman.