The Internal Revenue Service has been in its current modernization push since 1998, and it has been moving at a regrettably slow pace. As a businessman, it is hard to imagine that in 2018 I would still be using technology created more than two decades ago. Just as our businesses and entrepreneurs have to adapt to a changing technological environment, so must Washington.
In 2015, the nonpartisan Government Accountability Office noted the IRS effort to update the Electronic Fraud Detection System is over budget by more than $86 million. This means the overall cost for this unfinished projected is already more than double the originally requested budget.
As a member of the tax policy writing Ways & Means Committee, I am working to make the IRS more efficient for every Ohioan, especially our small business owners. As it stands now, small businesses can electronically file their W-2 forms through the Social Security Administration, at no cost to them. Having this option available cuts down on the time it takes for taxpayers to file this information and reduces Social Security’s cost in processing these forms.
A bill I recently introduced seeks to take that same logic — and same efficiency — and apply it to filing Form 1099. There are many reasons why you might interact with a 1099. For example, if you are self-employed, withdraw money from a pension or retirement account, or have accrued interest from funds in the bank, then a 1099 is important for you.
This concept should be very simple — our government needs to work for our small business owners. Instead of requiring small business owners to mail in their 1099 forms, my bill will require the IRS to create an electronic portal for submission. Some of my constituents prefer to send in their forms via snail-mail, and my bill won’t change that. What it will do is require the IRS to provide more options to taxpayers. That way, if a small business is looking to cut down costs, and increase efficiency, the government won’t get in the way.
I came to Congress from the business world to use my experience to help make Washington work better for Ohio. As far as the IRS is concerned, I have worked to cut down on unnecessary agency spending, prevent the IRS from targeting taxpayers based on political party affiliation, and now it’s time to move the IRS into the electronic age.
Not only will my legislation help our small business owners file their required tax forms, but electronic submission also improves the security of the process. Like many of you, I have been the victim of identity theft. In the 2015 filing season, a criminal stole my personal information and filed a fraudulent tax return in my name, claiming a refund. Having the ability to electronically submit tax forms would make committing fraud more difficult.
Fraud will go down because once the IRS offers a free online portal to file Form 1099, many small business owners are expected to take advantage of this system. The electronic filing will allow taxpayers to submit their forms even earlier, allowing the IRS enough time to compare data from an individual return with its corresponding Form 1099.
When someone stole my identity, the IRS sent me a letter asking for more information, hoping to reconcile inconsistencies in my filing. I was only alerted about this issue because of a data discrepancy in my forms. Similarly, with this new electronic system, the IRS would be able to quickly compare Form 1099 with your individual tax returns, thereby reducing the chance of fraud.
I was proud to see that the nonpartisan Joint Committee on Taxation clearly stated the legislation I am proposing comes at no additional cost to the taxpayer, and would even save the IRS money.
This new legislation will help make the government more efficient by reducing the time it takes taxpayers to file their forms, will help eliminate certain types of fraud, and will save taxpayers money. There is no excuse for the IRS to still be using archaic technology, thereby placing an unnecessary burden on Ohioans.
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