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Last Minute Tax Advice: “Make Sure You Get It Right”

Aaron Task
Editor in Chief
Daily Ticker

This weekend, millions of Americans will be scrambling to get their taxes done. Because April 15 falls on a Sunday this year and Monday is Emancipation Day (a holiday observed in the District of Columbia), people who've waited until the last minute have two extra days to file -- but that doesn't make the process any easier or less daunting.

For everyone who waited until the last minute, Doug Dachille of First Principles Capital Management has some advice: Don't screw up.

"Make sure you get it right because if you don't they're going to know," he says. "There is nothing they don't have the info about and as we keep moving forward, everything is there for them. They have the number. It's all being calculated."

To be sure, the government doesn't know everything -- especially in an age when people are increasingly bartering for services and bargaining for a "cash discount." Dachille's point is that as the world moves increasingly toward electronic commerce, there's a record of all transactions.

As a result, Dachille says the onus should be on the government, rather than the individual, to figure out what the tax burden is. "Just send me the bill," he says.

This is particularly true in the realm of investments where Dachille's self-described job is managing fixed-income accounts in a "tax-efficient" way and minimize the tax burden for investors.

Starting in 2013, the government is putting increased pressure on brokers to "practically do all your taxes," Dachille says. "All that annoying work you used to have to do to figure out the cost basis of stocks will all be done for you."

The IRS & You: "Perverse Incentives"

The accompanying video was taped at the recent TedXWallStreet event, where Dachille's speech focused on the theme of the "perverse incentives" when it comes to paying taxes.

"The government takes a unique approach vs. other service providers — the government requires you to fill out an itemized bill," he notes. "The government doesn't simplify for you and you need to fill out the bill."

In addition, "the taxpayer doesn't receive psychological benefit of deciding how his/her money is spent when filing a return," Dachille observes.

Dachille is calling for a simplification of "the billing process" -- better known as the tax code. But he's not talking about the typical tax "simplification" proposals you hear on the campaign trail, like removing certain deductions. Such proposals, he says, typically have unintended consequences and are like doing a minor renovation on an old house instead of tearing it down and starting over.

Instead, he's talking about changing "the nature of the relationship between government and the taxpayer [featuring] greater appreciation of the taxpayer and what he/she is contributing — similar to a typical service provider."

Don't hold your breath for such a fundamental change, which most definitely isn't coming before Tuesday's filing deadline.

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com