Calling the proposal for a "return-free" filing system "flawed" and "dangerous to taxpayers," 14 groups have written the President's Advisory Panel on Tax Reform to urge that it be taken off the table in any final report.While the timetable for a final report has been delayed by Hurricane Katrina relief efforts, with the final two scheduled meetings postponed, the return-free concept is one of the proposals under consideration by the panel.

There are two types of return-free systems, according to Eric J. Toder, senior fellow at the Urban Institute. Under the exact withholding system in use in the U.K., Germany and Japan, the correct tax liability is pre-paid by withholding.

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