They have our information they should just calculate what we owe and send us a bill. If they make a mistake in our favor then it's their fault and they need to do better. If they make a mistake in their favor then it's the responsibility of the tax payer to notice and send a form back contesting the bill.
This would simplify taxes and it would improve compliance. If the government sends you a form telling you what you owe you know that you can't just cut corners or pretend you don't. Of course you could contest it but you'd be unlikely to even try unless you knew you were actually right about it because the government would just say "we've reviewed it and found that you still owe x". It could go before a court if you were really desperate but this is something most people would only resort to if it was a significant amount and if they were sure they were right, because you know the judge isn't going to make an error in your favor.
Obama actually promised to make filing taxes easier in 2008 but hasn't done anything to the effect. This would meet that campaign promise. Unfortunately the tax filing assistance industry doesn't want this to happen. With media easy for anyone to produce and to view the influence of money over politics has a real potential to wane. Some politicians should tout how they rejected certain campaign contributions to avoid tying their hands over important policy matters, make viral videos of it, and watch as public support builds. This would have positive effects going beyond just the easier tax filing issue.
Many people claim, incorrectly, whether for or against themselves, on their taxes on purpose. The government would be forced to remove these claims, whether for or against, and in turn possibly ruin some person's tax strategies; the ability to claim and manipulate the claims of taxes such as dependents on a W4 is integral to many lives.
The government would have to further rule over the validation of the tax system and while audits do happen at any time to any person this would simply be a massive auditing system requiring an entire rework of the tax law more than likely; furthermore with access to these particular calculations this only effects statements claimed which further institutes people's dishonesty relating to EID small businesses.
Taxes aren't that confusing for the vast majority of Americans, but regardless, the IRS does not know everything, thus there is no way it could file taxes properly.
For example: does it know if I have rental income? If I have moving expenses? Unreimbursed business expenses, charitable contribution, sales taxes paid, side business, marriage being separated, dependents that shouldn't be claimed, capital gains, gambling winnings, etc.