Congress Is About To Stop the IRS From Offering Free Online Tax Filing. Here’s Why That Matters
Photo Credit: U.S. Department of the Treasury Internal Revenue Service (IRS) 1040 Individual Income Tax forms for the 2018 tax year are arranged for a photograph in Tiskilwa, Illinois, U.S., on Monday, March 11, 2019. Fewer people are getting refunds this year and that’s causing angst for Republicans who want to convince voters that the 2017 tax overhaul really did give them a tax cut. Photographer: Daniel Acker/Bloomberg via Getty Images
For low-income people, getting a decent return on your taxes can make a big difference. However, filing taxes is complicated, and tax services can charge upwards of a hundred dollars to file a simple return.
A simple solution would look like the Internal Revenue Service providing its own free online resources, but Congress is about to stop them from doing so, according to a ProPublica report.
Last week, the House Ways and Means Committee — led by Rep. Richard Neal, D-Mass. — passed the Taxpayer First Act. This bill makes a lot of changes to the IRS, including making it illegal for it to create an online tax filing system.
This bill is a bipartisan effort with sponsorship from Reps. John Lewis, D-Ga. and Mike Kelly, R-PA. It highlights just about everything wrong with politics right now because this isn’t going to serve taxpayers.
“This could be a disaster,” Mandi Matlock, a tax attorney who does work for the National Consumer Law Center, told ProPublica. “It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program.”
As outlined by TechCrunch, the bill is clearly a result of years of lobbying from companies like Intuit — the maker of TurboTax — and H&R Block. The development of a free, online government service would greatly threaten the entire tax industry’s profits.
The tax industry has been playing an interesting game for years now. In 2002, the IRS made an agreement with tax software companies known as the Free File Program. With it, Americans making under $66,000 per year could access tax software companies’ systems for free. However, the IRS agreed to not make its own competing software.
There have been vocal critics of this program, claiming it “scams” taxpayers. In addition, ProPublica previously reported that the free option was under promoted and left people open to data breaches.
The idea of banning the IRS from creating its own tax services is alarming. Tax season in America is already far more difficult than other countries and this only makes it harder.