ProPublica is waving a red flag to get taxpayers' attention. Making it illegal for the IRS to develop their own free tax-filing system is to the tax preparation industry what making it illegal to hold gun manufacturers liable was to the gun industry. They've been pushing this for years, and it looks like their dream will come true. God forbid we ever have access to the same kind of easy, free system already available in so many other countries.
Guess it's okay for everyone else to lose jobs due to automation, huh?
Call your Congress member and ask them not to vote for this bill as is, 1-202-224-3121:
Last week, the House Ways and Means Committee, led by Rep. Richard Neal, D-Mass., passed the Taxpayer First Act, a wide-ranging bill making several administrative changes to the IRS that is sponsored by Reps. John Lewis, D-Ga., and Mike Kelly, R-Pa.
In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits.
“This could be a disaster. It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program,” said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center.
Experts have long argued that the IRS has failed to make filing taxes as easy and cheap as it could be. In addition to a free system of online tax preparation and filing, the agency could provide people with pre-filled tax forms containing the salary data the agency already has, as ProPublica first reported on in 2013.
The Free File Alliance, a private industry group, says 70% of American taxpayers are eligible to file for free. Those taxpayers, who must make less than $66,000, have access to free tax software provided by the companies. But just 3% of eligible U.S. taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches.
The congressional move would codify the status quo. Under an existing memorandum of understanding with the industry group, the IRS pledges not create its own online filing system and, in exchange, the companies offer their free filing services to those below the income threshold.
One member of the Free File Alliance explicitly told shareholders that the IRS “developing software or other systems to facilitate tax return preparation … may present a continued competitive threat to our business for the foreseeable future.”