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Bill to block free IRS tax filing

4-16-2019

Stafford Sass, Contributing Writer

A new bipartisan bill has been making waves in the House of Representatives, after being introduced by Democratic Senator John Lewis of Georgia on March 28th. The "Taxpayer First Act" put forward by the Ways and Means Committee would block the IRS from creating its own online service to file taxes free of charge. The bill also included provisions that would protect low-income taxpayers from abusive private debt collectors. The bill passed by a "voice vote" meaning no member of the house went on record to vote yes or no. Around the world, online filing, is pretty standard, in some countries the online tax forms come already filled in with all the information government agencies already have. In America however free online filing has yet to be realized, and now it may be in jeopardy.

The way the IRS has dealt with this issue in the past is that it agreed not to create its own online service if existing tax filing companies offer their online services for free to American citizens who make less than $66,000 a year and are fifty-six years old or younger. But the private group Free File Alliance states that, though up to 70 percent of Americans are eligible for free filing, only three percent of eligible citizens use the free programs each year. People critical of the program claim that companies upsell the paid versions of their products while deliberately under promoting the free version.

 

This bill has been a long time coming and has been something private tax filing companies have been trying to do for years. Last year H&R Block spent $6.6 Million in regards to lobbying for the IRS filing deal. Head of the Ways and Means Committee, Democratic senator Richard Neal, of Massachusetts, received $16,000 from H&R Block and Intuit during the last two elections.

Critics of an IRS operated system claim that it could potentially devastate the private sector. Blucora, owner of TaxAct had this to say in a message to its shareholders in 2017: “the risk of federal and state taxing authorities developing software or other systems to facilitate tax return preparation and electronic filing at no charge to taxpayers, which could reduce the need for TaxAct’s software and services. These or similar programs may be introduced or expanded in the future, which may cause us to lose customers and revenue.”

Democratic Congressman Sean Casten, of the sixth district of Illinois, voiced his concern and disappointment of the bill in a statement made April 9th.  Casten stated, "I would not have supported this bill as written and am disappointed that I was not given the opportunity to oppose, so as to compel a necessary correction." Casten then went on to say "I came to Washington to be an independent voice for the people of IL-06. That means standing up to bad policy and bad process, even if that means disagreeing with my own party.'

The IRS's current deal with TaxAct and the Free File Alliance will expire in 2021 if it is not made permanent by the Taxpayers First Act.