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Monday 15 august 2022

Expanded IRS free-file system one step closer in Dems’ bill

Continued from Front system up and running. tax return filing system. In ported that while 70% of tem that makes it easy for
There’s also pushback from short, the IRS agreed not taxpayers were eligible such a large group of tax-
And now that the IRS is set commercial tax prepara- create its own filing system for services through the payers to file their returns,”
to receive nearly $80 bil- tion companies, which if companies would instead Free File Alliance, only 3% she said.
lion through the so-called question whether Ameri- provide free services to tax- of taxpayers actually use Vanessa Williamson, a se-
“Inflation Reduction Act,” cans want the IRS to pre- payers making $73,000 or the service. The watchdog nior fellow at the Urban-
the agency has the means pare their taxes. less. recommended the IRS find Brookings Tax Policy Cen-
to develop new systems Perhaps this biggest hurdle This program, though, has new free filing options be- ter, said “if the IRS moves
to help Americans pay is an agreement between been marred with con- fore the Alliance expires in forward with a free prod-
their taxes. The legislation the IRS and some commer- troversy, with commercial October 2023. uct, it could save lower-
passed Congress on Friday. cial tax preparation com- firms misrepresenting their With the funding in the bill, income families the money
Several hurdles stand in the panies, known as the Free services and low taxpayer the IRS has an opportunity they used to give to H&R
way. Even in a best-case File Alliance, which pre- participation rates. to create a new system. Block or TurboTax.”
scenario, it will likely take vents the federal agency The Government Account- Included is a provision that “Tax prep companies are
years to get a new, free from creating its own free ability Office in April re- allots $15 million to the IRS notorious for tricking tax fil-
to make plans for a free di- ers into paying for services
rect e-file tax return system. they should be getting
Those plans would have to for free,” Williamson said,
be developed within nine “so an IRS free file service
months and would include would be a very welcome
cost estimates for creating step that would save Amer-
and administering a sys- icans money.”
tem. They would also re- In 2019, ProPublica wrote
quire public input. about Intuit’s TurboTax and
There are also legislative H&R Block Inc.’s efforts to
attempts to move this ef- mislead taxpayers away
fort along. from the federally support-
Sen. Elizabeth Warren, D- ed free services for which
Mass., in July resubmitted a they qualified. And in May,
bill called the Tax Filing Sim- New York Attorney General
plification Act that would Letitia James secured a
require the IRS to create $141 million settlement with
its own free online tax filing Mountain View, California-
service and move away based Intuit Inc., which
from its partnership with pri- had to pay restitution to
vate online tax preparation some taxpayers.
companies. Intuit withdrew from the
“I’ve been pushing for a Alliance in July 2021, stat-
free tax filing system for ing in a blog post that the
years, and now the IRS is on company could provide its
the verge of having signifi- benefits without the Free
cant funding to modernize File Alliance’s limitations.
its IT systems, which means H&R Block withdrew from
it’s time to develop simpli- the partnership in 2020.
fied filing tools laid out in “Most Americans don’t
my Tax Filing Simplification want the tax collector to
Act,” Warren told The Asso- also serve as the tax pre-
ciated Press. parer,” said Derrick L. Plum-
“Americans spend too mer, a spokesman for Intuit.
much time and money to “The IRS already has a core
file their taxes, and the IRS mission that it needs to fo-
should adopt these pro- cus on, and creating a new
posals to help millions of system would cost billions
Americans file taxes and of taxpayer dollars and
claim refunds.” jeopardize the financial
At her Finance Committee freedom of millions more,”
appearance, Yellen called he said.
for a new system. A spokesperson for H&R
“There’s no reason in the Block did not respond to an
world that a modern econ- Associated Press request
omy shouldn’t have a sys- for comment.q