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Report suggests collusion between IRS and tax prep industry that doesn’t want you to know filing taxes is free

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ProPublica, an independent investigative journalism outlet, is reporting about a batch of emails it has had access to, that allegedly show the Internal Revenue Service (IRS) effectively colluding with “tax preparation industry” to undermine its own program allowing Americans to file taxes free of charge.

The emails were obtained under the Freedom of Information Act, despite the attempt of the IRS to keep them away from the public, ProPublica says. A journalistic investigation into the practices of Intuit and its tax preparation software TurboTax was what led to the request for information, concerning a public-private partnership known as Free File.

The scheme means that the IRS has no online tax filing system of its own, entrusting it instead to Intuit and other private companies – who were supposed to provide tax filing free of charge to a majority of eligible Americans, based on their income.

But instead, ProPublica says, the program has increasingly been serving the tax preparation industry instead of those citizens in need of free tax filing.

And although the emails from the fall of 2018 show that the IRS Advisory Council (IRSAC) was about to conclude in a report the service’s “deficient oversight and performance standards for the Free File program” that “put vulnerable taxpayers at risk” – the Free File Alliance – a group of companies collaborating with the IRS – appears to have taken some “preemptive action.”

Acting on the unpublished draft report, the Free File Alliance, led by its head Tim Hugo and Inuit lobbyist Stephen Ryan, proposed an early extension to the program – and also a number of changes to it, including “restricting the industry’s ability to market paid services to Free File users.”

In the end, this new memorandum of understanding was signed between the industry group and the IRS.

The Free File Alliance maintains that it did not pressure the US government service. But in reality, some of the most notable problems with the Free File programs have to do with those who should benefit from it not even being aware that it exists.

For example, the IRSAC report said that while it was IRS’s responsibility to advertise the Free File program – the agency “hasn’t had an advertising budget for years.”

In addition, according to the report, the tax preparatory industry embodied in the Free File Alliance also “aggressively” went after its critics.

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