The IRS has an e-file system that simplifies the filing process for taxpayers. At our current level of technology having an official free tax filing system feels like a logical, progressive step. However, the US Congress thinks of this issue differently. According to ProPublica, both Democrats and Republicans want to prohibit the IRS from creating their free online filing system.
The IRS itself created the market of online filing. Multiple tax companies approved by the IRS provide their services to millions of Americans. However, the industry is less philanthropic and “free” as some officials would like you to believe.
If you make under $66 thousand annually, you can file your taxes online for free. The IRS has a budget to cover expenses of companies like Intuit that are supposed to provide free online tax filing services to eligible citizens.
The IRS proposed to create its own online system that would allow users to report their income via the internet. Sadly, lobbyists for Intuit and other similar companies do not want to enable the IRS to, basically, eradicate the market of online tax filing.
It is true that the agency was not able to create a convenient and effective online tax filing system. Their efforts were all but productive. However, they could make improvements to the existent system and allow over 70% of taxpayers to use high-quality tax software for free.
Such software would immediately reduce the competitiveness of companies like Free File Alliance. Their representative told shareholders that the free filing system made by the IRS could drive them off the market “in the foreseeable future.”
The new legislation called “The Taxpayer First Act” will force the IRS to pledge not to make its own software and move these services to third-party contractors. These contractors will provide online tax filing for free to those individuals whose income is below the $66 thousand threshold.
Another concerning point is that the text of the document also has a special provision that will prohibit the IRS from hiring private debt collectors to deal with high-income taxpayers who avoid paying taxes.