I hope you are sitting down because the news you’re about to read is shocking. The Internal Revenue Service is implementing something that may actually help Americans and save them some money. Though, I would not want to be an online tax filing company.
According to reports, the White House has begun considering the creation of a government-run alternative to TurboTax and H&R Block.
Although Republicans may look at the plan with a jaundiced eye, The Wall Street Journal writes, “Democrats and consumer advocates have been pushing for the Internal Revenue Service to offer free online tax filing on its website, particularly for people with straightforward returns. Their core argument: Tax-preparation companies charge middle-income Americans for what advocates think should be a free public service.
The companies, meanwhile, are boosting lobbying spending and leaning on lawmakers to fight a change that could shrink their revenue, and they are emphasizing free options already available for taxpayers. They see the changes under consideration as a first step toward an even bigger threat in which the IRS could use information it gets from employers and other sources to prepare a first draft of taxpayers’ returns for them.
The IRS is due to release a report this week on a possible Direct File system—think TurboTax but on the agency’s website—and the Biden administration will then decide whether to pursue it.
‘This is a service that I think the government ought to provide,’ said Kitty Richards, a progressive tax expert and former Treasury official. “It’s problematic that we instead provide it through these private corporations that prey on people and extract profits from taxpayers that are just fulfilling that civic duty.”
Tax-prep companies say they already provide free services, including filing of many federal returns, though taxpayers often pay for state tax preparation or other products. People with incomes under $73,000 can also use the IRS Free File program, which provides access to private software. TurboTax and H&R Block no longer offer services through Free File, but companies such as TaxAct and TaxSlayer do. Last year, Free File served just 3% of roughly 100 million eligible taxpayers.”
Sounding like the owner of one of the biggest horse-and-buggy dealers in the market in 1910, a spokesman for Intuit said, “A direct-to-IRS e-file system will be redundant, and it will not be free—not free to build, not free to operate and not free for taxpayers.”
While the free filing service would be nice, it shouldn’t give the IRS a free pass on the way it treats Americans. New Conservative Post noted in February that following the addition of 86,852 more agents to its ranks and adding tens of billions to its budget, the IRS was going after the tips of waitresses despite promises from Democrats that only rich people would be impacted by the change.
Furthermore, a recent study out of Syracuse University showed that the IRS would mostly target middle-class and poor people with new audits.
And, of course, we all know the IRS gives special treatment to the politically connected.
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