Multiple tax preparers are asking the IRS not to create its own free tax filing system because doing so would likely have a drastic effect on the tax preparing business.
The IRS is working to conduct a study on how it can create its own program for taxpayers in the United States to file their tax returns directly with the agency for free. While Republican lawmakers have spoken out against this, arguing that it would give the IRS more power than it already has, various tax preparing businesses such as H&R Block and TurboTax have also rallied against this possible free filing feature, according to the New York Times.
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“A direct-to-IRS e-file system is a solution in search of a problem,” said Tania Mercado, a spokeswoman for Intuit, which operates TurboTax. “And that solution will cost taxpayers billions of dollars.”
The free filing option from the IRS would come as several companies already offer services through the IRS that allow taxpayers to file their taxes for free. However, certain prerequisites are needed for this offer, such as being a taxpayer who makes less than $73,000 every year, as well as not having any guidance from a tax expert when filing one’s returns.
In November 2022, several conservative tax policy organizations, such as the Taxpayers Protection Alliance, Americans for Tax Reform, and the Club for Growth, wrote a letter to Congress asking lawmakers to stop the IRS from further expansion. Americans for Tax Reform President Grover Norquist has argued that the IRS taking over the tax filing process in the U.S. would lead to more audits and less privacy for taxpayers.
“If the government does your taxes for you, they have to know everything about you,” Norquist said. “It is the end of economic privacy.”
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The IRS’s plan on how it will spend the $80 billion it recently received from the Inflation Reduction Act is expected to be released imminently by the agency. A portion of the $80 billion, $15 million, is being used to fund the study on the possible free filing option for the IRS.
Though Republicans have argued against this funding, Treasury Secretary Janet Yellen has defended the investment. The Biden administration has also attempted to discuss how customer service will be improved by this money given to the agency.
