Congress Is About to Make Free Online Tax Filing Illegal
Tax Day is nearly here and, if you haven't already, you're probably rushing to finish filing your taxes. Yes, it's the season of mind-numbing copying from one form onto another. It's also the season of paying, for either an accountant or a service like TurboTax, to get your money back from the government, or, better yet, paying to hand over more in taxes. What's most maddening, though, is that there are things the Internal Revenue Service could do to make the whole process cheaper, more convenient, and less of a pain.
Unfortunately, Congress is about to make it permanently illegal for them to do any of it.
In the Democrat-controlled House of Representatives last week, the House Ways and Means commission passed a bill called the Taxpayer First Act with bipartisan support. The name is classic misdirection, since it's actually putting tax filing companies concerns before taxpayers. Call it the Turbotax First Act. The bill makes a bunch of administrative changes to the IRS, with one particularly egregious detail. From ProPublica:
In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits.
“This could be a disaster. It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program,” said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center.
In 2002, the IRS agreed that it wouldn't create a free filing system that would rival private companies like Intuit or H&R Block, as long as those companies offered free filing for people making under $66,000 a year. And the Free File Alliance—a consortium of 12 member tax filing companies—does offer that to the nearly 100 million Americans who qualify. But, as CNN points out, only 3 million people actually make use of it. A separate ProPublica investigation found that reportedly because companies frequently under-promote it or use it to up-sell customers to more costly services.
So what's the point of this bill then? Co-sponsored by Georgia Democrat and civil rights icon John Lewis and Pennsylvania Republican Mike Kelly, the Taxpayer First Act would make that ban on a free, public filing system permanent. Intuit, the company behind TurboTax, and H&R Block spent a combined $6.6 million last year lobbying on IRS-related issues, and Massachusetts Representative Richard Neal, who took over the Ways and Means Commission when Democrats took back the House, accepted $16,000 from the two companies over the last two election cycles. This cycle has been going on for years now: In 2016, Intuit and H&R Block spent a combined total of $5 million lobbying for the Free File Act, a bill that died in committee but mirrored a lot of the Taxpayer First Act.
The IRS actually already has all the information it needs for taxes on the majority of Americans, but the Free File Alliance has been pressuring Congress for years to make sure the system stays as complicated as possible. If filing became so easy that anyone besides the super-rich could do it on their own, those companies would lose billions of dollars they make off millions of Americans every year. Congress is making it clear who's more important to them in this equation. While the rest of the country is making sure their own taxes are all squared away, Democrats and Republicans are rushing to get this bill set in stone.
