The Internal Revenue Service is moving forward with plans to unveil a free tax filing service, despite objections from the tax industry.
American taxpayers can file for free if they make less than $69,000 a year. Unfortunately, tax preparation companies often make it difficult to find the free options in an effort to steer taxpayers toward paid solutions.
As part of the Inflation Reduction Act, Congress set aside $15 million to help the IRS develop a competing free tax filing option, resulting in Intuit spending $3.5 million to lobby Congress in 2022 — the most it has ever spent in a single year — claiming the IRS’ plans represented a conflict of interest.
“Unquestionably, a government-run tax preparation system that makes the tax collector the investigator, auditor, enforcer, and now also the preparer, is a conflict of interest,” CEO Sasan K. Goodarzi said at the time.
According to NPR, the IRS is making progress on its free filing system, with plans to test a pilot program early next year. Intuit renewed its objections, claiming the IRS solution would ‘harm Americans.’
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“A direct-to-IRS e-file system is wholly redundant and is nothing more than a solution in search of a problem,” said Rick Heineman, a spokesman for Intuit told NPR. “That solution will unnecessarily cost taxpayers billions of dollars and especially harm the most vulnerable Americans.”
Lawmakers and regulators disagree, saying tax prep companies have made it overly difficult to find the free options they’re legally required to provide. In fact, according to NPR, only 2% of Americans take advantage of free filing.
“That’s because the tax prep companies sabotaged the program, so they could keep raking in money,” Sen. Elizabeth Warren.
The new IRS option doesn’t mean taxpayers will be locked into a single solution. IRS commissioner Danny Werfel emphasized that tax payers will be able to use the method of their choice.
“Taxpayers will always have choices for how they file their taxes,” Werfel told reporters. “They can use tax software. They can use a trusted tax professional. They can use a paper tax return. We’d rather they file electronically, sure. But they have that choice.”
