Shaheen, Warren push for free tax filing service from IRS

  • This Feb. 13, 2019, photo shows multiple forms printed from the Internal Revenue Service web page that are used for 2018 U.S. federal tax returns in Zelienople, Pa. The head of the IRS, overseeing the most sweeping overhaul of the U.S. tax codes in three decades, says the average refund in this year’s tax-filing season, 2,833, worked out to be close to last year’s. Internal Revenue Service Commissioner Charles Rettig told Congress Wednesday that an increase is urgently needed in the agency’s budget to modernize antiquated computer systems and protect taxpayers’ data. (AP Photo/Keith Srakocic) Keith Srakocic

Monitor staff
Published: 4/15/2019 4:54:00 PM

Tax filing season is a haven for the organized. For those whose record keeping is below par or those who are punctuality-challenged, it can quickly turn to a nightmare.

It can also become fairly expensive. While some free tax filing options exist, anyone looking to maximize their deductions often pay between $30 to $100 for a basic online service, and potentially much more for in-person assistance.

This year, New Hampshire Sen. Jeanne Shaheen is among a handful of Democrats looking to provide alternatives. A bill submitted by Shaheen, Massachusetts Sen. Elizabeth Warren and California Rep. Brad Sherman would expand the ways that citizens could submit their taxes without going through an accounting firm or professional tax preparer.

But a hard lobbying push by tax preparation companies and a near-unanimous vote on contradictory legislation in the House last week could dampen the bill’s success.

Shaheen’s and Warren’s bill, the Tax Filing Simplification Act of 2019, would direct the Internal Revenue Service to broaden its services and provide more filing options. Under a series of new programs, federal taxpayers could file through a free-file service offered by the IRS in competition with popular private services like TurboTax and H&R Block. Those with simpler finances who aren’t looking for deductions could choose to let the IRS prepare their tax returns for them.

The changes would ease the navigation process for swathes of low-income citizens and “make the process simpler and cheaper,” Shaheen said.

“This bill would positively impact hardworking, taxpaying Americans in every community throughout the country,” Shaheen said in a statement.

The issue has appeared and re-appeared for years. But each time, it’s received fierce pushback from the tax filing industry, according to a report by ProPublica. That industry has its own alternative: the “Free File Alliance,” a group of companies that offer free filing options for those making less than $66,000 a year. But according to the Alliance, few appear to be using those services; compared to 70% who are eligible, only 3% of 100 million Americans have used them, the Alliance has said.

Advocates for reform argue that the IRS would have more incentive to market a free-filing program than for-profit companies. But this year, the headwinds for Shaheen’s bill are as strong as ever.

In the House, the “Taxpayer First Act” would prohibit the IRS from creating a free filing alternative to TurboTax and H&R Block, in addition to protections for low-income tax filers against certain actions taken by debt collectors. That bill passed 414-0, despite early vocal opposition from some House Democrats.

But as the House bill crosses to the other chamber, some in the Senate think it could be tweaked. In an interview at a stop in Concord Saturday, said there could be political appetite to tweak the House bill, which has the support of Democratic Sen. Ron Wyden, of Oregon, and Republican Sen. Chuck Grassley of Iowa.

“When it comes over to the Senate we’re talking about how we try to bring that together – that’s what I want to see happen,” she said.

The bill, she said, would allow the IRS to give filers a prepared filing that taxpayers could then accept and reject “with a push of a button.”

“What I want to see is the government step up to its obligations that are already provided for in law to provide free access to filing,” Warren said. “It's important to me that filing be made easier for the millions of families for whom that's all they need.”

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