Bill Would Ban IRS From Creating Free Electronic Tax Filing System

STEVE INSKEEP, HOST:

It's April 15, which means you have to file your taxes before midnight if you've not already done so. If you want to file online, you typically have to go through a private company like H&R Block or Intuit, the makers of TurboTax.

Why do you have to use them? Well, an agreement with the IRS and private tax prep companies prevents Americans from filing directly online with the IRS. And that rule could become permanent. Lawmakers on both sides of the aisle are trying to pass the so-called Taxpayer First Act, which would permanently bar the IRS from creating a free electronic tax filing system.

Rachel Martin talked with ProPublica reporter Justin Elliott about why this bill is needed.

JUSTIN ELLIOTT: One of the things this bill does is it codifies an existing agreement between the IRS and the private tax prep industry - so companies like the maker of TurboTax. And one of the things that agreement says is that the IRS will never create essentially its own version of TurboTax. So the IRS won't essentially compete with the industry. So what that means is that many Americans will have to continue paying, you know, $50 or $60 to use TurboTax or H&R Block instead of having essentially, like, a government option to file their taxes.

RACHEL MARTIN, BYLINE: So this has gotten bipartisan agreement, huh?

ELLIOTT: Yeah. I mean, it's a longstanding program, and it's also something that the industry has been lobbying for for a long time. And so H&R Block and Intuit had been pushing for this for years. And you know, they do offer a free option if you make below a certain income threshold. But very few people end up actually finding that, and a lot of people end up using the paid version.

So essentially, this bill would continue this deal between the IRS and the industry, under which the industry offers this free option but the IRS agrees to never create its own version of these, you know, tax prep services.

MARTIN: So essentially, that means Americans have fewer choices.

ELLIOTT: Yeah, exactly. And you know, one of the remarkable things that happened is after we wrote about this, people from other countries were sending tweets to me on Twitter saying that in Germany and Finland and other places, doing their taxes took, like, five minutes because the government actually provides their forms pre-filled out because the tax agency already has their salary data.

MARTIN: So is it safe to assume that there was just a lot of lobbying on the part of companies that get paid when consumers come in and say - these are too complicated for me to do. Can you do them?

ELLIOTT: Yeah. I mean, just H&R Block and Intuit - those are the two biggest - together, they spent over $6 million dollars lobbying on issues, including this one, last year - had been pushing for this to make it into law for many years now. And the current bill contains a lot of other provisions, including some that are supported by consumer advocates. And I think that's one of the reasons it's now getting bipartisan support and might make it into law.

MARTIN: But consumer advocates do support this?

ELLIOTT: Consumer advocates oppose this provision. But there's other totally unrelated provisions in the bill that, you know, speak to the IRS' debt collection practices, for example, that consumer advocates have supported. So, you know, that's one of the reasons, I'm told, that this bill is getting bipartisan support in Congress.

MARTIN: Justin Elliott with ProPublica, we appreciate it. Thanks, Justin.

ELLIOTT: Thanks a lot.

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