As reformlegislationOpens a New Window.advances throughCongressOpens a New Window.that may eliminate a future IRS-created free filing software for taxpayers, New York Democrat Rep. Alexandria Ocasio-Cortez suggested most Americans shouldn’t be preparing their own taxes.
In a speech on the House floor, the freshman lawmaker refereced a Vox article which deemed it a “huge scandal” that lawmakers have not yet required the IRS to automatically prepare taxes for most Americans.
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“Long-term, we should be looking at a solution where everyday people do not necessarily have to spend hours every year preparing tax returns, when the majority of Americans have relatively simple and straight-forward returns," sheadded.
Bipartisan reform legislation advancing through Congress – The Taxpayers First Act – contains a provision that would prevent the IRS from creating free tax preparation software to compete with private sector offerings from companies like TurboTax.
That particular provision was first pointed out byProPublica, which notes that a free program provided by the IRS could cut into the profits of private tax software businesses. According to the publication, Intuit and H&R Block spent $6.6 million on lobbying related to IRS filing and they also contributed $16,000 to House Ways and Means Committee chair Richard Neal (D-Mass.) over the last two election cycles.
Currently, the IRS offers a service called Free File for certain qualifying, lower-income taxpayers. It offers this service through authorized third-party providers, including companies like H&R Block.
Ocasio-Cortez’s idea is not necessarily a new one.
Austin Goolsbee, a former economist in the Obama administration, proposed the idea of a “simple return” more than a decade ago. Since the IRS is asking the majority of people to copy information it already has onto forms and then submit it, the “simple return” would have the IRS send the taxpayer the documents with pre-filled information. It was a voluntary program designed to save taxpayers who opted into the program both time and money.