three ways to fix the program.
by 卡塔尔世界杯常规比赛时间
here’s something weird: the irs offers the vast majority of taxpayers the option to use the free file program to prepare returns.
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it costs taxpayers nothing. yet only three percent use it. can it be fixed? should it? congress is weighing in.
free file is a classic example of private-public cooperation. the program allows taxpayers with incomes below $73,000 to use non-irs websites developed by private companies. using federal guidelines, the sites guide taxpayers through the process of filing their returns.
u.s. senators amy klobuchar (d-minn.) and tina smith (d-minn.) have joined 21 of their colleagues in introducing legislation to simplify the tax filing process by, among other things, directing the irs to develop a free, online tax preparation and filing service that would allow all taxpayers to prepare and file their taxes directly with the federal government instead of being forced to share private information with third parties.
the tax filing simplification act is led by senator elizabeth warren (d-mass.), with representatives katie porter (d-calif.) and brad sherman (d-calif.) introducing the house companion.
at the same time, the plan would prohibit the irs from entering into agreements restricting its ability to provide free online tax preparation or filing services, taking aim at a memo of understanding between the irs and the free file, inc., a consortium of tax preparation providers.
the mou establishes three main stipulations:
- the companies should try to follow federal agencies’ federal digital services guidelines.
- companies can drop out of the program at any time.
- the irs will refrain from offering a competing online service.
that third item is a major motivation for provider participation because it eliminates federal competition, which, from the providers’ point of view, could be anything from disastrous to jocular.
the mou has evolved through a few iterations, and in the latest form, the irs has the option of developing its own online service. it must, however, inform the consortium if it provides funding for service development.
the mou is currently set to expire in 2023. what will happen after that is undecided by one and all. providers may be concerned that the program isn’t worth the effort of serving a minute percentage of taxpayers, especially if it must spend even more to meet federal guidelines, such as accessibility for taxpayers with disabilities.
the participants
as of january 2022, eight companies were participating:
- 1040now.net
- eztaxreturn.com
- freetaxreturn.com inc
- fileyourtaxes.com
- on-line taxes at olt.com
- taxact
- freetaxusa
- taxslayer
in 2020, two big companies dropped out: intuit and h&r block.
little enthusiasm
taxpayers have shown little enthusiasm for free file. of the taxpayers who used the service in 2014, 40 percent did not return even though they continued to use “do-it-yourself” methods rather than professional tax preparers.
the issue caught the attention of the government accountability office, which identified the problem and recommended a solution.
the gao identified the obvious problem—that taxpayers are less than enthusiastic about the program and that participating companies are questioning the profitability of the effort.
the gao did not, however, identify the cause of the problem.
the gao’s recommendations:
- the irs should add to the mou practices that would improve taxpayer experience.
- the irs should eliminate the mou provision requiring notification if the irs funds the development of a similar service.
- the irs and free file, inc. should work with stakeholders to develop additional options for free online filing, such as a public free file service
the gao said that the latter two recommendations would mitigate the risks of continuing the free file program if more providers opt out. the irs agreed only with the first recommendation, explaining that the second would impair the trust and transparency it has with the private sector and that a public free-filing option would probably not improve taxpayer experience, and anyway, the irs lacks funding for any such development.
the irs and ffi recently extended the current agreement to october 2023. what happens after that is anybody’s guess.
but if the democrats have their way, the plan would also:
- enhance taxpayer data access by allowing all taxpayers to download third-party-provided tax information that the irs already has into a software program of their choice, saving time and decreasing the risk of math errors on w-2 income or ctc payments that lead to significant processing delays.
- direct the irs to expand the ctc non-filer tool to cover other tax benefits, especially the eitc.
- allow eligible taxpayers with simple tax situations to choose a return-free option, which provides a pre-prepared tax return with income tax liability or refund amount already calculated.
- mandate that these data and filing tools be made available through a secure online function and require any participating individual to verify his or her identity before accessing tax data.
- reduce tax fraud by getting third-party income information to the irs earlier in the tax season, allowing the agency to cross-check this information before issuing refunds. and,
- order the irs to expand the ctc non-filer tool to cover other tax benefits, especially the eitc, by march 1, 2023.
will it happen?