The flagship climate and health care bill passed by Democrats will bring taxpayers one step closer to a government-operated electronic free-file tax return system.
will bring U.S. taxpayers one step closer to a government-operated electronic free-file tax return system.
And now that the IRS is set to receive nearly $80 billion through the so-called “Inflation Reduction Act,” the agency has the means to develop new systems to help Americans pay theirSeveral hurdles stand in the way. Even in a best-case scenario, it will likely take years to get a new, free system up and running. There's also pushback from commercial tax preparation companies, which question whether Americans want the IRS to prepare their taxes.
The Government Accountability Office in April reported that while 70% of taxpayers were eligible for services through the Free File Alliance, only 3% of taxpayers actually use the service. The watchdog recommended the IRS find new free filing options before the Alliance expires in October 2023.Included is a provision that allots $15 million to the IRS to make plans for a free direct e-file tax return system.
Vanessa Williamson, a senior fellow at the Urban-Brookings Tax Policy Center, said “if the IRS moves forward with a free product, it could save lower-income families the money they used to give to H“Tax prep companies are notorious for tricking tax filers into paying for services they should be getting for free," Williamson said, “so an IRS free file service would be a very welcome step that would save Americans money.”&R Block Inc.
Bruce Sacerdote, a Dartmouth economist, has examined systems in other countries in which taxpayers don't have to enter much data on their electronic forms because the government has already done so.
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