House Approves Bill That Would Bar the IRS From Offering Free Online Tax Filing

House Approves Bill That Would Bar the IRS From Offering Free Online Tax Filing

© Jonathan Ernst / Reuters

The House on Tuesday approved by voice vote bipartisan legislation to change the Internal Revenue Service that, among other things, would bar the tax agency from creating its own free electronic tax filing system.

“Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system,” ProPublica’s Justin Elliott reported Tuesday morning. “If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits.”

Taxpayers who have adjusted gross income of $66,000 or less already have access to free tax-filing software, only it’s through private companies and not directly from the IRS. The Free File Alliance, a private industry group whose members include H&R Block and Intuit, says that about 70 percent of taxpayers are eligible, or about 100 million Americans. But only a small fraction of those taxpayers use the free program. “Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches,” Elliott writes.

The ProPublica report sparked a response from liberals on Capitol Hill, who threatened “a last-minute rebellion,” according to The Washington Post, but then “gave up their fight, in part because of the value of other elements of the legislation.” The Taxpayers First Act of 2019 also includes protections from private debt collectors and up to $30 million in matching grants for a program to help low-income taxpayers.

“They were persuaded to see that stopping passage based on one objection would kill highly palatable aspects of the bill,” said Brenda Jones, a spokesperson for Rep. John Lewis (D-GA), a sponsor of the bill, according to the Post. Jones also told the Post that supporters of the legislation will create a working group to study problems in the IRS’s agreement with private tax preparers.