WASHINGTON – Just in time for Tax Day, House lawmakers this week will unveil a plan that would make permanent an Internal Revenue Service program that provides free online tax preparation for low- and middle-income Americans.
It's the kind of effort that consumer advocates would cheer, in theory. But privacy and other concerns surrounding the 13-year-old Free File program have winnowed the list of supporters and ceded the lobbying push to such companies as TurboTax maker Intuit and H&R Block that provide the software and electronic filing services at no cost.
The plan by Reps. Peter Roskam, R-Ill., and Ron Kind, D-Wis., calls for new measures to protect tax-filers' data security, according to draft text provided to CQ. It aims to enshrine a program that supporters portray as a model public-private partnership.
"By working together with the private sector to offer online tax preparation, the federal government has saved hundreds of millions of dollars since 2003," said Kind in a statement. "Making this program permanent helps hardworking families and saves taxpayer money."
The Free File program gives filers with taxable incomes of $62,000 or less free online tax preparation through the agency's website, along with free online filing of federal tax returns. Congress first approved the program in 2002 to prod more Americans to file online. The current agreement between the companies and the IRS runs to 2020.
Taxpayers with incomes above the threshold can get access to free online forms — without the prompts, commonly asked questions and other support provided by the companies — and can file their taxes online at no cost.
Some critics say the system puts a barrier between taxpayers and the government.
"As a consumer advocate, the fact that you cannot electronically file your return online directly through the IRS, you have to go through a third party, is absolutely bizarre," said Chi Chi Wu, a staff attorney at National Consumer Law Center. "It's completely political. It's about TurboTax and these other tax preparers that don't want to lose this market."
