Dems, GOP Unite to Ban IRS From Offering Free Online Filing After Lobbying From TurboTax, H&R Block

Congress is set to approve a rare bipartisan bill that would permanently bar the IRS from offering a free online tax filing system, ProPublica reports.

The Taxpayer First Act, which among numerous changes to the IRS would make it illegal for the agency to create their own electronic tax filing system, is sponsored by Georgia Democratic Rep. John Lewis and Pennsylvania Republican Mike Kelly. The bill has already been approved by the House Ways and Means Committee.

The move comes after a fierce years-long lobbying effort from for-profit tax industry giants like H&R Block and Intuit, the maker of TurboTax, due to concerns that a free IRS system would threaten their profits.

The pro-industry group Free File Alliance says 70 percent of American taxpayers are eligible to file for free with the companies because they earn less than $66,000 but ProPublica notes that only 3 percent of eligible adults actually use the free offerings each year. TurboTax and H&R Block have been criticized for using the free filing as a way to upsell their paid products.

The IRS currently has an agreement with the industry not to create their own system in exchange for the companies offering free e-filing to those who earn under $66,000.

Tax industry spent millions on lobbying for move:

The proposed move comes after years of lobbying from Intuit and H&R Block.

"Those efforts have been fueled by hefty lobbying spending and campaign contributions by the industry," ProPublica reported. "Intuit and H&R Block last year poured a combined $6.6 million into lobbying related to the IRS filing deal and other issues. Neal, who became Ways and Means chair this year after Democrats took control of the House, received $16,000 in contributions from Intuit and H&R Block in the last two election cycles."

Experts say filing should be easier & cheaper:

The IRS bill comes despite years of urging by experts to make the tax filing system as cheap and easy as possible.

“Experts have long argued that the IRS has failed to make filing taxes as easy and cheap as it could be,” ProPublica reported. “In addition to a free system of online tax preparation and filing, the agency could provide people with pre-filled tax forms containing the salary data the agency already has.”

"This is not some pie-in-the-sky that's never been done before," William Gale, the co-director of the Urban-Brookings Tax Policy Center, told the outlet. "It's doable, feasible, implementable, and at a relatively low cost."


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