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house Bill H.R. 2297

Should the IRS Provide Taxpayers With a Pre-Filled Tax Return?

Argument in favor

Pre-filled returns for the 90% of taxpayers who don’t itemize their tax returns will save Americans time and money. By making it easier to file taxes, they'll also increase the tax filing rate and ensure more people get their returns. Since the current Free File program is used by only 3% of taxpayers, it’s clear that a better free alternative is needed.

John's Opinion
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Today at 3:09 PM
The IRS already has this information so why not? Can’t cheat your taxes anymore? Good. They will already help you complete your taxes on the phone so what’s the beef. Seems anytime people see IRS they think BAD. So get onboard with the smart kids and let your taxes be done for you without paying TurboTax. This is a no-brainer for all non mouth breathing citizens.
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jimK's Opinion
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Today at 3:47 PM
Pro’s: ensures that taxpayers who can’t afford to hire CPA’s can claim deductions that they are entitled to, but did not how to claim. Con’s: By making tax filing ”automatic”, people have less reason to get enraged by taxes. They have less reason to challenge how their tax dollars are being used, or to compare their tax burden to “elite” tax payers, who have many ways to cut their tax burden. Also, it can cut IRS costs to correct misfiled returns and collect remaining taxes due.
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Eric's Opinion
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Today at 3:03 PM
They already have all this information. We get the forms from them so we can fill out other forms. We just fill in some random details.
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Argument opposed

The IRS, in partnership with the major tax preparation companies, already has a Free File program that allows taxpayers making $62,000 or less a year to file their taxes for free. This bill would require the IRS to do more work and may make it necessary to increase the agency’s budget.

Cherie65's Opinion
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Today at 3:03 PM
Redundant. Another government spending bill that really doesn't benefit anyone but a government entity. Stop spending our money on making the bureaucracy larger!
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FAIRtaxGuy's Opinion
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Today at 3:43 PM
No one should ever have to file a return and IRS no longer needs to exist. Just replace all taxes on income with a flat rate, simple, visible sales tax on new goods/services that includes a monthly tax credit option. FAIRtax is the answer. HR 25 in the House. 33 Sponsors/Cosponsors.
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Poli.Sci's Opinion
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Today at 3:00 PM
This only complicates the system that is already filled with “suggestions” to simplify the process. Honestly, going out and buying TurboTax with four licenses on it and sharing that with family or friends is the best way to go. I would gladly spend $50 to get this and it takes less than a half hour with it’s simple guide. There are also free programs out there offered by tax filing services as well. People can take advantage of these programs well before the IRS comes up with a feasible program that costs more money to maintain than it would to go and buy $50 worth of TurboTax.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Ways and Means
    IntroducedApril 12th, 2019

What is House Bill H.R. 2297?

This bill — the Tax Filing Simplification Act of 2019 — would aim to simplify and decrease the costs of the tax filing process for millions of American taxpayers. It would require that a free, online tax preparation and filing toolbe made available to tax filers, permit filers to download third-party-provided return information, and allow individuals with simple returns to let the Internal Revenue Service (IRS) prepare their taxes for them.

Under this bill, the IRS would be required to provide establish and operate the following programs for free:

  • Online tax preparation and filing software;
  • A program for taxpayers to download third-party provided return information relating to individual income tax returns;
  • A program to permit individuals with simplified tax situations to elect to have the IRS prepare their returns; and
  • A program to provide technical assistance and federal tax return information for states that provide or seek to provide state-level tax preparation and filing software.

Impact

Taxpayers; free tax filing; tax preparation companies; the IRS; and the Free File Alliance.

Cost of House Bill H.R. 2297

A CBO cost estimate is unavailable.

More Information

In-DepthRep. Brad Sherman (D-CA) reintroduced this bill from the 115th Congress to ease the tax filing process for millions of American taxpayers and reduce their tax filing costs:

“Under the Tax Filing Simplification Act, most Americans would receive a tax return already prepared by the IRS.  They could hit ‘submit’ and they’re done. Or they could make changes and then hit ‘submit.’ Or they could simply ignore the IRS pre-prepared return and submit their returns just as they do now.”

Senate sponsor Sen. Elizabeth Warren (D-MA) says:

"Taxpayers waste too many hours and hundreds of dollars on tax preparation each year, which disproportionately burdens low-income and minority taxpayers. This bill will require the IRS to offer easy, free, online tax-filing for all taxpayers. This is a simple idea with a long history of support from both Republicans and Democrats, and it's time to make it a reality."

In 2017, Sen. Warren explained how this would work and why it’d be better than the current Free File program:

“The IRS would simply enter the information they already have on file, send it to the taxpayer, and let the taxpayer know how much they owe or will be refunded. [Currently,] the tax prep companies make it almost impossible to figure out if you qualify for free filing. Each company has different criteria, and they all up-sell new products every click of the way through the return.”

Economic Security Project Action is among a number of organizations that supports this bill. Its director, Adam Ruben, says:

"Millions of Americans each year who are eligible for cash refunds like the Earned Income Tax Credit don't claim them -- either because tax filing is too complicated, or they don't know they're eligible. This creates a system where only the wealthiest Americans can afford to take advantage of the tax breaks and deductions available to them. Senator Warren's Tax Filing Simplification Act is a commonsense improvement that would make tax filing easier and more fair, and mean millions more hardworking Americans will get the refunds like the EITC they're entitled to."

Although this bill has been supported entirely by Democrats and Independents for the past two Congresses, the idea of return-free filing hasn’t always been a liberal issue. In an 1985 speech, President Ronald Reagan praised the idea. He said:

“We envision a system where more than half of us would not even have to fill out a return. We call it the return-free system, and it would be totally voluntary. If you decided to participate, you would automatically receive your refund or a letter explaining any additional tax you owe. Should you disagree with this figure, you would be free to fill out your taxes using the regular form. We believe most Americans would go from the long form or the short form to no form.”

After Reagan, President Barack Obama campaigned on a filing system he called “The Simple Return” in 2008. In a speech, he said, “There is no reason the IRS can’t send Americans pre-filled tax forms to verify.” In 2006, Obama’s senior economic advisor, Austan Goolsbee, had authored “The ‘Simple Return’: Reducing America’s Tax Burden Through Return-Free Filing,” in which he advocated making tax filing simpler by having the IRS use the information it already has to create a prepared return the taxpayer can approve or reject.

The major tax-preparation companies — including Intuit, H&R Block and Liberty Tax — are members of a consortium called the Free File Alliance, which seeks to preempt any IRS free online tax preparation programs with its own services for low-income taxpayers provided by the for-profit companies. In 2002, the Free File Alliance made a deal with the IRS, called “Free File,” to offer free filing for anyone making $62,000 or less in partnership with the IRS. In the same deal, the IRS agreed not to offer its own software.

Intuit, which owns TurboTax, and H&R Block have lobbied for years to stop the government from providing a prefilled filing for taxpayers. In 2016, Inuit spent over $2 million on lobbying, with most of its efforts focused on legislation that’d permanently bar the government from offering taxpayer prefilled returns; similarly, H&R Block spent $3 million on lobbying in 2016, with some of it also directed towards the same legislation. When Sen. Warren introduced this bill in 2017, the Free File Alliance warned in a press release that allowing the IRS to prep returns would create “a tremendous and potentially harmful conflict of interest for the American people by enshrining the roles of tax preparer, tax collector, tax auditor and tax enforcer in one entity.” In 2016, Tim Hugo, the Free File Alliance’s executive director, noted that Free File had facilitated 48 million returns over the past 13 years (equivalent to $1.4 billion worth of tax software). Hugo also called return-free filing “a recipe for a backdoor tax increase.”

In 2017, Gene King, a spokesman for H&R Block, also argued that receiving an IRS-prepared return would “intimidate” taxpayers into paying whatever the IRS says they owe and require a larger IRS budget to implement. He questioned, “With the government focused on maximizing revenues, can taxpayers really expect the IRS to scrutinize every return to ensure taxpayers are paying only what they owe? Doubtful.”

Anti-tax conservatives, led by Grover Norquist, also don’t want tax collection to be made more efficient through return-free filing. They fear that it’ll be easier for the government to raise tax rates if taxes feel effortless and people spend less time considering them.

This bill has eight Democratic House cosponsors in the 116th Congress. Its Senate companion bill, sponsored by Sen. Elizabeth Warren (D-MA), has 11 cosponsors, including 10 Democrats and one Independent.

Last Congress, this bill had eight Democratic House cosponsors and didn’t receive a committee vote. Its Senate version, sponsored by Sen. Warren, had 11 cosponsors (10 Democrats and one Independent) and didn’t see committee action. Prior to the 115th Congress, Sen. Warren introduced this bill in prior Congresses,where it failed to gain traction.

This bill is endorsed by the National Consumer Law Center (on behalf of its low-income clients), the Institute for Taxation and Economic Policy, Americans for Tax Fairness, Economic Security Project Action, the Hispanic Federation, and Americans for Financial Reform.

This bill’s sponsors claim that under it, most taxpayers will be able to complete their tax returns in under 10 minutes and at no cost.


Of NoteIn the 2018 tax season, American taxpayers spent an average of 11 hours and around $200 preparing their tax returns (a cost equal to almost 10% of the average federal tax refund). The IRS’ current Free File program — which uses agency-vetted third-party software from tax-prep companies — has been criticized for being under-utilized (only about 3% of eligible taxpayer use it, even though the program claims to provide free tax preparation services to 70% of taxpayers) and serving as a vehicle for upselling taxpayers to other, paid products.

For the roughly 90% of households that don’t itemize their tax returns, the IRS essentially knows how to fill out their tax forms without their input. This bill would take advantage of this fact to allow those eligible households to let the IRS fill out their tax paperwork, implementing “return-free filing” and saving families and the IRS time.

Eight OECD countries, including Finland and Norway, fully prepare returns for the majority of their taxpayers. Consequently, in Estonia, it takes the average person five minutes to file taxes. Similarly, in Sweden, most taxpayers just get a document from the government with all relevant tax information already filled out; and some even get a text message with their prepared tax information, and their taxes are done if they simply respond “yes” to the text.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / grejak)

AKA

Tax Filing Simplification Act of 2019

Official Title

To amend the Internal Revenue Code of 1986 to establish a free online tax preparation and filing service and programs that allow taxpayers to access third-party provided tax return information.

    The IRS already has this information so why not? Can’t cheat your taxes anymore? Good. They will already help you complete your taxes on the phone so what’s the beef. Seems anytime people see IRS they think BAD. So get onboard with the smart kids and let your taxes be done for you without paying TurboTax. This is a no-brainer for all non mouth breathing citizens.
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    Redundant. Another government spending bill that really doesn't benefit anyone but a government entity. Stop spending our money on making the bureaucracy larger!
    Like (17)
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    Pro’s: ensures that taxpayers who can’t afford to hire CPA’s can claim deductions that they are entitled to, but did not how to claim. Con’s: By making tax filing ”automatic”, people have less reason to get enraged by taxes. They have less reason to challenge how their tax dollars are being used, or to compare their tax burden to “elite” tax payers, who have many ways to cut their tax burden. Also, it can cut IRS costs to correct misfiled returns and collect remaining taxes due.
    Like (16)
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    No one should ever have to file a return and IRS no longer needs to exist. Just replace all taxes on income with a flat rate, simple, visible sales tax on new goods/services that includes a monthly tax credit option. FAIRtax is the answer. HR 25 in the House. 33 Sponsors/Cosponsors.
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    They already have all this information. We get the forms from them so we can fill out other forms. We just fill in some random details.
    Like (13)
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    It’s absurd that we have to file taxes at all, much less that we have to pay a industry extra money to do something unavoidable. Ever heard of the Tax Complexity Lobby? Seriously. The tax-preparation industry lobbies strenuously against any system that makes taxes easy. The Tax Complexity Lobby, includes big national preparers like H & R Block and tax-prep software companies. Intuit, the maker of the top-selling program TurboTax, has reportedly spent millions over the years to persuade members of Congress to “oppose I.R.S. government tax preparation.” In an annual report, the company warned investors that “government encroachment” — the I.R.S. filling out the forms for you — would be a significant competitive threat, which is why it has to fight the idea. So you do more work, they make more money. Any part of that seem wrong to you? In Japan, you get a postcard in early spring from Kokuzeicho (Japan’s I.R.S.) that says how much you earned last year, how much tax you owed and how much was withheld. If you disagree, you go into the tax office to work it out. For nearly everybody, though, the numbers are correct, so you never have to file a return. What’s going on in these countries — and in many other developed democracies — is that government computers handle the tedious chore of filling out your tax return. The system is called “pre-filled forms,” or “pre-populated returns.” The taxpayer just has to check the numbers. If the agency got something wrong, there’s a mechanism for appeal. Our own Internal Revenue Service could do the same for tens of millions of taxpayers. For most families, the I.R.S. already knows all the numbers — wages, dividends and interest received, capital gains, mortgage interest paid, taxes withheld — that we are required to enter on Form 1040. The I.R.S. sends out a letter called a CP2000 Notice by the millions every year. This is the form that says: You entered $4,311 on Line 9b, but the reports we have on file say the figure should have been $4,756. I get these letters now and then — the revenue service is always right — and it makes me mad. If the government already has all this stuff, why did I have to spend hours digging through receipts and statements and 1099 forms to report what the I.R.S. already knows? Not to mention how much money the government could save by getting tens of millions of uncertain taxpayers out of the filing cabinets and away from the pocket calculators. If you’re paid strictly in wages and, like nearly 70 percent of Americans, you claim the standard deduction rather than itemizing, you’re familiar with the drill: You get a W-2 from your employer listing what you were paid and how much tax was withheld. Next (unless you shell out for pro prep) you fill in some blanks, do some math, squint at a tax table, sign your name, drop the form in the mail, and worry that you screwed it up. And you very well may have—the IRS finds more than two million mistakes every year. These are spotted easily enough, because the IRS got the very same W-2 figures, did the same math, and filled out the same form. All this redundancy can’t really be necessary, right? Sure enough, because return-free filing already exists in such forward-thinking locales as Japan, Denmark, Sweden, and Spain, where the government basically does just what makes sense: they send out a bill for taxes due—or a refund of overpayment—for the recipient to approve. Even here in the U.S., you don’t have to compute your property taxes yourself, so why can’t you just kick back and wait for the IRS to figure out your income tax? The government said it receives the necessary information too late in tax season, they claimed, so a return-free system would delay refunds and anger impatient taxpayers. Which sure sounds like a dodge—is the IRS, the one federal agency even less beloved than the TSA, really afraid people will be mad at it? You’d figure typical deficit-hawk conservatives would be happy to save the money the IRS wastes every year confronting the American taxpayer’s inability to subtract correctly. Ronald Reagan himself endorsed return-free filing in 1985. But small-government zealot Grover Norquist and his group Americans for Tax Reform oppose efforts to streamline the filing system, preferring reforms that “enhance voluntary compliance.” A weaselly phrase, that—no arms would be twisted by offering a return-free option, and completing a 1040 hardly means you’re “volunteering” to pay taxes. The more likely reason for the resistance is that the proposed set-up would make the tax “simplification” Norquist favors—lopping off upper tax brackets, mainly—a much harder sell. If you’re trying to paint U.S. taxation as hopelessly burdensome, the last thing you want to see is the IRS transformed into an agency that just mails Americans a refund check every year. Meanwhile, special-interest groups are in the trenches trying to shoot down return-free pilot plans. In 2005, California adopted a program called ReadyReturn, which allows qualified residents to opt for a pre-completed tax return rather than fill out their own. The state estimates that the new process has saved millions a year in prep fees and about a half a mil in government administrative costs, and taxpayers who’ve used the service are overwhelmingly pleased. Thing is, not many Californians take advantage of it—in 2012, only 90,000 out of the approximately one million eligible—and officials complain they've had a hard time getting the word out. That’s because software manufacturer Intuit, the maker of the prep app TurboTax, wants it that way: according to a 2013 investigation by the nonprofit journalism outfit ProPublica, the company spent more than $3 million in lobbying and campaign contributions between 2005 and 2009 fighting ReadyReturn. Intuit didn’t manage to kill the program outright, but the state’s budget for marketing it was cut to a dinky $10,000. The Tax Complexity Lobby depends on taxes being complex and frustrating to make money. But we the people already pay the IRS to do the work once. Why pay a second time with the money we get to keep for a duplicate effort by the tax prep industry? There is no need.
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    Increase IRS budget? Nope!
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    Forcing tax filers to go through tax preparation companies is one of the biggest scams in this country! The IRS already has the tax information for people who don’t itemize. By not having a free filing option, the government is essentially ensuring the profits of the big tax preparation companies who buy off politicians so that they do their bidding. Provide a free filing option now!
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    Yes. The tax preparation companies made a deal to provide this because they were afraid that such a service would drive them out of business. Then they hid that option in their software. They made it almost impossible to file for free—a service that they promised to provide. (See https://www.wnycstudios.org/story/taxes-tedious) They broke their word. Let the IRS provide the service. They have the information already.
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    Um. Yeah. If you're going to make me pay for this, I shouldn't have to pay others to set up information the government already has.
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    Absolutely! The only thing keeping this from being a no-brainer are the lobbying dollars from the companies whose business model relies on taxes being complicated. The IRS has the data to make the process far faster for most of us, and they should use it to that end!
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    This only complicates the system that is already filled with “suggestions” to simplify the process. Honestly, going out and buying TurboTax with four licenses on it and sharing that with family or friends is the best way to go. I would gladly spend $50 to get this and it takes less than a half hour with it’s simple guide. There are also free programs out there offered by tax filing services as well. People can take advantage of these programs well before the IRS comes up with a feasible program that costs more money to maintain than it would to go and buy $50 worth of TurboTax.
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    Preferably a version off and online especially for those with little to no deductions. Why do we have to pay professionals each year and each year we have to pay them more. I use TurboTax and this year I got a request from the IRS saying they missed something. I paid extra this year to have them done to avoid this. No extra nothing on my end but somehow I have to take more of my time to take care of a 1040ez because I had nothing special not even a 1 deduction.
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    Thank you
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    I can support this as a Republican, but I do agree with my republicans that running corporate America out of business is a bad idea for the economy. The idea of the IRS making it easier on the tax payer especially low income tax payer is what drives me to support this bill. I do wish there was a Republican cosponsoring this what should be bipartisan bill.
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    I think it would be helpful but it must be simple and understandable, I would think to a sixth grade level of education and all on one page. You get these tech gurus working on something and they like to impress themselves with their cleverness.
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    It should at least be an option.
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    Intuit & H&R Block are being sued for tricking people into paying for preparing & filing services that the IRS offers for free. So, yes - having the IRS do more to ensure people use their free services is absolutely necessary. Of course, this bill will never see the light of day in the GOP controlled senate because it is for the benefit of common people.
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    People need to be Responsible for their own taxes Preparation. The IRS, in partnership with the major tax preparation companies, already has a Free File program that allows taxpayers making $62,000 or less a year to file their taxes for free. This bill would require the IRS to do more work and may make it necessary to increase the agency’s budget. SneakyPete..... 👎🏻👎🏻👎🏻 IRS 👎🏻👎🏻👎🏻. 6.17.19.....
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    The comments here against this bill show the absolute ignorance and stupidity of conservatives. You people have absolutely no clue how government works properly. I doubt you could manage yourself out of a paper bag.
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