Free File Program: 'Tax Filing Simplification Act' Would Create a Conflict of Interest & End a Free Program that's Working for Taxpayers
WASHINGTON, D.C. (April 14, 2016) – The Free File Alliance, a coalition of 13 industry-leading tax software companies partnered with the Internal Revenue Service (IRS), today released the following statement after the Tax Filing Simplification Act was introduced in the U.S. Senate in a bid to end the Free File Program, and fundamentally change the country's tax system of voluntary compliance by having IRS prepare citizens' tax returns.
"The Tax Filing Simplification Act is anything but simple," said Tim Hugo, executive director of the Free File Alliance. "Not only would the legislation create a tremendous and potentially harmful conflict of interest for the American people by enshrining roles of tax preparer, tax collector, tax auditor and tax enforcer together in one entity, the IRS, but the system's very creation would also be a huge burden for taxpayers. The IRS has cut 13 percent of its full-time workforce since 2011, and government budgets are shrinking, not expanding. The proposal would make the essential tax administration work of the IRS impossible, while disadvantaging the taxpayer.”
Hugo continued, "The reality is that Americans already have free and effective options for tax preparation which cost the public, Treasury and taxpayers nothing. The Free File program, which is regulated by the IRS, has provided $1.4 billion in donated tax software services, serving almost 50 million American families. Responding to an IRS survey, 96 percent of users said they found Free File easy to use, while 98 percent said they would recommend the program to others. It is also important to recognize that while Free File was created to further drive the IRS e-filing initiative and reduce tax administration costs, it has also engaged the tax software industry in providing free and innovative preparation options, which multiply every year."
Through Free File, available at www.IRS.gov/FreeFile, taxpayers with a 2015 Adjusted Gross Income of $62,000 or less can access free, industry-leading tax software to prepare, complete and e-file their federal tax returns at no cost. Free state return options are also available to everyone making $62,000 or less. Eligible taxpayers have consumer choice, with free service offerings from 13 companies.
Taxpayers who have an AGI that exceeds $62,000 can e-file their federal tax returns or an extension using Free File Fillable Forms—a service designed for taxpayers who prefer working directly with the electronic equivalent of IRS paper tax forms and instructions.
Free File is intended to particularly help lower- and middle-income taxpayers who may be eligible for refundable tax credits like the Earned Income Tax Credit (EITC), which Free File enables them to claim through their tax returns at no cost. Likewise, Free File helps taxpayers with the new health care requirements. Using Free File, most taxpayers simply have to check a box to report health care coverage for the entire year. The service is also available in Spanish. And finally, the program offers expanded services to active duty U.S. armed forces, and the families who are waiting for them back at home.
About the Free File Alliance
The Free File Alliance, a coalition of 13 industry-leading tax software companies, has partnered with the IRS since 2003 to help low and middle-income Americans prepare, complete and e-file their federal tax returns online. The Free File Alliance is committed to giving 70 percent of taxpayers free access to the industry's top online tax preparation software. For more information, visit www.freefilealliance.org.