The US Congress will soon officially ban the IRS from offering its own tax filing service, according to reporting by ProPublica, a non-profit news agency. Probably.
Advocates of a free, government-sponsored tax filing service have long argued that the current system doesn’t do justice to the millions of taxpayers making under $66,000 per year who actually shouldn’t be paying anything to file their taxes.
Tax Prep Industry Victory Seems Inevitable
According to a representative of the Free File Alliance, speaking to ProPublica, disallowing the IRS to create a free tax filing service will be great for everyone.
Only about 3% of qualified taxpayers file for free. Private tax accounting software firms use free filing as a way to divert people to paid products. The IRS lists a number of places which should enable many taxpayers to file for free, and the list changes every day (for fairness). However, nearly all of these obfuscate the process. This reporter filed for an extension just this morning, believing he could do so for free through one of the services. However, when it came time to hit submit, there was a cost involved. The most likely case, for most taxpayers already exhausted by the process, is to just pay the $20-100.
But some tax experts have long envisioned a system where taxpayers simply log on to a government website and process their documents. In the end, taxpayers who use privatized tax systems without the help of a CPA are only paying for access to an open network called e-File. The IRS’s e-file website currently functions as a sales funnel to several companies with the legal right to use e-file. An…