Just in time for Tax Day, the for-profit tax preparation industry is about to realize one of its long-sought goals. Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system.
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In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits.
—Congress Is About to Ban the Government From Offering Free Online Tax Filing. Thank TurboTax.
That sounds outrageous, right? And this ProPublica article did get Congress to think more deeply about the problem: Bill to Limit IRS’ Ability to Offer Free Tax Filing Service Is Getting New Scrutiny —The attention comes after ProPublica reported on the provision.
I think the wording of the bill is important. I think it’s important that the law doesn’t permanently bar the IRS from creating its own program. Up until now the agreement was the online tax-preparing companies would offer free filing for low- and moderate-income groups as long as the IRS promised not to compete — and this agreement was reached when around turn of the millennium the Office of Management and Budget asked the IRS to create free electronic tax-filing options for low- and moderate-income taxpayers. The IRS didn’t have the expertise so turned to the companies for help, and the agreement with them made sense.
The argument against the present agreement is most eligible taxpayers don’t know about the free option, and the requirements can be confusing. I think there should be some pressure on the companies to make their free options more simple to use, and the threat of competition from the government is useful. On the other hand, the IRS is already overburdened, and developing a new program outside of their expertise could be a nightmare.
Do you have any feelings on the subject?
April 14, 2019
I know nothing about tax laws…but adding another arm to the overburden IRS doesn’t seem like a good idea – and there should be more advertisement of the “free services” available, lots of people probably could do with a handout/up from that arena…
I agree completely. Even if the IRS offered it they would have to advertise, so why not advertise what’s already available?
I don’t know enough about what’s going on with this to really have an opinion but I’m always happy with free stuff
It would mean using free online software to do your taxes rather than taking your information to someone to do it for you. You might still want to pay for that convenience.
I knew about the current way to submit your taxes for free, but I’m not sure how I feel about it. I always worry about our information being out there, and worry about the IRS being a target for hackers. However, having said that, I don’t know how (what program) the accountant used to submit our taxes. I just know that for the first time in 39 years we owe, and writing that check was/IS really, really hard to do. I know I’m not alone in that.
We finally started filing electronically using TurboTax a couple of years ago, but we pay for their software and only have our information online when we send it. We do all of our calculations when we’re not hooked up to the internet. We hesitated to do even that, but it turns out to be a lot easier for us. And the IRS has our information — there’s no guarantee they won’t be hacked.
I thnk I’m with Kim.
I have done my own for years because it just seems simpler. I have no interest of any kind to deduct or whatever… and you’d think it would be easy. it’s not!
a few years ago they owed me. it took them about SEVEN months to pay me. I got all kinds of excuses when I was finally able to reach a human being. each call was a few months apart and a different excuse. I should have charged them the % they would have charged me if I had been over half a year LATE! but it’s my state that I abhor! it’s awful! far worse than the federal IRS.
I quit having anything held out and now I owe them less than $200. I hope it’s right. the thought of having to do that mess over makes me ill! LOL!
I don’t know about the issue you’ve brought up. it’s all about MONEY in this country… and profit. so I imagine it will be sorted out to the business’s advantage. but it SURELY could and should be simplified. if MINE was difficult I can only imagine what it must be for people who are really involved in investments and capital gains or properties etc. !!! AGGGH!
The trouble with TurboTax is it’s sometimes confusing what they want us to put in. In previous years I did ours by hand and Andy used TurboTax and then we worked out our discrepancies. This year I used TT for the first time and I’ll probably do it from now on.
So far we’ve always gotten a refund and get it quickly when we file electronically. It took longer when we did it by hand but never had any problem. Once they gave us back less than we thought the refund should have been, with some excuse but no details, and we decided not to argue. We expected it would be like your experience — a nightmare trying to get a real person — and figured it wasn’t worth the hassle. I agree with you — if they don’t give your money back right away, they should pay interest, and if it’s a ridiculous amount of time they should pay a penalty too. It should have more of a semblance of fairness.
I’m sorry OK is so bad. NM makes it really easy. They base it on the federal form plus a few more deductions and additions.
What a mess!
I filed with TurboTax but because of Obamacare there is an additional form that had to be filled out. There’s no avoiding the form but it was very basic info on my part because I never went to a doctor, not even once this year, but it still had to be filed so that cost me. Then because I live in Illinois I had to file that form (paid for that form too, although I received no income from an Illinois source). Then I had to pay to file the Iowa state tax because I work in Iowa.
Yeah, so much for free filing.
And yes, I’m considered low income.
So I have definite feelings on the subject.
I would LOVE to be able to file for FREE online.
Oh, wow! I hadn’t realized it was that bad. They made you pay to file the health care form? That sucks! As does your having to pay to file for two states. But I’m guessing it wouldn’t be much easier and less costly if the IRS was offering the software. 🙁
I knew about the lobbying by the tax preparation industry.
CreditKarma has a free tax service which I was using in parallel with TurboTax — until it got to a point where CreditKarma didn’t give me an option I needed for one particular income item.
This is our second year without any payroll income — 2014 was the first. With 11 months of social security, this year’s taxes on our “fixed income” gave me an feel on how much we need to adjust our withholding to keep from having to pay a penalty. We were penalized $55 for not withholding enough from our income in 2018.
It’s hard to estimate so we usually overpay. I wish they gave us interest when we do that!
I am opposed to having to pay in order to pay our taxes. I’d like to see IRS get their system up to date, then provide a free filing system.
Apparently a lot of people can already use the online software for free — they just need to be told it’s available. I don’t think the IRS is up to the task.