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Weekly Column: The IRS Needs To Focus On Real Improvements, Not Unnecessary Programs

Guest column submitted by U.S. Senator Mike Crapo

As the 2024 tax season gets underway, the Internal Revenue Service (IRS) continues to fail taxpayers by moving forward with the launch of a costly and unnecessary pilot program known as Direct File.  The pilot program, which was tucked into the Democrats’ Inflation Reduction Act, claims to provide “free” government-run preparation services even though it is funded by millions of taxpayer dollars.  Idahoans deserve real improvements from the IRS--not a misguided slide toward big government. 

A new IRS-run pilot program may seem harmless, but there are serious privacy, security and financial consequences at stake for taxpayers.  For starters, having the IRS act as tax preparer, tax collector and tax enforcer raises significant conflicts of interest.  In addition, the so-called free program would--if expanded beyond a small-scale experiment--cost billions of dollars in development and operational costs. 

What’s more, the program is essentially redundant.  Public-private partnerships and private tax software companies offer many of these services for free to millions every year.  In fact, the IRS already provides a service through a public-private partnership called (the similarly titled) “Free File” program.

The Free File program between the IRS and various established tax preparation companies makes tax filing accessible for eligible Americans.  Since Free File’s launch in 2003, it has filed more than 70 million tax returns at no cost to the taxpayer.  Using an estimate of $30 saved per return, the program has saved taxpayers nearly $2.1 billion.

The existing Free File program differs from the IRS’s new Direct File initiative in several important ways. 

First, since Free File started in 2003, it has cost the government virtually nothing, including call centers for customer support.  In contrast, the IRS estimated, with “considerable uncertainty,” that the Direct File program will cost taxpayers up to $2 billion over ten years, including up to $208 million every year for a new IRS call center.

Second, some of the Free File participants let taxpayers file a corresponding state return in every state with an income tax for free (other participants may charge a nominal fee), while the IRS pilot program only allows state filing in four states that have an income tax. 

Third, Free File has an incentive to lower tax bills to the maximum extent of the law.  Direct File, on the other hand, is run by the IRS, which has an institutional focus to maximize federal revenues.

On behalf of Idahoans, I will continue to press the IRS to prioritize taxpayer services; guard against partisan targeting; protect taxpayer privacy; modernize technology; and provide much-needed transparency.  Instead of diverting resources and attention to a redundant, expensive new government-run program, the IRS would better serve taxpayers by highlighting the existing options available to them and improving basic customer service.

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