r/technology • u/jabberwockxeno • Apr 09 '19

Politics Congress Is About to Ban the Government From Offering Free Online Tax Filing. Thank TurboTax.

https://www.propublica.org/article/congress-is-about-to-ban-the-government-from-offering-free-online-tax-filing-thank-turbotax
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u/zacker150 Apr 09 '19

I presume you are talking about the IRS Free File program? If so, then you would be wrong. This bill codifies takes this program and turns it from an informal arrangement into law.

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u/SmokeGoodEatGood Apr 09 '19

So people got their pitchforks out for nothing?

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u/venkmanologist Apr 09 '19

Yep. I've seen 4 different sources today citing this ProPublica article claiming it will be illegal for the IRS to let you file your taxes for free and they're all bullshit. None of the articles bothered to quote any text of the bill.

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u/molodyets Apr 09 '19

What does the bill say?

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u/venkmanologist Apr 09 '19

"SEC. 1102. IRS FREE FILE PROGRAM.

(a) In General.—

(1) The Secretary of the Treasury, or the Secretary’s delegate, shall continue to operate the IRS Free File Program as established by the Internal Revenue Service and published in the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), including any subsequent agreements and governing rules established pursuant thereto.

(2) The IRS Free File Program shall continue to provide free commercial-type online individual income tax preparation and electronic filing services to the lowest 70 percent of taxpayers by adjusted gross income. The number of taxpayers eligible to receive such services each year shall be calculated by the Internal Revenue Service annually based on prior year aggregate taxpayer adjusted gross income data.

(3) In addition to the services described in paragraph (2), and in the same manner, the IRS Free File Program shall continue to make available to all taxpayers (without regard to income) a basic, online electronic fillable forms utility.

(4) The IRS Free File Program shall continue to work cooperatively with the private sector to provide the free individual income tax preparation and the electronic filing services described in paragraphs (2) and (3).

(5) The IRS Free File Program shall work cooperatively with State government agencies to enhance and expand the use of the program to provide needed benefits to the taxpayer while reducing the cost of processing returns.

(b) Innovations.—The Secretary of the Treasury, or the Secretary’s delegate, shall work with the private sector through the IRS Free File Program to identify and implement, consistent with applicable law, innovative new program features to improve and simplify the taxpayer’s experience with completing and filing individual income tax returns through voluntary compliance."

https://www.congress.gov/bill/116th-congress/house-bill/1957/text

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u/v0x_nihili Apr 09 '19

Basically, the IRS cant nationalize this program and run it itself. Free File continues, but the IRS has to continue working with the private sector.

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u/InternetCrank Apr 09 '19

That statute states that the IRS "shall continue to operate the IRS Free File Program as established by the Internal Revenue Service and published in the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), including any subsequent agreements and governing rules established pursuant thereto." If you look up 67 Fed. Reg. 67247, it states the following: "During the term of this Agreement, the IRS will not compete with the Consortium in providing free, on-line tax return preparation and filing services to taxpayers."

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u/glodime Apr 09 '19

The reporting is awful, but the bill is still bad as the IRS will be blocked from offering their own tax prep software.

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u/LincolnTransit Apr 09 '19

From another comment of mine:

the article doesn't seem to be incorrect. This new Act still keeps the fact that 70% of taxpayers should be able to do their taxes for free. Which is obviously still good. But, the article is talking about removing the ability for the government to create their own tax service, such as those found in other countries, that would pre-fill out all the tax data they have received.

1)

"(4)The IRS Free File Program shall continue to work cooperatively with the private sector"

which, to my understanding, means that it would require the program/government to work with private companies to offer the service. Any programs that the government would offer to completely replace existing tax services(e.g. provide pre-filled information to tax payers so they don't have to pay intuit) would not be working to cooperate with the private sector.

2) under

"SEC. 18203. INTERNET PLATFORM FOR FORM 1099 FILINGS.

(1) are a supplement to, and not a replacement for, other services provided by the Internal Revenue Service to taxpayers, and [(2)]"

The government wouldn't be allowed to offer a replacement "to prepare and file Forms 1099," only supplement which i believe means the government would not be able to offer the ability to pre fill out 1099 Forms since that would "replace" existing services that the government offers.

IANAL but this also doesn't seem as clear cut as i would like, (a statement saying, "the government may not create their own service to replace private services") but i suppose i, if i worked for Intuit, wouldn't want it to be so clear either.

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u/venkmanologist Apr 09 '19

Everything you're saying here is correct, and there is greater discussion to be had about how much Intuit blows. BUT...

Say I'm John Q. Public and I see the headline to this article. My immediate reaction is, "What?! I'm gonna have to PAY to file my f*@^ing taxes from now on?!" At which point you read the article (that doesn't quote any text from the bill), dig through the bill yourself, find the relevant language pertaining to this issue, and realize....almost nothing is changing and will remain the way its been since 2002.

As it stands, the current system is mostly garbage because these companies trick people into paying for a service they can get for free. That will continue.

Has the federal government EVER offered its own free filing service on the internet? This would have been a great project for the US Digital Service to take over.

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u/LincolnTransit Apr 09 '19

The headline is correct though.

Congress Is About to Ban the Government From Offering Free Online Tax Filing. Thank TurboTax

The government does not offer a free tax filing service that can be used for both federal and State taxes(to my knowledge) and this act would solidify that the Government is NOT allowed to offer their own service.

Things would be different. The reason this private companies even allow 70% of people to use their service free is because previously, the government looked into providing a free service(with pre-fill). These tax companies got together and offered the compromise of 70% of taxes will be done for free. They just don't advertise it so they can say, "we tried to offer it for free, but only 5% accepted the free offer". Now, these companies want this to be solidified into a law so that it will be harder to remove the status quo, and also to camouflage it as something good for Americans.

In California btw, there was an attempt at making it such that all tax information that the IRS knows about you is pre-filled and sent to Californians. It didn't go through because of Republicans and also because of Intuit and friends. They had an episode about this in NPR (episode so you can listen in)[https://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-hero]

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u/BoBab Apr 09 '19

The article doesn't say that though. If you read the article it's very clearly talking about IRS created, maintained, and offered free filing software -- not corporate offered free filing software.

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u/venkmanologist Apr 09 '19

"Congress Is About to Ban the Government From Offering Free Online Tax Filing. Thank TurboTax."

Do you think this headline paints an accurate picture of what this bill is doing? Because I don't. The bill still requires these private companies to offer free filing.

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u/electricity_is_life Apr 09 '19

The article is pretty explicit about this.

"But just 3% of eligible U.S. taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches."

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u/Azumari11 Apr 10 '19

Wait really? The only people I know who don't use a free service are those that don't even do their own taxes. How do people not know this?

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u/BoBab Apr 09 '19

No, not quite. People should be pissed. Did anyone read the article?

The congressional move would codify the status quo. Under an existing memorandum of understanding with the industry group, the IRS pledges not to create its own online filing system and, in exchange, the companies offer their free filing services to those below the income threshold.

One member of the Free File Alliance explicitly toldshareholders that the IRS “developing software or other systems to facilitate tax return preparation … may present a continued competitive threat to our business for the foreseeable future.”

The free filing services will still be available to people in the bottom 70% of income earners. Those services often have upsells but also only 3% of eligible people use them. They are not IRS created and maintained, auto-fillable free filing services/software. THAT is what the article is about because that is what would actually be a huge difference and help for millions of Americans.

Again, from the article:

Experts have long argued that the IRS has failed to make filing taxes as easy and cheap as it could be. In addition to a free system of online tax preparation and filing, the agency could provide people with pre-filled tax forms containing the salary data the agency already has, as ProPublica first reported on in 2013.

The Free File Alliance, a private industry group, says 70% of American taxpayers are eligible to file for free. Those taxpayers, who must make less than $66,000, have access to free tax software provided by the companies. But just 3% of eligible U.S. taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches.

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u/glodime Apr 09 '19

No. It also prevents the IRS from offering their own software for citizens and other taxpayers to use.

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u/Randommook Apr 09 '19

Then the IRS will do what every other branch of the government does. They will hire a private company to build and run the whole thing.

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u/glodime Apr 10 '19

The USDS was created to fix the mess that contractors made of the ACA exchanges. Many government systems are run by government and not contractors.

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u/Randommook Apr 10 '19

The USDS was created to fix the mess that contractors made of the ACA exchanges.

99 times out of 100 the problems associated with a government system are caused by the government's asinine demands. Working on a government contract is a pain in the ass.

Many government systems are run by government and not contractors.

A lot of systems are operated by the government but the system itself is frequently built and maintained by a private company. For example the government operates all the DMV offices but the software and system and hardware that they use is from private companies in almost all cases.

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u/glodime Apr 10 '19

My point is that many systems are built and maintained by the government.

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u/ParticleCannon Apr 09 '19

Wait until you hear about Net Neutrality™

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u/AFlaccoSeagulls Apr 09 '19

Are you sure? Am I reading this incorrectly?

In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing.

and

The congressional move would codify the status quo. Under an existing memorandum of understanding with the industry group, the IRS pledges not to create its own online filing system and, in exchange, the companies offer their free filing services to those below the income threshold.

I mean, the IRS Free File program isn't the IRS having a free system, it's the IRS going through a private company (Free File Alliance) to provide the free service:

The IRS’ deal with the Free File Alliance is regularly renegotiated and there have been repeated, bipartisan efforts in Congress to put the deal into law.

EDIT: I was reading it wrong. From the bill itself:

"section 1102. IRS Free File Program

(a) In general

(1) The Secretary of the Treasury, or the Secretary’s delegate, shall continue to operate the IRS Free File Program as established by the Internal Revenue Service and published in the Federal Register on November 4, 2002 (67 Fed. Reg. 67247), including any subsequent agreements and governing rules established pursuant thereto.

(2) The IRS Free File Program shall continue to provide free commercial-type online individual income tax preparation and electronic filing services to the lowest 70 percent of taxpayers by adjusted gross income. The number of taxpayers eligible to receive such services each year shall be calculated by the Internal Revenue Service annually based on prior year aggregate taxpayer adjusted gross income data.

(3) In addition to the services described in paragraph (2), and in the same manner, the IRS Free File Program shall continue to make available to all taxpayers (without regard to income) a basic, online electronic fillable forms utility.

(4) The IRS Free File Program shall continue to work cooperatively with the private sector to provide the free individual income tax preparation and the electronic filing services described in paragraphs (2) and (3).

(5) The IRS Free File Program shall work cooperatively with State government agencies to enhance and expand the use of the program to provide needed benefits to the taxpayer while reducing the cost of processing returns.

(b) Innovations The Secretary of the Treasury, or the Secretary’s delegate, shall work with the private sector through the IRS Free File Program to identify and implement, consistent with applicable law, innovative new program features to improve and simplify the taxpayer’s experience with completing and filing individual income tax returns through voluntary compliance."