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Monday, October 24, 2016

by Liz Day and Justin Elliott, ProPublica

Last month, we detailed how Intuit, the maker of TurboTax, has fought a proposal that could make filing taxes easier and cheaper for millions of Americans.

As we noted, tax activist Grover Norquist and other conservatives have also opposed the proposal, called “return-free filing,” which would give many taxpayers the option to receive a pre-filled return that they could simply review, sign and send back, all for free. Return-free filing has been endorsed by many experts and adopted by several European countries.

As it turns out, Norquist has also recently weighed in on the side of the tax-prep industry on another issue.

A House bill introduced earlier this year would bar the IRS from offering taxpayers software that would compete with programs like TurboTax. In March, Norquist and others wrote a letter to members of Congress that urged them to support the bill — what they called a “pro-taxpayer, anti-IRS power grab legislation.”

At issue is how Americans file their taxes and whether electronic filing can be offered directly through the IRS.

The bill is called the Free File Program Act, co-sponsored by Rep. Peter Roskam (R-IL) and Rep. Ron Kind (D-WI). It declares that the IRS, with a few narrow exceptions, “may not establish, develop, sponsor, acquire, or make available” electronic filing service or tax software.

Roskam declined to comment. Spokespeople for Kind and Norquist did not immediately respond.

The bill would also make permanent the Free File program, a public-private partnership between the IRS and the tax software industry created in 2002 to offer some taxpayers free electronic filing.

The industry group behind the program boasts that almost all taxpayers can use software like TurboTax or more primitive electronic forms for free. But access to the more sophisticated software is limited by income. Only about 3.5 million taxpayers used Free File last year, according to a Treasury Department tally through the end of April.

The pact governing the partnership, which counts Intuit as a member, includes a sweet deal for the industry: In return for the companies offering free software to some, the IRS agreed not to develop its own free, online tax prep services. The current deal expires next year.

Intuit lobbied on an earlier version of Roskam’s bill that was introduced in 2011.

The company has spent over $11.5 million on lobbying on a range of issues in the past five years. That money buys high-profile help: Intuit’s lobbyists on the tax-prep issue include former Sen. Tim Hutchinson, a Republican from Arkansas; former Rep. Pete Hoekstra, a Republican from Michigan and former Rep. Albert Wynn, a Democrat from Maryland. All three now work for the DC office of law firm Dickstein Shapiro. Neither the former lawmakers nor the law firm immediately responded to requests for comment. Intuit also did not respond to requests for comment.

Intuit has given money to the sponsors of the bill. Roskam has received $12,500 from Intuit’s political action committee and company executives in the last two election cycles. Kind has gotten $12,400.

Sen. Mark Pryor (D-AR)  introduced a companion bill in the Senate. Pryor received $3,000 from Intuit’s PAC in the last election cycle.

Another recent bill would actually institute a version of return-free filing, allowing many taxpayers to avoid paying for any prep.

On Friday, Rep. Bill Foster (D-IL) introduced the bill to create a voluntary system under which an IRS website would offer individual taxpayers forms that are automatically populated with data from employers and other sources.

“Our tax code is complicated enough, we shouldn’t be asking taxpayers to submit information the IRS already has,” Foster said in a press release.

“Taxpayers spend an estimated 6.1 billion hours a year complying with the tax code and an average of over $200 on tax preparation fees,” according to the release. (More on those figures can be found in a 2012 report by the Taxpayer Advocate Service, an independent organization within the IRS.)

The bill is called the Autofill Act, and last week marks the second time Foster has introduced the legislation. A spokeswoman said Foster got interested in the issue after he became frustrated with the “redundant paperwork” needed to file his own taxes and discovered California had a state version of return-free filing.  She said he will now be working to collect co-sponsors and the bill is likely to be referred to the Ways and Means Committee.

This doesn’t mean an anxiety-free tax season is coming soon: Similar bills introduced in the past haven’t gone anywhere.

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  • 4sanity4all

    The IRS should be able to send us pre-filled tax forms that we could review and submit. I am outraged that Roskam and Kind think otherwise. They have accepted campaign money from Intuit, and now they are pushing legislation favorable to Intuit. That is corruption, in my opinion. And it should be illegal, if it is not. I am also outraged that laws keep the IRS from having an on line site where our info could appear pre-filled on tax forms, with the amount of tax owed calculated. It would save us so much time and trouble. I’m sure they could arrange it so that if a taxpayer wants to claim deductions, that could be added by the tax filer. We should all demand this from our elected representatives.

    • RobertCHastings

      Sounds like bribery to me. How can they, or any Congressman, Republican or Democrat, get away with what is obviously a quid pro quo arrangement?

  • sunmusing

    The IRS needs to look into the corruption in the “tax free” PAC’s…and the missing tax revenues from all those on making huge profits and hiding them elsewhere…”No man shall stand between God and the IRS”…

    • RobertCHastings

      Oh, no, they couldn’t do that. The Republicans are already wanting an in-depth hearing on the IRS’s tagging non-profit conservative orgs. for review. However, it is high time that our government start doing exactly as you say, erecting an impenetrable wall between members of Congress and outside sources of money and influence.

  • docb

    DESPICABLE…How could they possibly be for such a thing..Call them out..LOUDLY..

    1.866.220.0044 or 1.866.311.3405! and at their local offices.

  • I am all in favor of an online pre-filled form from the IRS. However, I still think that anyone should have the right, (which is probably the way the rules would apply anyway), to seek paid, outside CPA’s, Auditors, etc.

    HOWEVER, the most important item that I either missed in the article, or was omitted, is that the pre-filled information MUST be on secured servers, not ones that are open to requests from anyone other than the tax filer.

    ALSO, these servers should NOT be accessible to the auditors and investigators in any manner that is more freely accessible than this type of information would be available under present conditions.

    In other words, these servers should NOT be a government, or private industry, tool for searching out criminal activity or tax evasion.

    My reasoning is that if those rules are not in place, this could, and probably would, become an easy method for fishing out questionable information that might be more difficult to find through normal channels.

    It strikes me that it would be self-incriminating to use this pre-filled form if protections are not provided for tax filers.

    However, once information leads to a natural conclusion of criminal intent, or tax evasion, a specific system should be available to VERIFY the information that has been accumulated. It should include a number of “hoops” that investigators would need to “jump through” before the information could be accessed.

    Access should not be granted by a specific individual, but rather by a small tribunal or committee. And, it should NOT be used as a sole source for this information.

  • Allan Richardson

    I remember seeing a few years ago an option on the 1040-EZ to “let the IRS compute my taxes and send me a bill.” Of course, the taxpayer still had the responsibility to list all income honestly, but the EZ was intended for simple-situation taxpayers. Is that still available?

    Also, it used to be possible to go on the IRS web site and fill out a simple form, equivalent to 1040-EZ, directly online. I personally would not use it, because it does not leave an audit trail on my own computer (but people without computers would like it precisely for that reason, since the cache can be erased on the library computer when they finish).

    The main reason this technology is not yet available is that the Congressmen who supervise the IRS do not want its budget to be “wasted” on development projects, or on the newer server machines needed to put those projects online. The private companies spend lots of money on their programs each year to make them user-friendly and keep up with tax law changes. Until Congress can apply the concept of “invest-to-make-a-profit” that helped each of THEM to become wealthy to the government itself, they will continue the same short sighted policies. The fact that this is profitable for those companies is a side effect, bad for some of us, good for them.

  • Allan Richardson

    I just thought of another possible drawback for taxpayers. There is a slippery slope from sending you a filled out form which you can edit and file online, to sending you one that you can pay as is online but have to file on paper to change, to flagging you for audit if you change anything, to sending you a bill that you CANNOT contest (without hiring an expensive lawyer, of course; and the lawyer can take the tax judge out to dinner and you end up owing nothing but the lawyer’s bill).

    • RobertCHastings

      Just a little paranoid? Much more than mere pragmatism is evident in your posts.

  • Don’t re-elect them to congress. They take payoffs.

  • tobyspeeks

    Pro Taxpayer, Citizens United, No Child Left Behind, Right to Work… The people who come up with bills designed specifically to engorge their own bank accounts and name them with everyday user friendly names are the purest evil this country has to offer.

  • deb1ryan

    It’s not free to file with Turbo Tax or Tax Act, I know I used them both and paid for the filing. It’s only free to figure your taxes, not to file them. And once again, the republicans show whose side they are on and it’s not the tax payer, it’s BIG Business!!!!! Who Knew???? We did, we know they are not for the middle class tax payer!!!

    • ralphkr

      You must have extremely complicated tax returns, deb1ryan, to have to pay a filing fee. Fortunately, I have a very simple return merely consisting of pension, savings interest, dividends, capital gains so I only generate 4 forms & 10 worksheets and I pay nothing for TaxAct software downloaded to my computer and E-filing is free. I had overpaid my Estimated Tax in January because some vital 1099s had not arrived so I did have to wait for them to show up and then wait 5 days after filing for my refund to show up in my bank account. Although my income has recovered somewhat after being crushed by the Bush years it still is under the the well over $100K I enjoyed during most of the Clinton years (took nearly 18 months to recover from the first Bush). That is the trouble with getting most of my income from investments. It always tanks during Republican administrations.

      • deb1ryan

        You are wrong on that one, e-file was not free, it was $9.95 and it said it was a charge for using the software, I filed a complaint with the company for false advertising. And then there was the additional charge for filing with the state. And NO, I don’t have a complicated tax return, don’t own a house or business either!!!!!

        • ralphkr

          No, deb1ryan, the TaxAct software (either online or downloaded) is free unless you opt for the Deluxe version ($7.95) which automatically enters all the info from the previous year form and the Federal Efile was also free of charge. I do believe that there is a charge for state forms but we do not have state income tax. The high property tax and sales tax (even on labor) more than makes up for the savings by not having income tax for anyone making less than $300K per year. By the way I started using TurboTax long before it was purchased by Intuit but switched to TaxAct when they started the free downloaded software. At one time I used to pay $1 plus a new floppy for software that would calculate Fed tax and print out completed forms (no Efile back then).

          • deb1ryan

            Nope, used the free version. Went back to my checking account and found the charges for both the federal and state filing.

          • ralphkr

            That is strange, deb1ryan, Are you sure that the charges weren’t for the state forms & state filing. I have never paid for either the software nor the E-file, not EVER, and my income has varied from barely over $52K under the glorious leadership of Cheney and his Puppet, Bush, to over $125K during Clinton’s administration. (and people wonder why I dread the thought of a Republican president).

          • deb1ryan

            My shock was, last year I paid nothing expect the state filing, this year I had two charges to use it. So, I am not sure why it did that, but I was just glad I didn’t use turbo tax, some of our clients had trouble with the software this year. I don’t like the idea that Turbo Tax is fighting the ability for taxpayers to use software from the IRS that will be free. Just more corporate BS, so the middle class can get stiffed.

  • Greg Mcfadden

    So much for the people, right? Question is, what are we going to do about any of this? Just utilizing our right to vote takes us nowhere!

  • RobertCHastings

    My daughter two years ago used one of Norquist’s “free file” gimmicks. It was NOT free. If you use such a program in the future, Make sure it REALLY IS free, as in not having to pay for it.
    And what is the problem Norquist, et al,have with free filing through the IRS. If you think about it, there is no invasion of privacy as the IRS already has all the pertinent information, you are afforded the right to review and edit as necessary, and it is free. My accountant sends me a pre-filled form every year, just as the IRS proposal would, so why shouldn’t the IRS be allowed to do it. This would save money on so many different levels that resistance to it seems almost nonsensical. Looks like the Republicans are opposed to anything and everything that would simplify April 15. They have already nixed the simplification of the tax code, and now this.