Taxpayer advocate proposes free e-filing for everyone

National Taxpayer Advocate's FY 2005 Objectives Report to Congress

Related Links

A controversy that software industry officials thought had been put to rest two years ago is likely to be reopened after the Internal Revenue Service's chief taxpayer advocate told lawmakers this month that all citizens should have access to free software online for filing their tax returns.

Nina Olson, who is head of the IRS' Office of the Taxpayer Advocate, opposes extending an agreement between the IRS and the tax preparation software industry. Under that arrangement, known as Free File, 60 percent of taxpayers qualify for free filing, but others must pay for software to file their returns online.

The arrangement lets software companies offer free tax preparation and filing online for moderate- and low-income taxpayers. It began in 2003 and will end in 2005, if it is not renewed. In her July 6 report to Congress, Olson said she favors having the IRS provide free software on its Web site for all individual taxpayers. But it would be barebones software, she said, unlike the tax preparation packages offered by the software industry.

A senior adviser to Olson described the proposed software as "the electronic analog of filing a paper return." The free IRS software would let taxpayers enter and tabulate data and link to various instructions and IRS publications. But unlike more sophisticated commercial tax preparation software, it would not give tax advice or alert taxpayers to possible deductions for which they might be eligible.

Tax software officials involved in the Free File program oppose Olson's proposal, which they say would give taxpayers an inferior product and would hurt the software industry. "We're disappointed with her comments," said Michael Cavanagh, executive director of the Free File Alliance LLC, a group of companies that offer their commercial software free to taxpayers who qualify for the Free File program.

This year, 3.4 million taxpayers used Free File to file their tax returns online. "The Free File Alliance has worked, so there's absolutely no public policy reason to go in this direction at all," Cavanagh said of Olson's proposal.

He added that he is certain that IRS officials will not act on Olson's suggestion. "Her proposal is that the IRS should get into the electronic tax prep business, and the IRS does not agree with that," he said. "We think clearly that would take away from the American taxpayer the innovation and level of [software] quality they now enjoy."

IRS spokesman Tim Harms said IRS officials do not comment on the report to Congress that the Office of the Taxpayer Advocate is required to submit twice a year.

Olson said her proposal would help the tax agency meet its goal of having 80 percent of all tax and information returns filed electronically by 2007. Congress set that goal for the agency in the IRS Restructuring and Reform Act of 1998.

IRS officials and lawmakers agree that reaching or exceeding that goal would allow for greater internal efficiency and taxpayer convenience. The agency, for example, would need fewer data transcribers. And most taxpayers would get their refunds faster because online-filing software looks for common errors before it accepts tax returns.

But Olson, in her report, said her proposal is more than practical; it is a matter of principle. No one, she said, should be forced to pay extra to file a tax return online.

The Fed 100

Save the date for 28th annual Federal 100 Awards Gala.

Featured

  • computer network

    How Einstein changes the way government does business

    The Department of Commerce is revising its confidentiality agreement for statistical data survey respondents to reflect the fact that the Department of Homeland Security could see some of that data if it is captured by the Einstein system.

  • Defense Secretary Jim Mattis. Army photo by Monica King. Jan. 26, 2017.

    Mattis mulls consolidation in IT, cyber

    In a Feb. 17 memo, Defense Secretary Jim Mattis told senior leadership to establish teams to look for duplication across the armed services in business operations, including in IT and cybersecurity.

  • Image from Shutterstock.com

    DHS vague on rules for election aid, say states

    State election officials had more questions than answers after a Department of Homeland Security presentation on the designation of election systems as critical U.S. infrastructure.

  • Org Chart Stock Art - Shutterstock

    How the hiring freeze targets millennials

    The government desperately needs younger talent to replace an aging workforce, and experts say that a freeze on hiring doesn't help.

  • Shutterstock image: healthcare digital interface.

    VA moves ahead with homegrown scheduling IT

    The Department of Veterans Affairs will test an internally developed scheduling module at primary care sites nationwide to see if it's ready to service the entire agency.

  • Shutterstock images (honglouwawa & 0beron): Bitcoin image overlay replaced with a dollar sign on a hardware circuit.

    MGT Act poised for a comeback

    After missing in the last Congress, drafters of a bill to encourage cloud adoption are looking for a new plan.

Reader comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

More from 1105 Public Sector Media Group