IRS, Congress debate Web portal for tax filing

Inspector general report on Free File program

Related Links

In a letter sent Nov. 2 to the Internal Revenue Service, the Senate Finance Committee questioned IRS Commissioner Mark Everson about building an a Web portal to allow taxpayers to file taxes for free. But Everson said in a speech today that the task might be too big for the agency right now.

Sens. Chuck Grassley (R-Iowa), committee chairman, and Max Baucus (D-Mont.), its ranking member, expressed concern that tax software companies in the IRS’ Free File program entice taxpayers with sales gimmicks. The IRS also seems to exercise little or no oversight on their actions, the letter states.

“The industry appears to be using the Free File program as an opportunity to bolster its revenue through the sale of ancillary products at taxpayer expense,” Grassley said.

If participating companies are taking advantage of the program, “perhaps it is time to consider having the IRS provide a direct filing portal to enable all taxpayers to file electronically without cost,” the senators’ letter states.

Although Everson supports a free Web portal for filing taxes, he said its creation would be a huge undertaking.

“At this stage, the most important thing is for everybody to understand how big a deal that would be,” Everson said at a Council for Electronic Revenue Communication Advancement conference in Arlington, Va.

The project would take a lot of investment, he said. In the short term, it would be too big for the agency to handle. In the long term, once the agency’s systems are modernized, such a portal would feasible, he said.

A policy debate also surrounds the issue of a Web portal. Critics question whether the IRS should play such a role in tax filing because it would take business away from tax-preparation companies.

“I’m all for private enterprise but not when it co-opts taxpayer service,” Grassley said.

The Web portal discussion has evolved rapidly in recent years as technology has advanced in industry and at the IRS, Everson said.

Among other areas, the debate is tied to the decrease in Free File program numbers, he added.

The Treasury Inspector General for Tax Administration released a report last month that found Free File use dropped by 23 percent between 2005 and 2006, mainly due to the amended agreement with the Free File Alliance, a group of tax software companies. The new agreement limits Free File to 70 percent of taxpayers or taxpayers whose income is $50,000 or less, according to the report.

The senators’ letter addresses problems with the Free File program, which they describe as inaccessible, complicated and frustrating for taxpayers. They should have a way to file taxes online directly to the IRS, the letter states.

“In the 21st century, there should be an easy, convenient and free way for taxpayers to file their returns directly to the IRS online,” Baucus said. Making tax preparation easier would close the tax gap, he added.

The IRS has until Nov. 17 to respond to the committee.

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