Eliminating Free File would leave millions of taxpayers behind
Fifteen years ago, online tax software companies and the IRS entered into a public-private partnership to provide free, quality tax preparation services to low-income Americans under a program called Free File.
The partnership has been a great success. H&R Block is proud to offer these services and since Free File’s inception, it has helped millions of Americans file their taxes for free with the confidence of H&R Block standing behind their return.
{mosads}We are fully committed to Free File and, as we have for all our customers for 63 years, we put the taxpayer first, providing help and inspiring confidence with what is often their biggest financial transaction of the year, and we work to get them every credit and deduction they deserve.
In recent weeks, however, questions have been raised about the Free File Alliance. It is important to set the record straight. H&R Block fully complies with the Free File agreement, our Free File services are clear, and we take taxpayer privacy extremely seriously.
Suggesting otherwise is inaccurate, irresponsible and undermines a successful public-private partnership that has benefitted millions of people.
Public-private partnerships are a critical problem-solving tool. They help spur innovation and competition, leveraging the benefits of the private sector to serve public needs.
Another successful public-private partnership between our industry and IRS is the Security Summit, which has reduced taxpayer identity theft refund fraud by 80 percent over the last three years. We take great pride in the benefits these collaborations deliver to consumers.
Arguments against Free File are really an attempt to achieve a different political motive — to eliminate Free File and instead have the government take over tax preparation through Government Populated Return.
Under Government Populated Return, the IRS would send Americans a pre-determined tax return. The concept is troublesome and unworkable for many reasons. First, the IRS acknowledges it already struggles to meet its responsibilities amid continued budget cuts and staffing decline.
Since 2010, the IRS’ budget has been cut by 17 percent, and its staff has been reduced by 23 percent. As former IRS Commissioner John Koskinen left office he cautioned, “Beware the collapse of the IRS. We’re at the edge…I keep trying to warn people that we just can’t keep losing employees and absorbing budget cuts. We’ll fail.”
In addition to capacity challenges, the IRS does not have the technological infrastructure to support a program like Government Populated Return. Alarmingly, the IRS is still running applications from the 1960s.
As the Treasury Inspector General for Tax Administration, J. Russell George recently commented, “Modernizing the IRS’s computer systems has been a persistent challenge for many years and will likely remain a challenge for the foreseeable future.”
George also highlighted how technology issues pose a threat to cybersecurity via identify theft and impersonation scams.
If appropriations were to become available, they should be directed toward these and other major IRS challenges. In her most recent report to Congress, taxpayer advocate, Nina Olson highlighted that IRS telephone assisters answered only 29 percent of the calls the IRS receive, and “in addition to answering the fewest number of taxpayer calls in recent memory, the IRS also has the lowest individual audit rate in memory and its collection actions are way down.”
These are significant and persistent issues. Given these challenges, Congress ought to more closely review funding of the service to ensure that IRS can meet the needs of taxpayers.
Capacity aside, Government Populated Return would fail for many other reasons. Notably, the taxpayer would be liable for any errors made by the IRS. That’s not fair.
Unlike the IRS, H&R Block is in the taxpayer service business, not the tax collection business, so we work hard to get taxpayers every credit and deduction they deserve. We leverage innovation to taxpayer’s benefit and stand by them if tax authorities have questions or concerns.
Government Populated Return would be a drastic step in the wrong direction. While Free File, like any public-private partnership, should be the subject of continuous improvement, it has helped over 50 million Americans file their taxes for free with confidence.
Working together, let’s continue to improve the program so that it can keep helping millions of taxpayers for years to come.
Dan Turrentine is the vice president and chief government affairs officer for H&R Block.