IRS tests free e-filing system that could compete with tax-prep giants

[brooklynite]

Source: Washington Post

The Internal Revenue Service has quietly built its own prototype system to allow Americans to file tax returns digitally and free of charge, according to three current and former agency officials, essentially creating government software that could disrupt the tax-prep industry.

The system will be available through a pilot program for a small group of taxpayers by January, when the 2024 filing season begins, said the people briefed on the matter, who spoke on the condition of anonymity to discuss internal agency conversations. It was developed by the IRS and the U.S. Digital Service, the White House’s technology consulting agency.

Last year’s Inflation Reduction Act, one of President Biden’s chief legislative victories, included $15 million for the IRS to look into creating a direct filing program.

Treasury Department representatives declined to comment Monday.

Read more: https://www.washingtonpost.com/business/2023/05/15/irs-free-file/?utm_medium=social&utm_campaign=wp_main&utm_source=twitter

[BOSSHOG]

1. The US Tax System

Should not be an instrument to enlarge CEO Christmas bonuses, I applaud the IRS for this initiative. I have been filing our tax returns “free of charge” for almost 50 years. Americans with complicated returns should be able to do so as well. The black eye of greedy capitalists as perceived by many Americans is self inflicted. If billionaires are sincerely opposed to socialism they should insist the senators and congress members they own stop accepting their socialist paychecks.

[dalton99a]

4. +1

[dflprincess]

7. And if they want to cut Social Security

they can cut their own pensions first.

[hamsterjill]

2. Great idea if they can get the kinks out.

I tried using the free software in the IRS website this year and my return was very simple and straightforward. It got kicked back so many times for software issues that I gave up.

[nitpicked]

13. I tried to get in just for fun

But I couldn't even get started.

Back to the graphite word processor...and a paper return.

[dalton99a]

3. Kick

https://archive.ph/nB6Qu

[Jim__]

5. This is just e-filing, but not automated tax computations?

Turbo tax will e-file your taxes for a fee; but they will also automate the tax computations (for an additional fee, of course). Turbo tax makes filling out the tax forms relatively easy (at least for my taxes) and is cheaper than using an accountant.

It does seem like the government should provide an easy-to-use automated tax computation system. But, if I understand correctly, that is not what they are talking about here. Am I mis-understanding what is being proposed?

[leftieNanner]

6. I understand that they are creating

A free alternative to turbo tax.

Hope so!

[eggplant]

12. For simple returns, TurboTax (and others) will file for you completely free of charge.

They REALLY don't like telling you that. $141 million worth.

https://www.npr.org/2022/05/04/1096612276/turbotax-free-tax-filing-intuit-settlement

[dflprincess]

8. I don't know why this would be difficult

The IRS already has most the documents we use to file our taxes. Copies W-2s, 1099s (of all sorts) etc are set to them, we should just have to enter our SS#s, confirm address, filing status, dependents, and for most of us the 1040 would create itself.

[brooklynite]

9. The IRS knows about your INCOME (salary and investments) and your TAX PAYMENTS

It DOESN'T know about your deductions for non-Federal taxes, charitable contributions, business expenses, etc.

[ForgoTheConsequence]

10. 87% of filers take the standard deduction.

It would be fine for the majority of people.

[dflprincess]

11. I did say it would simplify things for most of us

I'm aware there are those with more complicated returns.

[Martin68]

14. Wait for it. The Tax Preparer lobby will start attacking the IRS system right...about....now!

The right wing will see it as a plot to rip off the public and feed tax-hungry liberal causes. The new system will doubtlessly suffer some ups and downs like any new software system that complex. Remember the Obamacare rollout? This will not be pretty.

[XorXor]

16. I suspect another argument from them will be

That the IRS system will work to ensure you pay the maximum amount of taxes and make no effort to find ways to reduce the amount owed.

[XorXor]

15. That would be nice to have