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Bay Area Estate And Tax Planning Law Firm
Estate Planning
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Could filing tax returns actually get cheaper, easier and faster?

| Apr 22, 2016 | Tax Controversies |

If you have filed California taxes using CalFile (or its predecessor ReadyReturn), you probably appreciated the convenience of what’s known as return-free filing. Simply put, your tax information pre-populates into the return for you, to be submitted as is or amended.

Wouldn’t it be nice to have this option when filing a federal return, instead of having to pay to use e-filing software? The IRS does technically offer a program called “Free File,” But very few people know about it, and even fewer use it. Because Americans continue to pay significant amounts of money to use private tax preparation software (because they don’t know of an alternative), Senator Elizabeth Warren recently proposed a bill called the Tax Filing Simplification Act.

Naturally, private tax preparation software companies have a vested interest in keeping the tax return process complicated. Lobbyists for the industry even managed to strike a deal that prohibits the IRS from developing its own software for tax prep and e-filing. That ban has been in place since 2003.

Warren’s bill would reverse this power dynamic and actually require the IRS to develop the software. It would also bar the agency from “entering into agreements that restrict its ability to provide free online tax preparation or filing services.”

To be sure, private companies offer some very attractive software features that can greatly simplify doing your taxes. But the cost of using that software is sometimes a considerable expense, and many believe that private companies should not be allowed to stop the IRS from creating free software to make it easier and cheaper for Americans to comply with the law (pay their taxes).

Even if Warren’s bill passes (and it may not), return-free filing would not work for everyone. More complicated tax returns would require at least some additional paperwork, if not help from a tax professional. But it would at least be nice to have the option.

In the meantime, if you have tax questions or encounter difficulties with the IRS, you should not face these problems alone. Please discuss your case with an experienced tax law attorney.


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