One concern for an IRS-run service cited by stakeholders referenced in the report, and by the IRS itself, is IRS funding, capacity and outdated tech.īut others say that the IRS is best situated to use data it has on taxpayers to potentially prepopulate tax returns and to help low-income Americans file their taxes and get the social benefits that come with that. Whether taxpayers would have better experiences if the IRS were to establish its own system is something stakeholders differ on, the report says. The deal that the IRS wouldn't make its own service was removed from the agreement between the IRS and the consortium in 2019, according to the GAO report. GAO's report says that companies are participating in the program, "to help ensure the federal government does not create its own tax filing system, which could compete with them." When the agency signed the first agreement with the servicers in 2002, the IRS agreed that it wouldn't offer its own free online tax preparation and filing services. "Historically, IRS had agreed that it would not develop its own online filing services in exchange for the participating companies offering free services to eligible taxpayers," the report states. The IRS doesn't itself currently have an online filing service like the GAO is suggesting it look into developing, but the question of whether or not the agency could or should offer its own option has been a question from the start of the program. The GAO report focuses on the tax agency's 20-year-old Free File program run by the IRS and a consortium of tax preparation companies to give most Americans options to electronically file their tax returns at no cost.Ĭurrently, about 70% of Americans are eligible for the program, which is meant for those who fall under a certain income threshold, but most people eligible for the program use other means to file their taxes, which they might have had to pay for, the GAO says. That stance goes against a recommendation from the government watchdog, which suggested that the agency identify and create more free options for filing tax returns online. The IRS doesn't think that a public, free-filing option would "significantly improve the taxpayer experience," the tax agency said in a new report from the Government Accountability Office.
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