The big tax preparation companies are all upset because the Biden administration proposes to do something that those companies have long promised but never actually done: Provide consistently free digital tax filing services. Oh, sure, companies like TurboTax and H&R Block have offered free filing services in the past, but good luck to any customers who tried. The companies created a deliberate maze of circuitous links to frustrate would-be free filers to the point they gave up and accepted the pay-only options.
The Internal Revenue Service now wants to offer a free government service that would effectively bypass those mazes. Who would argue with something like that? The tax-preparation companies and their Republican collaborators, that's who. Even to the point of opposing a $15 million study just to determine the idea's feasibility.
It's all part of the administration's $80 billion plan to overhaul the Internal Revenue Service using congressionally authorized Inflation Reduction Act funding. Republicans hate the overhaul plan, portraying it as a Democrat plot to hire what House Speaker Kevin McCarthy calls an "army of 87,000 IRS agents" to terrorize taxpayers everywhere.
The GOP political strategy is to reject any idea, no matter how good it might be, if the Democrats support it — anything to create a political wedge that they can sell to voters as something that must be opposed because the nation's future depends on it. Including free tax filing.
In reality, the planned IRS hiring would take place over the next decade, and it would be for overall IRS staffing, not just auditors and agents. And the goal is to improve efficiency to ensure that upper-income tax scofflaws don't get away without paying their fair share. The IRS estimates uncollected taxes total $600 billion annually. Republicans like McCarthy are very good at manufacturing bogeymen, portrayed as woke liberal government pickpockets, as a way of ginning up controversy to satisfy the GOP base.
That's how a free digital tax filing idea got painted with the government-pickpocket brush. And Republicans are finding willing partners among lobbyists for the big tax-preparation companies, which fear a free government service would cut into their profit-making business.
The Biden administration's proposal is to limit free services to filers earning less than $73,000, which is unfortunate because some taxpayers earning more than that don't necessarily need the more complicated and comprehensive services of tax-preparation companies. In fact, a Government Accountability Office report last year said that 70% of Americans should qualify for free online tax preparation as offered by companies like TurboTax, but only 3% of taxpayers take advantage of it. It's not clear whether the obstructions created by those companies deterred greater participation. TurboTax and H&R Block have now abandoned those services for lack of use.
But the mere idea of the government stepping in to do what they won't has stirred them to action. And Republicans are more than happy to oblige.
REPRINTED FROM THE ST. LOUIS POST-DISPATCH
Photo credit: stevepb at Pixabay
View Comments