Thirteen Republican attorneys general are slamming the federal effort to create a TurboTax-style tool at the IRS for taxpayers to file their returns directly with Uncle Sam — denouncing the move as a Trojan Horse to submerge Americans under cover.
In a letter to Treasury Secretary Janet Yellen on Tuesday, the Attorney General ripped the effort as “unnecessary and unconstitutional.”
“American taxpayers do not want to invite the proverbial fox into the henhouse,” wrote the group, led by Austin Knudsen of Montana. “There is an obvious conflict of interest when the IRS acts as a tax preparer, filer and auditor – a conflict that is destined to impact the vulnerable and low-income.”
Included in the $740 billion Inflation Reduction Act signed by President Biden in August 2022 is $15 million earmarked for the IRS to study the feasibility of a free tax filing system.
Montana Attorney General Austin Knudsen led the letter to the Treasury Department. Getty Images
The IRS then tapped New America, a progressive think tank that Republican critics had previously said supported establishing a direct tax filing program run by the agency, to conduct the study.
Last year, the Treasury Department announced plans to create a direct file pilot program for the 2024 tax season.
A chorus of progressives cheered the move, including Sens. Elizabeth Warren (D-Mass.) and Patty Murray (D-Wash.), as well as Reps. Katie Porter (D-Calif.), Brad Sherman (D-Calif. ) and Don Beyer (D-Va.).
Elizabeth Warren has been one of the most vocal advocates of giving Americans free tools to file their taxes. ZUMAPRESS.com
“Giant tax preparation companies have fought Direct File every step of the way, making tax filing more complicated and expensive than it needs to be and making it harder for families to get the tax credits they deserve,” they said last October.
“We look forward to supporting the IRS’s efforts to develop and expand the Direct File pilot, setting us on a path where millions of Americans will no longer have to worry about giant tax preparation companies sharing their personal data with Big Tech firms and ripping it off. for a service that should be free.”
Individual taxpayers are estimated to spend an average of $240 in out-of-pocket costs and 13 hours filing their annual tax returns, according to a 2022 IRS report to Congress.
The Inflation Reduction Act requires the Treasury Department to study the prospects of a direct file system operated by the IRS. AFP via Getty Images
Democrats have championed an IRS-run direct-file tax system as a way to ease that burden on everyday Americans.
But the Republican Attorney General argued that the pilot program was not properly authorized by Congress.
“Congress has not passed legislation granting this authority to the Treasury or appropriating any additional funds for this program,” they said.
A Treasury Department official disputed that claim, telling The Post “The IRS has broad authority to provide tools and assistance that enable taxpayers to meet their filing obligations and accurately complete their returns.”
When asked for comment, Treasury spokesman Haris Talwar said: “The limited Direct File Pilot will provide additional options for eligible taxpayers and allow them to file their taxes directly with the IRS in a convenient, secure and free manner.”
TurboTax is one of the top tax preparation companies in the US. PHOTO SERVICE FEATURES
Many conservatives have long opposed efforts to create a government-run TurboTax alternative, fearing that such a program could be a “power grab” for the IRS.
“Forcing the American people to accept the IRS as a tax preparer, filer and auditor is not a step forward,” House Ways and Means Committee Chairman Jason Smith (R-Mo.) said in October.
“Working Americans are rightly skeptical of an agency that has consistently abused its power, violated trust, and is implementing plans to target more middle-class taxpayers with audits.”
Ken Paxton, who recently survived an impeachment attempt, was one of the signatories. Reuters
A Republican official told The Post that strategists had devised a plan to launch an ad campaign against Democrats through the direct file system operated by the IRS.
“This has been in the works for a while since they started planning this,” the person said. “There will be campaign ads about this. And the theme is, this is an IRS coup to make you pay more money.
“If the IRS suddenly becomes your accountant, their goal is for you to pay the maximum revenue, versus [getting you] refund,” the person added. “It’s a good issue for Republicans because a lot of people don’t know about it, so it’s new information.”
Democrats argue that Congress needs to increase resources for the IRS. Reuters
In addition to Knudsen, attorneys general who signed the letter include Christopher Carr of Georgia, Raul Labrador of Idaho, Brenna Bird of Iowa, Liz Muriel of Louisiana, Andre Bailey of Missouri, Mike Hilgers of Nebraska, Alan Wilson of South Carolina, Jonathan Skrmetti of Tennessee , Ken Paxton of Texas, Sean Reyes of Utah, Jason Miyares of Virginia, and Patrick Morrisey of West Virginia.
“The IRS is notorious for its consistently poor customer service. In 2021, the IRS only answered 2[%] from calls to its official helpline. The following year, the IRS had a backlog of 21.3 million returns,” they stressed.
They predict that venturing into direct filing “will only exacerbate the agency’s failure.”
Democrats have countered that the IRS is starved of resources and needs more funding.
President Biden’s administration has sought to raise about $80 billion for the agency, drawing more ire and fierce opposition from Republicans
The AG also emphasized that the IRS has a history of being harder on low-income Americans, who are less likely to have accountants or high-powered tax lawyers at their disposal.
“Research from Syracuse University found that the IRS is five times more likely to audit low-income households earning less than $25,000 a year,” the attorney general added.
“Recipients of the Earned Income Tax Credit (EITC) are also twice as likely to be audited as taxpayers earning $500,000.”
In November, a group of 16 attorneys general sent a letter to Yellen reaffirming their support for the pilot program.
They noted a multistate investigation into Intuit, Inc., the owner of TurboTax, that ended with the firm agreeing to pay $141 million in damages to 4.4 million people for allegedly deceptive practices.
“Millions more families find these and other tax filing hurdles insurmountable and do not or cannot file taxes. For those who file taxes, a skewed market is causing many to lose critical benefits to which they are entitled,” they wrote at the time.
“Critically, online tax preparation giants like Intuit know that an IRS-run alternative will force them to engage in fairer business practices, to the benefit of consumers nationwide.”
Igor Volsky, executive director of Groundwork Action, a left-leaning policy think tank, disputed the AG’s claim that the IRS had a conflict of interest.
“This is not how we think about government in other contexts, and it shouldn’t be how we think about government with respect to the IRS,” he told The Post Wednesday. “Taxpayers also still have a choice. Direct File is intended to complement — not replace — private tax preparation services. It’s just another option for filers.”
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Source: thtrangdai.edu.vn/en/
