TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, July 7, 2018

Ventry: Free File Providers Scam Taxpayers; Congress Shouldn't Be Fooled

IRS Free File (2018)The Hill op-ed:  Free File Providers Scam Taxpayers; Congress Shouldn't Be Fooled, by Dennis J. Ventry, Jr. (UC-Davis):

In April, the House unanimously passed the Taxpayer First Act, including a provision to codify the IRS Free File Program.

Making Free File a permanent part of the tax law would mean that the IRS and its private-sector Free File partners — organized as the Free File Alliance (FFA) and including Intuit and H&R Block — would no longer periodically renegotiate the terms and conditions of the program. 

For that reason alone — i.e., preventing the IRS from verifying that FFA companies deliver free tax filing services as promised — codifying Free File is a terrible idea. 

Even worse, codification would enshrine a program that inflicts substantial harm on taxpayers by facilitating predatory upselling of paid products to Free File users, violating taxpayer privacy laws and stripping taxpayers of legal remedies in the event of disputes with FFA companies. ...

Rather than codify Free File, Congress should restructure it to focus on providing truly free e-filing services.

In so doing, Congress should authorize the IRS to verify that FFA companies (i) disclose all upselling activities and revenues, and further disclose to whom they sell taxpayers’ private information (ii) abide by all taxpayer privacy laws and (iii) preserve the full range of taxpayers’ legal rights in the event of disputes with FFA companies.

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Any time oversight is reduced or removed, it's a bad idea. If they want to codify Free File, they should codify oversight of the program too, by allowing the IRS to make necessary regulations.

Posted by: ruralcounsel | Jul 9, 2018 4:17:04 AM

How about an IRS designed, built and (freely) distributed tax filing software? Since the IRS is the creator of all tax forms and presumeably knows how to fill them in correctly, surely they can design a federally owned software program that is at least the equal to what is being offered by the FFA.

Posted by: John | Jul 9, 2018 8:56:47 AM

@ John, my guess is Intuit doesn't agree with you. Besides mass efiling will not work without significant simplification of the Tax Code. Have you ever tried to fill out the EITC forms?

Posted by: Dale Spradling | Jul 10, 2018 6:53:22 AM