TaxProf Blog

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

Friday, August 3, 2018

Ventry: The Failed Free File Program Should Be Reformed, Not Codified

Dennis J. Ventry (UC-Davis), The Failed Free File Program Should Be Reformed, Not Codified, 160 Tax Notes 317 (July 16, 2018):

This article details how the current IRS Free File program harms taxpayers and tax administration. It lays blame for the program’s harmful effects on the IRS’s private-sector partners, the Free File Alliance (FFA). Under the auspices of Free File, FFA companies up-sell paid products to Free File users, violate taxpayer privacy laws, strip taxpayers of legal rights in the event of disputes with FAA companies, and negligently expose users to cyber attacks.

To save the program, Congress should radically restructure it to focus on providing absolutely free e-filing services to low- and middle-income taxpayers. To assist in the restructuring efforts, Congress should ask the Government Accountability Office to provide a top-to-bottom assessment of the program. In addition, Congress should authorize the IRS to verify—before, during, and after each tax season—that FFA companies disclose all up-selling activities and revenues, reveal to whom they sell users’ return information, (iii) ensure users’ legal rights and remedies, and (iv) safeguard users from cyber threats. Alternatively, the IRS should terminate the program and launch its own free e-filing service by leveraging its increasingly robust online taxpayer accounts.

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As the creator and master of all paper and .pdf tax forms and author of the instructions of how they are to be filled in and submitted, it would seem to be a logical and hardly great leap for the IRS to create and disseminate free of charge its own tax return preparation software. Such software, properly used to file electronically, could engage seamlessly with the IRS's taxpayer account system.

Changes in preparer would no longer require sometimes difficult if not impossible task of migrating data from one preparer's software to another.

Last but not least: glitches in preparation would have one source and one solution. With thousands of users - even the ones using more obscure forms - providing feedback, the IRS's product would/could/should become increasingly the most sophisticated and accurate.

Posted by: John | Aug 4, 2018 1:39:15 AM