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The Internal Revenue Service is the country’s tax collector, but a majority of people like the idea of the agency also becoming a tax preparer that does the job for free, according to a new poll released Monday.
The IRS is studying if it can pull off a tax-return filing service, becoming a no-cost option compared to commercial tax-preparation options like TurboTax and H&R Block.
In Monday’s poll, 76% of voters said they like the prospect of the IRS creating a no-cost and simplified tax-return filing service on its website. Nearly nine in ten poll participants identifying as Democrats (88%) backed the idea, as did 69% of independents and 64% of Republican-leaning poll participants.
The Economic Security Project, a left-leaning advocacy organization, partnered with Navigator, which describes itself as a “progressive” public-opinion research firm.
On Capitol Hill, many Democrats support the IRS providing a direct-filing option while many Republicans — and the tax preparation industry — have come out against it. The agency’s report on the issue is expected as soon as this week, the Wall Street Journal reported.
In the poll released Monday, support for a direct-filing option held up across income levels. While 77% of households making under $50,000 a year supported the option, 74% of poll participants earning over $100,000 a year said they backed a direct-filing choice.
“On Capitol Hill, many Democrats support the IRS providing a direct-filing option while many Republicans — and the tax preparation industry — have come out against it. ”
Eight in ten people aged 18 to 44 supported the idea, and a slightly lower percentage (71% of people) aged 65 and above supported an IRS-run direct filing option, the poll said.
“We see overwhelming support across demographics,” Adam Ruben, vice president of campaigns and political strategy at the Economic Security Project, told reporters Monday. “Americans want a free and simplified public tax-filing option, and that’s what the IRS should create.”
Very few households use the IRS’ current free-filing program, a partnership with certain tax preparation software companies, say proponents of a direct filing system.
The tax-and-climate package passed last summer, the Inflation Reduction Act, devoted $15 million for the forthcoming IRS study. The money is one part of $80 billion over a decade to improve the IRS operations and enforcement.
The results of Monday’s poll runs counter to an earlier look at public views of the IRS getting into tax preparation.
When asked about simple tax returns, 48% of people said they would prefer to use their current tax-preparation software, while 15% opted for an IRS direct-file version, according to the consulting firm MITRE. Another 37% said they wanted the IRS to handle the entire return where the consumer just signed off on the return.
A MITRE spokesperson was not immediately available for comment.
Tax-prep services criticize potential IRS move into the space
“Today, the consumer has [a] great choice in where they turn for no-cost tax preparation help, which is offered by more than 30 companies and non-profit organizations,” H&R Block said in a statement.
“A new online fillable form from the IRS is a far cry from a tax-prep ecosystem, which would not include or guarantee personalized help, technology for the long-term, or sufficient data security,” the statement added. “Additional IRS funding should be directed to improving its existing services for taxpayers.”
Intuit, the company that owns TurboTax, has also criticized the idea of the IRS getting involved with tax preparation.
“An IRS direct-to-e-file system is redundant and will not be free — not free to build, not free to operate, and not free for taxpayers. A direct-to-IRS e-file system is a solution in search of a problem, and that solution will unnecessarily cost taxpayers billions of dollars,” Intuit said in a statement.
Last year, Intuit reached a $141 million settlement with attorneys general for allegedly tricking taxpayers into thinking they were getting free tax preparation. Intuit has maintained that its online services were made clear to customers, and noted it settled the case without admitting any liability.
The settlement money will be distributed among certain Intuit customers, according to New York Attorney General Letitia James.
Most payments are expected to be between $29 and $30 dollars, applying to people who used TurboTax to file their federal income taxes for tax years 2016, 2017 and 2018 when they could have been eligible to prepare their taxes through the IRS Free File Program.
Intuit
INTU,
shares are up more than 8% year to date, while H&R Block
HRB,
shares are down more than 15%. The Dow Jones Industrial Average
DJIA,
is up around 0.5% while the S&P 500
SPX,
is up more than 7%.
