Washington, D.C. – U.S. Senator Sheldon Whitehouse (D-R.I.) has joined Senator Elizabeth Warren (D-Mass.), along with Senators Jeanne Shaheen (D-N.H.), Tammy Baldwin (D-Wis.), Bernie Sanders (I-Vt.), Tom Udall (D-N.M.), Edward J. Markey (D-Mass.), Tammy Duckworth (D-Ill.), Maggie Hassan (D-N.H.), Jeff Merkley (D-Ore.), Cory Booker (D-N.J.), and Richard Blumenthal (D-Conn.) to reintroduce the Tax Filing Simplification Act to ease the tax filing process for millions of American taxpayers and reduce their costs. Last tax season, American taxpayers spent an average of 11 hours and around $200 preparing their tax returns – a cost equal to almost 10 percent of the average federal tax refund.
Along with lowering costs and eliminating red tape for all taxpayers, return-free filing and other improvements in the Tax Filing Simplification Act would ensure that more eligible people — including millions of low-income Americans — receive important tax refunds, like the Earned Income Tax Credit. The legislation would dramatically simplify the filing process for individuals with simple tax situations, direct the Internal Revenue Service (IRS) to develop a free, online tax preparation and filing service that does not require the sharing of private information with third parties, and prohibit the IRS from entering into agreements that restrict its ability to provide these services.
“I agree with the Rhode Islanders who think they ought to be able to easily file their taxes directly with the IRS for free,” said Senator Whitehouse. “This bill would make that better, simpler, cheaper system a reality.”
“Taxpayers waste too many hours and hundreds of dollars on tax preparation each year, which disproportionately burdens low-income and minority taxpayers,” Senator Warren said. “This bill will require the IRS to offer easy, free, online tax-filing for all taxpayers. This is a simple idea with a long history of support from both Republicans and Democrats, and it’s time to make it a reality.”
The Tax Filing Simplification Act makes several commonsense changes to simplify and decrease the costs of the tax filing process for millions of American taxpayers by:
- ??Prohibiting the IRS from entering into agreements that restrict its ability to provide free online tax preparation or filing services;
- Directing the IRS to develop a free, online tax preparation and filing service that would allow all taxpayers to prepare and file their taxes directly with the federal government instead of requiring that they share private information with third parties;
- Enhancing taxpayer data access by allowing all taxpayers to download third-party-provided tax information that the IRS already has into a software program of their choice;
- Allowing eligible taxpayers with simple tax situations to choose a new return-free option, which would provide a pre-prepared tax return with income tax liability or refund amount already calculated;
- Mandating that these data and filing options be made available through a secure online function and requires any participating individual to verify his or her identity before accessing tax data; and
- Reducing tax fraud by getting third-party income information to the IRS earlier in the tax season, allowing the agency to cross-check this information before issuing refunds.
First introduced in 2016 and reintroduced in 2017, this approach to tax filing has been endorsed by tax scholars and a bipartisan set of policymakers. The bill is endorsed by the National Consumer Law Center (on behalf of its low-income clients), the Institute for Taxation and Economic Policy, Americans for Tax Fairness, Economic Security Project Action, the Hispanic Federation, and Americans for Financial Reform.
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