UPDATED 21:58 EDT / MAY 15 2023


The IRS is building a government-run system for tax preparation

The Internal Revenue Service has been working on a system for Americans to file their taxes in one place, for free, according to an article in The Washington Post today.

The Biden administration wants Americans to have an alternative to tax preparation software such as Intuit Inc.’s TurboTax and H&R Block. For a long time now, it has been argued that filing your taxes should not come at such a high cost, and there should be a system that makes the famously complicated process simple.

Filing taxes is one of the biggest stresses in the life of Americans, according to various surveys. It takes the average American 13 hours to file, and for businesses, 25 hours on average. Reports suggest that other countries have systems that aren’t so complicated and stressful.

Not only that, it’s costly using the services already out there that make up a $14 billion industry. Surveys have shown that Americans, for the most part, would welcome a free government-made tax filing system.

The IRS soon will issue a report on the software, called the “Direct File” system. It’s reported that it may be released to the public sometime next year. Unsurprisingly, the companies that offer the current systems have already lobbied against the government-run system. They argue that they already provide a free service for simple tax returns and that any service offered by the government will not, in the greater scheme of things, be free to build or free to run and so not free to taxpayers.

The IRS does already offer a “Free File Online” service for people who earn less than $73,000, but some companies, such as the ones already mentioned, don’t have a partnership with the IRS in regard to this system. It’s thought only about 3% of Americans use this free tool. Still, it’s likely many Americans will jump at the chance of using a free and simplified service for a task that some people regard as worse than spending a night in jail.

“This is a service that I think the government ought to provide,” Kitty Richards, a progressive tax expert and former Treasury official, told the Wall Street Journal. “It’s problematic that we instead provide it through these private corporations that prey on people and extract profits from taxpayers that are just fulfilling that civic duty.”

Photo: Olga DeLawrence/Unsplash

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