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Lobbyists Begin Chipping Away at Biden’s $80 Billion I.R.S. Overhaul [1]

['Alan Rappeport', 'More About Alan Rappeport']

Date: 2023-03-30

Treasury Secretary Janet L. Yellen has defended the investment in the I.R.S. in recent hearings, and the Biden administration has tried to play down the idea that more funding will increase audits or investigations. Officials instead have talked up customer service improvements that it expects the new money to facilitate. But those efforts are also drawing complaints from an industry that profits from a byzantine tax code that prompts many Americans to seek out professional help.

Democrats have long pushed to make filing free for everyone, seeing that as a way to make the process easier and less costly. But that ambition could upend the business models of the multibillion-dollar tax preparation industry, which earns hefty fees for helping people navigate the tax code.

Several companies already provide free tax-filing services through the I.R.S. website to those who earn less than $73,000, and the agency provides forms that taxpayers who do not need any guidance can use to file their returns for free. Some other software platforms offer limited free services for simple tax returns that also do not offer guidance through the process.

Initially, a tax-filing system developed by the I.R.S. would be similar to the existing free options. But proponents of the idea believe that over time it could evolve to become a more comprehensive system that would provide taxpayers with returns that are already filled out based on wage data that the I.R.S. tracks. At that point, taxpayers could just sign off on their returns as easily as responding “yes” to a text message.

Top Republicans on the House Ways and Means Committee wrote a letter to the I.R.S. early this month expressing alarm about the study and claiming that political bias was already taking place. The research is being conducted by the left-leaning New America Foundation — which has supported the idea of free tax filing — and that has raised concern that the Biden administration has decided to move ahead with the plan. The Republican lawmakers, Representatives Jason Smith of Missouri and David Schweikert of Arizona, warned that the administration wanted to hand the I.R.S. control over both the filing and auditing of tax returns and requested documents and communications related to the study.

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[1] Url: https://www.nytimes.com/2023/03/30/us/politics/biden-irs-overhaul-taxes.html

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