The IRS recently announced it was rolling out a free-file program which would be an alternative for taxpayers instead of paying tax professionals or services like TurboTax and H&R Block.
Unsurprisingly, Intuit is clapping back hard and has issued statements across dozens of publications stating that this system would hurt black taxpayers.
The research they're using to make this claim is the fact that the IRS audits black taxpayers 3-5x the rate of non-black taxpayers (primarily due to the Earned Income Tax Credit), but the author of the research has stated that taking her findings out of context when applied to a free-file system.
The IRS has also stated that it’s reducing audits related to EITC claims to focus more of its efforts on higher-income earners.
Additionally, those who are more distrusting of the IRS believe it will lead to more taxpayers getting audited if they don’t agree with the numbers the IRS comes up with for your return in the free file program.
My position has always been that filing taxes should be as easy as possible if you want high rates of compliance. The reality is, most taxpayers would be well-served by a system that was free and allowed them to verify and file based on numbers the IRS already has. It’s not like this isn’t done in other countries either, it does with success. And, it’s not making preparing your own taxes illegal, it’s just giving taxpayers another option.
The Republicans are already trying to strip funding for this program, so whether it will ever come to full fruition or stays in test-mode with a small number of taxpayers remains to be seen.
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