WASHINGTON—Congresswoman Katie Porter (D-CA) this week introduced legislation to make it easier for families to file their taxes directly with the federal government. The Tax Filing Simplification Act of 2022, co-led by Congressman Brad Sherman (D-CA), would direct the Internal Revenue Service (IRS) to develop a free, online tax preparation and filing service available to all Americans. Companion legislation has been introduced by Senator Elizabeth Warren (D-MA).

 “It should be free and easy for Americans to file their taxes; instead, Orange County families have to waste time and money each year,” said Congresswoman Katie Porter, a member of the House Oversight and Reform Committee. “The IRS already has the information it needs to calculate tax liabilities and refunds, but corporate special interests like TurboTax have lobbied Congress for years to allow them to keep abusing taxpayers to line their pockets. Our Tax Filing Simplification Act puts people first and makes government work better for taxpayers.”

“American taxpayers spend too much time and money preparing their tax returns. It doesn’t have to be this way,” said Congressman Brad Sherman, a Certified Public Accountant (CPA) and Co-Chair of the Bipartisan CPA Caucus. “The Tax Filing Simplification Act represents a common-sense solution to a problem that’s burdened taxpayers for too long—simplifying the tax filing process with fewer costs and complications. Pleased to team up with Senator Warren and Congresswoman Porter in this effort to help the government work better for the people.”   

More than two decades have passed since Congress approved legislation requiring the IRS to develop procedures to implement a “return-free” tax system. Rather than provide free services to Americans directly, the IRS partnered with private software companies to create the Free File program, which is rife with fraud and abuse. In 2019, Congresswoman Porter stood up to leaders of both parties to oppose a bill that would have barred the IRS from creating its own online tax filing system. Software companies like TurboTax aggressively lobbied for this legislation so they could continue swindling taxpayers into paying for services that should be free.

Free File claims to provide free tax preparation services to 70 percent of taxpayers, but only 3 percent of eligible taxpayers actually use the program. Software companies are allowed to set up their own eligibility criteria, creating a “maze of offerings” that confuses taxpayers into purchasing unnecessary products. Taxpayers wishing to e-file their taxes also have no choice but to share sensitive financial information with a private third party—even though an audit found that nearly half of Free File companies fail to adequately protect taxpayer data from cybercriminals.

In addition to directing the IRS to create direct-to-consumer tax filing tools, Porter’s Tax Filing Simplification Act would save millions of taxpayers time and money by:

• Prohibiting the IRS from entering into agreements that restrict its ability to provide free online tax preparation or filing services,

• 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, saving time and decreasing the risk of math errors on W-2 income or Child Tax Credit payments that lead to significant processing delays,
• Directing the IRS to expand the Child Tax Credit non-filer tool to cover other tax benefits, especially the Earned Income Tax Credit,
• Allowing eligible taxpayers with simple tax situations to choose a return-free option, which provides a pre-prepared tax return with income tax liability or refund amount already calculated,
• Mandating that these data and filing tools be made available through a secure online function and requires any participating individual to verify his or her identity before accessing tax data,
• 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, and
• Directing the IRS to expand the Child Tax Credit non-filer tool to cover other tax benefits, especially the Earned Income Tax Credit, by March 1, 2023.

“The average American spends 13 hours and $240 every year to file their taxes—that's too much time and too much money. This is the result of corporations like Intuit sabotaging the Free File program to rake in large profits. Congress should pass my Tax Filing Simplification Act, and the IRS itself can and should adopt my plan to simplify the tax filing process for millions of Americans and lower their costs,” said Senator Warren.

Porter’s legislation is endorsed by the Center for the Study of Social Policy, Children's Defense Fund, Public Citizen, AFL-CIO, Alliance for a Just Society, American Family Voices, American Federation of State, County and Municipal Employees (AFSCME), American Federation of Teachers, American-Arab Anti-Discrimination Committee (ADC), Americans for Democratic Action (ADA), Americans for Financial Reform, Americans for Tax Fairness, Blue Future, Center for American Progress, Center for Disability Rights, Center for Economic and Policy Research, Center for Law and Social Policy (CLASP), Center for New Revenue, Children's HealthWatch, Coalition on Human Needs, CommonDefense.us, Community Change Action, Consumer Action, DemCast USA, Economic Policy Institute, Economic Security Project Action, Fayetteville Police Accountability Community Taskforce, Food Research & Action Center, Futures Without Violence, Humanity Forward, ideas42, In the Public Interest, Income Movement, Institute for America's Future, Institute for Policy Studies- Program on Inequality, Institute on Taxation and Economic Policy, ISAIAH (MN), Jain Family Institute (JFI), Jobs With Justice, Main Street Alliance, MANA, A National Latina Organization, Missionary Oblates of Mary Immaculate JPIC, MomsRising, MoveOn, National Association of Hispanic Elderly, National Association of Social Workers, National Black Justice Coalition, National Coalition for Asian Pacific American Community Development (CAPACD), National Community Action Partnership, National Consumer Law Center (on behalf of its low income clients), National Diaper Bank Network, National Employment Law Project, National Immigration Law Center, National LGBTQ Task Force Action Fund, National NeighborWorks Association, National Network for Arab American Communities, National Organization for Women, National Resource Center on Domestic Violence, National Women's Law Center, NETWORK Lobby for Catholic Social Justice, Our Revolution, Oxfam America, ParentsTogether Action, Partnership for America's Children, Public Good Law Center, Responsible Wealth, RESULTS, RootsAction.org, Share Our Strength, Sojourners, State Revenue Alliance, Take On Wall Street, The Arc of the United States, Unitarian Universalists for Social Justice, United Church of Christ Justice and Local Church Ministries, United for a Fair Economy, Universal Income Project, and Women’s March.

“Filing taxes can be stressful and time-consuming for everyone, and for millions of families it stands between them and vital tax credits that can help them pay the bills and save for the future. Simplifying tax filing is critical to lift the burden off families, ensure everyone can access the refundable credits they are owed, and realize the potential of these credits to promote economic security and advance racial and economic equity,” said Megan Martin, Executive Vice President at the Center for the Study of Social Policy.

“The problems caused by an overly complicated tax filing system—the time, expense, and worry that families are faced with each April—should not be a given in this country,” said Susan Harley, managing director of Public Citizen’s Congress Watch division. “By implementing reforms to simplify the system such as return-free filing and a government run Free File program, the Tax Filing Simplification Act would ensure the IRS takes swift action to provide filers with a better experience while lessening the chances they make the small, well-meaning mistakes that tie up the IRS’ resources.” 

Porter has consistently advocated for taxpayers throughout her time in Congress. Last month, Porter led a letter to government watchdogs raising concerns about longtime Free File Alliance member Intuit’s repeated hirings of former federal regulators and influence-peddlers. She has also demanded answers about Intuit’s shady business practices from the company directly. Porter is also pushing to clear the IRS’ backlog of millions of tax returns, and has urged her colleagues to fully fund the agency so more Americans get their money back.

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