Legislation recently introduced in the U.S. Senate would add a new subsection to Section 6020 of the Internal Revenue Code to prohibiting the Internal Revenue Service from preparing tax returns in unauthorized instances.
The Fostering Autonomy in Independent Returns by Prohibiting Redundant and Extralegal Programs (FAIR PREP) Act would name the Direct File tax-preparation program, that launched last year without congressional authorization, as an example of unlawful preparation. The program would cost up to $249 million annually, according to IRS estimates.
Approximately less than 1 percent of the estimated 19 million eligible taxpayers used the new filing option, yet the IRS plans to make the program permanent. Thirteen attorneys general sent a letter to the U.S. Department of Treasury calling the IRS’s decision to create the program “unnecessary and unconstitutional.”
Under the bill, the IRS and Treasury would be prevented from circumventing the rule by contracting with, or awarding grants to, third parties to operate such a program unless explicitly authorized by Congress.
The bill has the endorsement of Americans for Tax Reform, the Center for a Free Economy, Heritage Action, the National Taxpayers Union, the Taxpayers Protection Alliance, and Tennessee Attorney General Jonathan Skrmetti.
The FAIR PREP Act was referred to the Senate Finance committee.