April 13, 2016

Senator Warren Introduces Bill to Simplify Tax Filing

As Tax Day Nears, Extensive Report Examines Industry Capture of the Filing Process, Efforts to Block IRS Reforms

Bill Text, Fact Sheet
Tax Report

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) today introduced the Tax Filing Simplification Act of 2016 to simplify and decrease the costs of the tax filing process for millions of American taxpayers. This year, taxpayers will spend an average of 13 hours preparing and filing their returns, and will pay $200 for tax preparation services - a cost equal to almost 10 percent of the average federal tax refund.

The legislation introduced today would direct the Internal Revenue Service (IRS) to develop a free, online tax preparation and filing service that taxpayers can use to prepare and file their taxes directly with the federal government, if they choose to do so, and would prohibit the IRS from entering into agreements that restrict its ability to provide free online tax preparation or filing services. The Act would give all taxpayers the right to download third-party-reported tax information that the IRS already has, and would provide those with simple tax situations with a return-free option.

In conjunction with the introduction of the Tax Filing Simplification Act, Senator Warren released a staff report that describes how - for decades - the tax preparation industry has blocked the IRS from implementing laws that would make tax preparation and filing easier for taxpayers. Corporate capture of the filing process means that taxpayers have to absorb billions of dollars in costs and share their personal information with third parties just to file their taxes.

The legislation has been endorsed by dozens of law professors and economists including Austan Goolsbee of the University of Chicago, Emmanuel Saez of the University of California - Berkeley, and Joe Bankman of Stanford University. The Act was introduced with original cosponsors Senators Bernie Sanders (I-Vt.), Sheldon Whitehouse (D-R.I.), Tom Udall (D-N.M.), Jeanne Shaheen (D-N.H.), Al Franken (D-Minn.), Tammy Baldwin (D-Wis.), and Edward J. Markey (D-Mass.)

"Congress should be making it easier for Americans to file their taxes each year, not bowing to the interests of the tax prep industry," said Senator Warren. "The Tax Filing Simplification Act is a commonsense bill that would help taxpayers all across this country file their taxes with less stress and fewer costs, and it would push the IRS to use the authority it already has to simplify Tax Day for all Americans."

"Tax Day has become an opportunity for corporations to profit off of confusion over our complicated tax code. That is wrong. The Tax Filing Simplification Act would end the absurdity of Americans having to pay private companies hundreds of dollars to pay their taxes. We must make tax filing as easy as possible, not direct profits to private companies at the expense of working families,"Senator Sanders said.

"Families with simple returns should be able to prepare and file their taxes online without paying fees to private companies," said Whitehouse. "This bill will save those families money and time and protect their private information."

"I regularly hear from New Mexico taxpayers - especially those who are self-employed - who say that the overly complicated tax filing process costs them valuable time and hard-earned money," said Senator Udall. "The commonsense changes in this bill would make Tax Day easier on millions of dutiful, taxpaying Americans, cut down on fraud and save families money by enabling them to file taxes for free. I urge Congress to act quickly on this long-overdue reform."

"Every year, Americans spend far too much time and money filing their taxes," said Senator Franken. "This bill will save Americans money by simplifying an unnecessarily complex process. The IRS should be working to make this process as easy for taxpayers as possible."

"American taxpayers are forced spend too much time and money filing taxes when it doesn't have to be that way," said Senator Baldwin. "If Congress would simply act on commonsense reforms at the IRS, we can simplify tax filing and make it less expensive for taxpayers."