WEST VIRGINIA (WVDN) – The Biden Administration recently proposed a plan for the Internal Revenue Service (IRS) to establish its own tax preparation system. So-called “IRS Direct File” would disempower the American people and allow the IRS to collect more confidential taxpayer data while creating an inherent conflict of interest for the agency responsible for collecting federal tax revenue. Since when has the IRS ever had the interests of hardworking West Virginians at heart?
The current system ensures that taxpayers can choose from a marketplace of tax preparation options, from hiring a tax accountant to using commercial tax software to preparing taxes themselves. Unlike these methods, Direct File would have no incentive to ensure that taxpayers receive every possible deduction and credit to maximize refunds, especially because the plan could not feasibly incorporate state and local tax return preparation. What’s more, the existing IRS Free File program and other community-based programs allow individuals to file taxes free of charge, making the Direct File redundant and a total waste of taxpayer dollars for this dysfunctional agency.
Fundamentally, the IRS exists to enforce tax compliance. Expanding its role into the tax preparation business raises significant concerns about fairness, transparency, and the potential for abuse of power. The IRS does not have a strong track record when it comes to handling taxpayer information. Numerous data breaches, mishandling of sensitive information combined, and an inability to maintain current tax administration duties successfully only increase the risk of taxpayer privacy violations under Direct File. No wonder public favorability ratings for the IRS are at an all-time low.
These concerns about IRS-run tax preparation have been compounded by other provisions in the Inflation Reduction Act, which increased IRS funding by $80 billion and expanded the workforce by a staggering 87,000 new agents, empowering the IRS to browbeat the average American out of their hard-earned incomes. Given the IRS’ admission that it audits Black taxpayers at disproportionate rates, Direct File is undoubtedly a step in the wrong direction.
I am urging our elected members of Congress, including Senator Manchin, and the candidates for Senate, including Governor Justice and Congressman Mooney, to consider the implications of Direct File and commit to alternative solutions that support taxpayer choice, protect privacy, and foster innovation. This is not a solution. The American people deserve better than unworkable and controversial government-run tax preparation.
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