Taxpayers Don’t Want the IRS to Prepare and File Their Taxes
Tax season is underway, and taxpayers nationwide are busy collecting receipts, meeting with accountants, and taking stock of major life events over the past year as they work to meet the Tax Day deadline. It’s no secret that taxpayers are always looking for reliable and easy tools to make this stressful process simpler. What they certainly don’t want is the untrustworthy and untested Internal Revenue Service (IRS)-run Direct File tax preparation system the agency recently launched without congressional approval.
The Taxpayers Protection Alliance (TPA) recently asked Republican voters in South Carolina whether they would utilize this IRS-run Direct File system. The results confirm what TPA has been saying since day one: voters do not trust or want the IRS to act as both tax preparer and processor or have even greater access to their sensitive financial data.
In fact, more than 84 percent of South Carolina Republicans polled said that they do not trust a government-run tax preparation system. And, 77 percent of GOP voters said they would not use such a system if it did not prepare all their federal, state, and local taxes in one place – which the IRS-run system will not do. More than 77 percent of South Carolina GOP voters would also be opposed to Governor McMaster (R-SC) partnering with the federal government on this program in the future. Additionally, 81 percent of South Carolina Republicans also distrust the IRS’ ability to protect their private data and tax information.
The IRS is one of the most unpopular federal agencies, with nearly 51 percent of Americans holding an unfavorable view of the IRS last year. Repairing voters’ trust in this government institution is necessary and important, but the Direct File program will not remedy this problem. In fact, it is more likely to do the exact opposite. One tax professional recently warned that Direct File poses “an administrative nightmare.” The IRS already has a limited budget and resources; it doesn’t need to be taking on a massive new responsibility, especially one that is clearly not appealing to voters.
TPA’s recent survey confirmed that nearly all South Carolina GOP voters oppose taxpayer dollars being used to build out an IRS-run system. More than 2-in-5 voters said they’d prefer to see taxpayer money used to simplify the tax code, while 17 percent would like to see the IRS update their software and security.
Voters view Direct File as a clear conflict of interest that would establish the IRS as the sole entity that prepares, files, assesses, and collects taxes. A recent study from Syracuse University found that the IRS was five times more likely to audit low-income households earning less than $25,000 a year. The IRS also admitted last year that Black taxpayers were much more likely to be audited. Why should taxpayers trust the IRS to maximize the refunds and deductions they are owed?
Additionally, the pilot program is only designed to help taxpayers with simple returns. Millions of Americans who work in the gig economy or are self-employed and taxpayers who claim premium tax credits are not eligible for the pilot program.
The IRS’ direct file pilot program has not had public support since the outset. Instead of seeking Congressional approval (as IRS Commissioner Daniel Werfel initially promised), the Treasury Department and the IRS unilaterally launched this unnecessary pilot program following pressure from Senator Elizabeth Warren (D-Mass.) and other progressives. An independent study from the MITRE Corporation commissioned by the IRS found that only 28 percent of all taxpayers are very interested in a Direct File system.
The distrust of an IRS-run program among voters in South Carolina is no surprise. TPA also found that an overwhelming majority of likely GOP voters in Iowa, New Hampshire, and Nevada also oppose an IRS-led system to prepare taxes.
With the South Carolina presidential primary occurring on February 24th, former President Donald Trump and Former South Carolina Governor and UN Ambassador Nikki Haley should listen to their primary voters and pledge to revoke the IRS’ Direct File pilot program if elected.
