Shaheen co-sponsors tax filing simplification bill

Sen. Jeanne Shaheen is co-sponsoring the Tax Filing Simplification Act, which would require the Internal Revenue Service (IRS) to develop an online tax preparation and filing service that helps taxpayers file for free without using a private company.

Right now the IRS partners with private companies to offer online "Free File" for taxpayers with adjusted income under $62,000.

However, only a small percentage of taxpayers use this service, in part because the private websites try to funnel users into paying options.

"The tax preparation industry has blocked the IRS from implementing laws that would make tax preparation and filing easier for taxpayers," says a press release from bill sponsor Sen. Elizabeth Warren. "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." 

Opponents argue that the bill would give the IRS too much power. Private tax filing companies have an interest in attracting customers, so they compete to get customers the biggest tax returns. The IRS would have no motivation to help consumers get larger tax returns.

"Not only would the legislation create a tremendous and potentially harmful conflict of interest for the American people by enshrining roles of tax preparer, tax collector, tax auditor and tax enforcer theother in one entity, the IRS, but the system's very creation would also be a huge burden for taxpayers," says a press release from the Free File Alliance, a coalition of tax software companies.