Lawmakers reintroduce bipartisan IRS bill with 'Free File' provision removed

Lawmakers reintroduce bipartisan IRS bill with 'Free File' provision removed
© Greg Nash

House lawmakers on Thursday introduced a revised version of their bipartisan IRS modernization bill — removing a provision from earlier versions that would codify the IRS's "Free File" program, which drew criticism in recent weeks.

Lawmakers hope that the House and Senate will quickly pass the updated measure.

“This bill is a ray of hope,” said Rep. John LewisJohn LewisHillicon Valley: Productivity, fatigue, cybersecurity emerge as top concerns amid pandemic | Facebook critics launch alternative oversight board | Google to temporarily bar election ads after polls close Underwood takes over as chair of House cybersecurity panel Trump to pay respects to Ginsburg at Supreme Court MORE (D-Ga.), the chairman of the House Ways and Means Committee's oversight panel. Lewis introduced the bill along with the subcommittee's ranking member, Rep. Mike KellyGeorge (Mike) Joseph KellyFederal judge rules Pennsylvania's coronavirus orders are unconstitutional Judge halts Trump campaign's mail-voting lawsuit against Pennsylvania Rep. Dan Meuser tests positive for COVID-19 MORE (R-Pa.).

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“It is a significant win for the American people because it demonstrates that even in the most difficult times, we can come together as a nation, as a people and as a Congress to accomplish important things for the American people," Lewis added.

The bill, known as the Taxpayer First Act, includes provisions designed to improve the IRS in several areas, including taxpayer services, taxpayers rights during the enforcement process, identity theft protection and information technology. For example, it would exempt low-income people from the IRS's private debt collection program and would establish a single point of contact at the IRS for identity theft victims.

The package, supported by Republicans and Democrats in both chambers of Congress, came about after the House Ways and Means Committee's oversight panel held a series of hearings and roundtables about improving the IRS. The House previously passed a version of the bill in April, and also passed versions of the measure last year.

The versions that previously passed the House included a provision to codify the IRS's Free File program — a partnership with tax-preparation companies in which the companies offer free online tax-filing services to low- and middle-income taxpayers. 

But some Democrats raised concerns about the Free File provision when the House held the April vote on the package, referencing a ProPublica article highlighting lobbying from tax-prep companies. In the following weeks, ProPublica wrote additional articles reporting that tax preparation companies have taken steps to hide their options under the Free File program, which drew concerns from lawmakers in both parties and prompted the IRS to start a review of the program.

The new version of the bill, without the Free File provision, has more than two dozen co-sponsors — including freshman Democratic Reps. Katie HillKatherine (Katie) Lauren HillObama counsels NBA players on forming a social justice committee Republicans cast Trump as best choice for women House GOP campaign chairman insists party will win back majority MORE (Calif.) and Alexandria Ocasio-CortezAlexandria Ocasio-CortezOcasio-Cortez: Trump contributed less in taxes 'than waitresses and undocumented immigrants' Will Democrats attempt to pack the Supreme Court again? On The Money: Anxious Democrats push for vote on COVID-19 aid | Pelosi, Mnuchin ready to restart talks | Weekly jobless claims increase | Senate treads close to shutdown deadline MORE (N.Y.), who expressed concerns about the provision codifying IRS's partnership with tax-prep companies. 

Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenHillicon Valley: Subpoenas for Facebook, Google and Twitter on the cards | Wray rebuffs mail-in voting conspiracies | Reps. raise mass surveillance concerns On The Money: Anxious Democrats push for vote on COVID-19 aid | Pelosi, Mnuchin ready to restart talks | Weekly jobless claims increase | Senate treads close to shutdown deadline Democratic senators ask inspector general to investigate IRS use of location tracking service MORE (D-Ore.) said in a statement Thursday that, with the new version of the bill, "the House and Senate have come together on a path forward for the Taxpayer First Act." 

"There’s no federal agency Americans interact with more than the IRS, and it’s critical that it be modernized to better serve taxpayers," he said. "There’s bipartisan agreement that Congress should not codify the Free File program given its deficiencies and allegations of deceptive advertising and search engine manipulation by participating companies."

Sen. Elizabeth WarrenElizabeth WarrenNew Biden campaign ad jabs at Trump's reported 0 income tax payments Democrats blast Trump after report reveals he avoided income taxes for 10 years: 'Disgusting' Overnight Defense: Appeals court revives House lawsuit against military funding for border wall | Dems push for limits on transferring military gear to police | Lawmakers ask for IG probe into Pentagon's use of COVID-19 funds MORE (D-Mass.) and Rep. Brad ShermanBradley (Brad) James ShermanSherman joins race for House Foreign Affairs gavel Castro launches bid for House Foreign Affairs gavel The Hill's Morning Report - Presented by Facebook - Trump, GOP senators at odds over next stimulus bill MORE (D-Calif.) also praised the removal of the Free File provision and urged Congress to pass their bill to direct the IRS to create its own free, online tax filing service.

"For years, giant tax-preparation companies have deliberately rigged the IRS program that is supposed to provide free filing services to low- and moderate- income taxpayers and used it to pad their bottom lines instead," Warren said. "Taxpayers and advocates around the country fought back — and have won a victory to prevent that broken program from being written into law."