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Sen. Warren wants to expand IRS powers beyond the Inflation Reduction Act to prepare tax returns
Giving the IRS the ability to prepare individual tax returns is a controversial idea
By Fred Lucas FOXBusiness
Tucked into the tax and spending bill that passed the Senate this weekend was a $15 million provision to study allowing the IRS to prepare taxes.
The provision comes after Sen. Elizabeth Warren, D-Mass., and other Democrats have pushed legislation for adding tax filing to the agency's purview.
The Inflation Reduction Act, which passed the House Friday after clearing the Senate — the vote was 50-50 with Vice President Kamala Harris breaking the tie — appropriates almost $80 billion to the tax agency. That would enable the IRS to hire its desired 87,000 agents over the next decade to increase tax enforcement.
A small part of the funding includes $15 million dedicated to fund a task force to study the cost and feasibility of creating a free direct e-file program, which has been a controversial idea.
Warren wasn't planning to wait for a task force study and already filed a bill to develop a free, online tax preparation and filing service that allows all taxpayers to prepare and file their taxes directly with the federal government instead of through private tax preparers.
Elizabeth Warren
The Warren proposal would move more quickly to allow filers with simple tax situations to choose a "return-free option" that provides a pre-prepared tax return with an income tax liability or refund amount already calculated. Proponents also say it would reduce tax fraud by getting third-party income information to the IRS earlier in the tax season.
Warren’s bill has 22 Senate Democrat co-sponsors. Representatives Brad Sherman and Katie Porter, both California Democrats, are the lead sponsors of the House version.
"The average American spends 13 hours and $240 every year to file their taxes — that's too much time and too much money," Warren said in July, before Sen. Joe Manchin, D-W.Va., announced his agreement on the reconciliation package.
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