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Filing taxes in the United States could be free and simple for everyone — if only tax prep companies weren’t lobbying to keep it so complicated.
The Internal Revenue Service and your state tax collectors already have access to most of the information you painstakingly report in a tax return, because your employers and banks are required to provide it.
We could, in theory, have a return-free system, where the IRS sends you that information and how much it believes you owe, and you don’t have to file anything unless you disagree with it.
But we like a challenge, don’t we?
Instead of this straightforward public service, we have the next best thing: A private system that helps the majority of Americans file a federal tax return for free.
Except most of us don’t use it … because we don’t know it exists.
The Free File Alliance MUST Let You File Taxes for Free
The Free File Alliance is a public-private partnership between a group of tax software companies and the IRS. Eight companies are part of this agreement as of January 2022, according to its recent press release.
The agreement says these companies have to provide the majority of Americans with a free way to prepare and file their taxes online. It also bars the IRS from providing its own free filing system — like that dreamy no-return scenario I mentioned above.
The problem, predictably, is that no one advertises the free services.
The government has no budget to market it, and the for-profit tax preparers have no incentive to let you know about their free options — and every incentive to funnel you toward a paid option. And they use every opportunity, as ProPublica has reported repeatedly.
The result is that most filers have no idea the option exists, and hardly anyone takes advantage of it.
(BTW, we are happy to tell you all about those free tax filing services.)
In 2020, the Alliance touted “soaring” participation — a 28% “jump” from 2.3 million filers in 2019 to…
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