Congress Backs Criticized “Taxpayer First Act of 2019” — Justia News — April 11, 2019

The Act was passed with support of Democrats and Republicans.

Source: Congress Backs Criticized “Taxpayer First Act of 2019” — Justia News — April 11, 2019

On April 2, the US House Ways and Means Committee passed H.R.1957, the Taxpayer First Act of 2019 (the “Act”). Widely cited as a win for private online tax preparation companies such as TurboTax, opponents claim it will prohibit the IRS from creating competing free software to assist citizens in tax preparation and filing which could threaten the profits of these companies. Anyone in the US who makes under $66,000 a year is entitled to file their taxes for free, and while private companies do provide free filing products, only three percent of eligible U.S. taxpayers make use of them. Critics argue that these free services are “deliberately” un-promotedsimply and simply used as a tool to upsell other products and services to taxpayers. Those who support the Act, however, argue that the IRS will still be able to create its own software, and that other elements in the Act offer valuable consumer assistance, such as providing protections from private debt collectors.

Advertisements

Congress Is About to Ban the Government From Offering Free Online Tax Filing. Thank TurboTax. — ProPublica

So… is this what YOU want from your legislator? Assuming that you, like me, don’t want this, why are we the people ignored in favor of a cash donating, lobbying private business to pass a law to benefit themselves, but not you?

Have you read Federalist 57 lately?

My Congressman is about to hear from me. How about your Congressperson??

 

A bill supported by Democrats and Republicans would make permanent a program that bars the IRS from ever developing its own online tax filing service.

Source: Congress Is About to Ban the Government From Offering Free Online Tax Filing. Thank TurboTax. — ProPublica

Just in time for Tax Day, the for-profit tax preparation industry is about to realize one of its long-sought goals. Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system.

Last week, the House Ways and Means Committee, led by Rep. Richard Neal, D-Mass.passed the Taxpayer First Act, a wide-ranging bill making several administrative changes to the IRS that is sponsored by Reps. John Lewis, D-Ga., and Mike Kelly, R-Pa.

In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits.

“This could be a disaster. It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program,” said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center.

Experts have long argued that the IRS has failed to make filing taxes as easy and cheap as it could be. In addition to a free system of online tax preparation and filing, the agency could provide people with pre-filled tax forms containing the salary data the agency already has, as ProPublica first reported on in 2013.

The Free File Alliance, a private industry group, says 70% of American taxpayers are eligible to file for free. Those taxpayers, who must make less than $66,000, have access to free tax software provided by the companies. But just 3% of eligible U.S. taxpayers actually use the free program each year. Critics of the program say that companies use it as a cross-marketing tool to upsell paid products, that they have deliberately underpromoted the free option and that it leaves consumer data open to privacy breaches.

The congressional move would codify the status quo. Under an existing memorandum of understanding with the industry group, the IRS pledges not to create its own online filing system and, in exchange, the companies offer their free filing services to those below the income threshold.

One member of the Free File Alliance explicitly told shareholders that the IRS “developing software or other systems to facilitate tax return preparation … may present a continued competitive threat to our business for the foreseeable future.”

The IRS’ deal with the Free File Alliance is regularly renegotiated and there have been repeatedbipartisan efforts in Congress to put the deal into law.

Those efforts have been fueled by hefty lobbying spending and campaign contributions by the industry. Intuit and H&R Block last year poured a combined $6.6 million into lobbying related to the IRS filing deal and other issues. Neal, who became Ways and Means chair this year after Democrats took control of the House, received $16,000 in contributions from Intuit and H&R Block in the last two election cycles.

Neal, who describes himself as a longtime champion of the existing Free File program, has argued that it would “would help low- and moderate-income taxpayers.”

Free File Alliance Executive Director Tim Hugo called it “a great idea when you can provide a great product — free tax returns — to Americans at no cost to the federal government.” An H&R Block spokesperson said the company believes “Free File should be the subject of ongoing improvement, and we are committed to working with all parties to strengthen and improve Free File on behalf of the American taxpayer.”

Spokespeople for Neal, Lewis and Kelly did not immediately respond to requests for comment about the provision. A companion Senate bill with the same provision has been introduced by Sens. Chuck Grassley, R-Iowa, and Ron Wyden, D-Ore.

While efforts to make the IRS’ deal with the tax preparation industry permanent have fizzled in the past, critics are particularly worried this year. The Taxpayer First Act also includes a provision that would restrict the IRS’ use of private debt collectors to those above a certain income. A Wyden spokesperson said the current bill is a “bipartisan, bicameral compromise so it includes priorities of both chairmen and ranking members.” Wyden “supports giving the IRS the resources it needs to offer more services to taxpayers,” the spokesperson added.

Do you have information about the IRS or the tax preparation industry? Contact Justin Elliott at justin@propublica.org or via Signal at 774-826-6240.

Portrait of Justin Elliott

Justin Elliott

Justin Elliott is a ProPublica reporter covering politics and government accountability. To securely send Justin documents or other files online, visit our SecureDrop page.

Amazon Not Paying Federal Income Taxes on $11.2 Billion Profits | Fortune

Everybody’s mad at Amazon for this… but nobody seems to even bat an eye at the idiots who wrote the laws that allowed this to happen. In fact, we keep re-electing them…

This is the second year in a row the trillion dollar company won’t pay

Source: Amazon Not Paying Federal Income Taxes on $11.2 Billion Profits | Fortune

Those wondering how many zeros Amazon, which is valued at nearly $800 billion, has to pay in federal taxes might be surprised to learn that its check to the IRS will read exactly $0.00.

According to a report published by the Institute on Taxation and Economic (ITEP) policy Wednesday, the e-tail/retail/tech/entertainment/everything giant won’t have to pay a cent in federal taxes for the second year in a row.

This tax-free break comes even though Amazon almost doubled its U.S. profits from $5.6 billion to $11.2 billion between 2017 and 2018.

To top it off, Amazon actually reported a $129 million 2018 federal income tax rebate—making its tax rate -1%.

Amazon’s low (to non-existent) tax rate has been chided by politicians ranging from Senator Bernie Sanders to President Donald Trump.

But even though Trump previously blasted Amazon for its limited state taxes—a single presidential tweet caused the company’s shares to fall by 9%—ITEP notes that its non-existent federal tax payment is a result of the Trump Administration’s corporation-friendly tax cuts. The think tank writes that the 2017 Tax Cuts and Jobs Act not only decreased corporate tax rates from 35% to 21%, but it also didn’t close “a slew of tax loopholes that allow profitable companies to routinely avoid paying federal and state income taxes on almost half of their profits.”

According to The Week, Amazon ended up paying an 11.4% federal income tax rate between 2011 and 2016, which is a contrast to the -1% rate this year.

Amazon has a history of avoiding various sales taxes and made headlines last summer after successfully convincing Seattle Mayor Jenny Durkan to repeal a tax that would have helped the city’s homeless population.

Furthermore, New Yorkers made waves after learning about the significant tax cuts Amazon would receive if it built a headquarters in Long Island City.

As a result of public and political contention, Amazon canceled its plans to expand to New York Thursday.