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Dear John,
Did you know that 70% of taxpayers in 2023 have already qualified for the IRS’s current online Free File services?
If not, you’re not alone. It’s been available for Americans with an Adjusted Gross Income of $73,000 or less for years, but only 3% of taxpayers have taken advantage of this option. This is partly because we have been misdirected by the tax preparation industry, who stand to lose billions if we wise up to our options.
Internal H&R Block instructions obtained by ProPublica inform their service reps to keep this option quiet: “Do not send clients to this website unless they are specifically calling about the Free File program. We want to send users to our paid products before the free product, if at all possible.”
In 2019, it was estimated 14 million Americans eligible for Free File actually paid to file their taxes unnecessarily, which created approximately $1 billion in revenue for the tax preparation industry. That’s a lot of profit for something that should’ve been free.
Starting in 2024, all this could change for the better. The IRS has announced the implementation of a new pilot “Direct File” program to allow all U.S. taxpayers to use free, online, fillable forms, with no third-party tax preparer or software required.
However, this program will only be available to taxpayers in states whose governors have chosen to “opt in.” Click here to send a letter to your governor urging them to opt in to the new IRS Direct File program now.
Providing this new electronic tax filing option, for free, to all Americans regardless of income, would also limit the amount of personal information handed over to third parties, which can be vulnerable to data breaches, whether intentional or not.
A new report released last week by congressional Democrats charged that H&R Block sent “extraordinarily sensitive” data on tens of millions of taxpayers to Facebook’s Meta and Google over the last two years.
House Ways and Means Committee Chairman Richard Neal encourages taxpayers to take advantage of both the currently existing and soon-to-be-expanded free tax preparation options. "When 70% of taxpayers qualify for IRS's current Free File services, yet less than 3% take advantage, it's time for change," he said.
Of course, he’s right. Americans shouldn’t have to pay greedy companies outrageous fees in order to file taxes electronically online.
That’s why President Biden worked with Congress to pass $80 billion in new funding for the IRS as part of the Inflation Reduction Act last year. It wasn’t just to increase enforcement to go after wealthy tax cheats who refuse to pay what they owe, it was also to make the agency more customer service friendly and effective.
Free, direct filing of taxes should be available to all Americans, removing the expensive and untrustworthy “middle man” tax preparers. Send a letter urging your governor to opt in to this new program now.
Thank you for taking action.
Robert Reich
Inequality Media Civic Action
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