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Warren was among some Democrats who were excited to hear that lawmakers were reportedly removing a provision from tax legislation that would’ve continued to prevent the IRS from developing its own tax-filing software, which could impinge upon private companies' profits.
"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 in a statement. "Taxpayers and advocates around the country fought back -- and have won a victory to prevent that broken program from being written into law."
The reports were confirmed by a House staffer to ProPublica, which was also the first publication to break the news that major tax companies – specifically Intuit-owned TurboTax—were deliberately hiding free filing services from lower-income taxpayers.
Ocasio-Cortez suggested in April that taxpayers should not be preparing their own taxes. In a speech on the House floor, the freshman lawmaker referenced a Vox article which deemed it a “huge scandal” that lawmakers have not yet required the IRS to automatically prepare taxes for most Americans. She said, long term, the government should be looking at a solution where everyday people do not have to spend hours preparing their returns.
Meanwhile, Warren introduced legislation – the Tax Filing Simplification Act – which would direct the IRS to develop its own free tax preparation and filing service. The bill would allow taxpayers to choose a “free-return option,” whereby they would be provided a pre-prepared return.
The provision in the Taxpayers First Act became a public issue after the reports surfaced that major tax preparers were deceiving Americans into paying for services that they legally should be able to access for free.
Individuals with incomes of $66,000 or less are eligible to file for free through the IRS’ free file program – a partnership with third-party preparers. While 70 percent of Americans are eligible to file through this program, only 2.5 percent did so in fiscal 2018 – a statistic attributed to companies’ “deliberate efforts to hide the availability of their Free File products” in a lawsuit filed by Los Angeles attorney Mike Feuer.
Feuer filed the suit last month. New York Democratic Gov. Andrew Cuomo called for an investigation into the same “deceptive” practices last month.
Intuit has denied the claims, and its CEO said it was trying to make sure taxpayers were fully informed about their options. H&R Block said it was "proud to have helped millions of Americans with our four free tax-filing options, including the IRS Free File program."
A spokesperson for H&R Block said the company supports the Taxpayers First Act and that it is proud to have helped millions of Americans file their returns under the Free File program.
"We support the review of the Free File program by the IRS, and we look forward to participating in the review," the spokesperson added.
A spokesperson for Intuit did not have any additional comment.