Lawmakers reintroduce bipartisan IRS bill with ‘Free File’ provision removed

House lawmakers on Thursday introduced a revised version of their bipartisan IRS modernization bill — removing a provision from earlier versions that would codify the IRS’s “Free File” program, which drew criticism in recent weeks.

Lawmakers hope that the House and Senate will quickly pass the updated measure.

“This bill is a ray of hope,” said Rep. John Lewis (D-Ga.), the chairman of the House Ways and Means Committee’s oversight panel. Lewis introduced the bill along with the subcommittee’s ranking member, Rep. Mike Kelly (R-Pa.).

{mosads}“It is a significant win for the American people because it demonstrates that even in the most difficult times, we can come together as a nation, as a people and as a Congress to accomplish important things for the American people,” Lewis added.

The bill, known as the Taxpayer First Act, includes provisions designed to improve the IRS in several areas, including taxpayer services, taxpayers rights during the enforcement process, identity theft protection and information technology. For example, it would exempt low-income people from the IRS’s private debt collection program and would establish a single point of contact at the IRS for identity theft victims.

The package, supported by Republicans and Democrats in both chambers of Congress, came about after the House Ways and Means Committee’s oversight panel held a series of hearings and roundtables about improving the IRS. The House previously passed a version of the bill in April, and also passed versions of the measure last year.

The versions that previously passed the House included a provision to codify the IRS’s Free File program — a partnership with tax-preparation companies in which the companies offer free online tax-filing services to low- and middle-income taxpayers. 

But some Democrats raised concerns about the Free File provision when the House held the April vote on the package, referencing a ProPublica article highlighting lobbying from tax-prep companies. In the following weeks, ProPublica wrote additional articles reporting that tax preparation companies have taken steps to hide their options under the Free File program, which drew concerns from lawmakers in both parties and prompted the IRS to start a review of the program.

The new version of the bill, without the Free File provision, has more than two dozen co-sponsors — including freshman Democratic Reps. Katie Hill (Calif.) and Alexandria Ocasio-Cortez (N.Y.), who expressed concerns about the provision codifying IRS’s partnership with tax-prep companies. 

Senate Finance Committee ranking member Ron Wyden (D-Ore.) said in a statement Thursday that, with the new version of the bill, “the House and Senate have come together on a path forward for the Taxpayer First Act.” 

“There’s no federal agency Americans interact with more than the IRS, and it’s critical that it be modernized to better serve taxpayers,” he said. “There’s bipartisan agreement that Congress should not codify the Free File program given its deficiencies and allegations of deceptive advertising and search engine manipulation by participating companies.”

Sen. Elizabeth Warren (D-Mass.) and Rep. Brad Sherman (D-Calif.) also praised the removal of the Free File provision and urged Congress to pass their bill to direct the IRS to create its own free, online tax filing service.

“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. “Taxpayers and advocates around the country fought back — and have won a victory to prevent that broken program from being written into law.”