With 2023’s tax deadline fast approaching, our thoughts turn once again to the peculiarities of America’s filing system. Instead of the IRS interacting directly with the public for annual tax preparation, private companies facilitate electronic filing in the United States, a service that is supposed to be provided to most Americans free of charge.
Yet while more than 70% of Americans qualify for free, software-guided tax filing, only 3% end up using it. This means that not only are many filers spending extra time and money when they shouldn’t have to, but they may also be missing out on government benefits and tax breaks to which they are entitled.
But that may soon change. The 2022 Inflation Reduction Act directed $15 million to the IRS to study how they could design and implement their own free tax filing software and provide an alternative to the free file program. That report is due next month, but in the meantime, we’re going to take at look at what this IRS system could look like and how that might improve the way the IRS interacts with the public.
To help us do that, this week on the Buzz, we're joined by Gabriel Zucker, Associate Policy Director for Tax Benefits at Code for America. As a civic tech organization, they have plenty of experience thinking about and designing public sector tools to improve government services. And in this case, they’ve even designed a prototype to serve as a model for the IRS to, hopefully, emulate.
Resources:
GAO Free File Report
ProPublica's Investigation into Private Tax Prep Software
Code for America's Direct File Prototype
Code for America's Research on Simple Tax Filing
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Intro/Outro Music: Focal Point/Young Community
Courtesy of Epidemic Sound