Senate Democrats press IRS on simplified filing, more free options

CORRECTION: Twenty-nine senators have signed on to the letter sent by Carper and Warren. An initial version of this story included incorrect information.

A pair of Senate Democrats have urged the Internal Revenue Service (IRS) to take a simplified approach to the tax filing process and expand access to free e-filing options.

In a letter sent to IRS commissioner Daniel Werfel on Tuesday, Sens. Tom Carper (D-Del.) and Elizabeth Warren (D-Mass.) noted some ways the IRS can simplify its filing approach, including improving the taxpayer experience by using accessible e-filing tools.

“A key objective of the IRS should be to improve the taxpayer experience and make the process of filing income taxes simpler and more efficient. Better, more accessible e-filing tools can improve taxpayer compliance, minimize unintentional errors, and help taxpayers claim refunds quickly,” the senators wrote in their letter. 

“As you know, the recent investments in the IRS under the Inflation Reduction Act present a unique opportunity to show how the agency can work better for the American people, and we strongly urge you to prioritize expanded access to simple, free e-filing options as part of this effort,” the letter continued. 

The senators also expressed their concern with the Free File program, a program the IRS created in collaboration with private-sector tax preparation companies in an effort to simplify the tax preparation process and provide lower-income taxpayers the opportunity to file their returns for free while encouraging the growth of e-filing. 

Carper and Warren wrote how the usage rate of the Free File program is relatively low, saying how taxpayers who are eligible for the program will instead either file tax returns using other options or not file returns at all. 

“Despite Free File’s two decades of operation, millions of taxpayers annually still miss out on critical tax benefits like the Earned Income Tax Credit and Child Tax Credit because they do not file returns,” the letter reads. “This low utilization rate is deeply concerning, and suggests a lack of transparency and clear communication from tax preparation companies that participate in the program.” 

The letter was signed by 29 other senators, including Bernie Sanders (I-Vt.), Ben Cardin (D-Md.), Sherrod Brown (D-Ohio), Tina Smith (D-Minn.), Tammy Duckworth (D-Ill.), Tim Kaine (D-Va.), and Cory Booker (D-N.J.).

The letter comes after the Senate Finance Committee held a meeting last week on the president’s fiscal 2024 IRS Budget and the IRS’s 2023 filing season. The senators noted the Inflation Reduction Act (IRA), where the IRS was commissioned to do a free direct e-filing tax return system. 

The IRS was recently awarded $80 billion in funding from the IRA, which was passed last year. 

“We are laser focused on finding ways to reduce barriers that taxpayers face when filing returns, including those among us who are members of the Senate Committee on Finance,” the senators concluded with their letter. “While the IRS has previously had limited success in addressing these challenges due to lack of resources, the investments in the agency included in the Inflation Reduction Act (IRA) — including dedicated funding to develop a roadmap for greater e-filing options — make it possible to reverse course and significantly improve the taxpayer experience.”

This story was updated at 4:55 p.m. on April 26.