Taxpayers spend an average of 11 hours preparing and filing tax returns and pay $200 for tax preparation services 

Bill with Sen. Elizabeth Warren would simplify tax filing process and let Americans file their taxes directly with the IRS for free

WASHINGTON – U.S. Senator Tom Udall (D-N.M) joined Senator Elizabeth Warren (D-Mass.) in reintroducing the Tax Filing Simplification Act to simplify and decrease the costs of the tax filing process for millions of American taxpayers. Last tax season, taxpayers spent an average of 11 hours and around $200 preparing their tax returns -- a cost equal to almost 10 percent of the average federal tax refund in New Mexico.

Along with lowering costs and eliminating red tape for all taxpayers, return-free filing and other improvements in the Tax Filing Simplification Act would ensure that more eligible people in New Mexico and across the country receive important tax refunds, like the Earned Income Tax Credit. The legislation would dramatically simplify the filing process for individuals with simple tax situations, direct the Internal Revenue Service (IRS) to develop a free, online tax preparation and filing service that does not require the sharing of private information with third parties, and prohibit the IRS from entering into agreements that restrict its ability to provide these services.

“Tax Day should be as painless and easy as possible for taxpayers. Instead, New Mexicans often find themselves at the mercy of an unnecessarily complicated filing process costing them valuable time, and a tax prep industry profiting off their hard-earned money. This system disproportionately affects working families that are already struggling to make ends meet, and eats up a chunk of the critical tax credits that are meant to lift them up. Our tax laws should reflect our values as a nation, and help put money back in the pockets of working people. That’s why I’m proud to support these commonsense reforms to simplify tax filing, cut down on fraud, and let New Mexicans file their taxes directly with the IRS online for free,” said Udall.  

The Tax Filing Simplification Act makes several commonsense changes to simplify and decrease the costs of the tax filing process for millions of American taxpayers by:

• Prohibiting the IRS from entering into agreements that restrict its ability to provide free online tax preparation or filing services;
• Directing the IRS to develop a free, online tax preparation and filing service that would allow all taxpayers to prepare and file their taxes directly with the federal government instead of requiring that they share private information with third parties;
• Enhancing taxpayer data access by allowing all taxpayers to download third-party-provided tax information that the IRS already has into a software program of their choice;
• Allowing eligible taxpayers with simple tax situations to choose a new return-free option, which would provide a pre-prepared tax return with income tax liability or refund amount already calculated;
• Mandating that these data and filing options be made available through a secure online function and requires any participating individual to verify his or her identity before accessing tax data; and
• Reducing tax fraud by getting third-party income information to the IRS earlier in the tax season, allowing the agency to cross-check this information before issuing refunds.

Originally introduced in 2016 and reintroduced in 2017, this legislation has been endorsed by over 50 tax law professors and economists  and a bipartisan set of policymakers, along with the National Consumer Law Center (on behalf of its low-income clients), the Institute for Taxation and Economic Policy, Americans for Tax Fairness, Economic Security Project Action, the Hispanic Federation, Americans for Financial Reform, and Public Citizen. 

The bill was led by Warren and in addition to Udall, was cosponsored by U.S. Senators Jeanne Shaheen (D-N.H.), Sheldon Whitehouse (D-R.I.), Tammy Baldwin (D-Wis.), Bernie Sanders (I-Vt.), Edward J. Markey (D-Mass.), Tammy Duckworth (D-Ill.), Maggie Hassan (D-N.H.), Jeff Merkley (D-Ore.), Cory Booker (D-N.J.), and Richard Blumenthal (D-Conn.).

The full text of the legislation is available HERE. A fact sheet is available HERE.