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Government Services: IRS

Like them or not, taxes are a necessary part of an functional society. They the only way a government gets money needed to pay for things such as defense, public safety, schools, libraries, roads, parks, consumer safety watchdogs, and other services that benefit society as a whole.

While it's easy to dislike the Internal Revenue Service because they're the ones you send your money to, they do provide services most people appreciate when they need them...

o They answer questions you have about your taxes
o They protect you against identity theft
o They ensure others pay their required taxes

In this section we'll keep you updated on how services provided by the IRS are affecting you.

Related Issues

Free Tax Filing
IRS Funding

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You can file your taxes for free. But it could be better.

2019-May-16  (Updated: 2019-Jul-01)By: Barry Shatzman

If your 2018 income was less than $66,000, you could have filed your taxes for free. Including your state return. You could have been doing so for the past 15 years, too.

It's a government program actually called the Free File Program. It requires that free online tax preparation programs and electronic filing be provided to 70 percent of taxpayers based on their adjusted gross income.

The program is an agreement between the Internal Revenue Service (IRS) and the Free File Alliance - a consortium of tax software companies. It's an ongoing agreement that needs to be renewed regularly. But a bill in Congress - the Taxpayer First Act - would make the program permanent.

Sounds good... but prevents a better deal

There's a catch to the program. It prohibits the IRS from simply calculating your taxes for you..

For most Americans, the IRS has all of the information it needs to figure their taxes. Income for work and interest are reported, and people simply take the standard deductions. And the IRS knows what was withheld. So the IRS simply could send you your refund (or a bill). And it could provide you with the option to accept their calculations or file your own return.

The Free File Program agreement, however, prohibits the IRS from competing with the consortium "in providing free, online tax return preparation and filing services to taxpayers."

The IRS could develop a program to do your taxes automatically, but it would need to end the Free File Agreement.

Taxpayer First Act prevents that

The Taxpayer First Act has several consumer-friendly provisions. It makes it easier for low-income taxpayers to cut a deal with the IRS on taxes they can't afford to pay. It restricts property that the IRS can seize. It offers protections against identity theft.

But it also institutionalizes the Free File Agreement into law. The bill demands the program remain in effect, thereby preventing the IRS from canceling it. And because the agreement prohibits the IRS from providing a tax-preparation service, it would take another act of Congress for the IRS ever to be able to do so.

Competing bill would do the exact opposite

A bill by Sen. Elizabeth Warren, the Tax Filing Simplification Act, would require the IRS to establish its own free online tax preparation service. It would prohibit the IRS from entering into agreements that would limit its ability to provide its own services.

Update 2019-Jul-1: The Taxpayer First Act passed the Senate on June 13, 2019. It was signed by the president on July 1.

Hey... did we just save you a bunch of money on your tax preparation for next year? We can do lots more with your help. Please consider contributing just a few of the dollars that you saved. Just click here and you can be back reading in just a minute.

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IRS tax day failure may be tied to budget cuts

2018-Apr-17By: Barry Shatzman

The Internal Revenue Service (IRS) computer failure on tax day that prevented millions of Americans from paying their taxes electronically likely was the result of decreased funding over previous years.

IRS computers are aging, while more people are filing electronically. An IRS official told Congress in October that "we are concerned that the potential for a catastrophic system failure is increasing as our infrastructure continues to age."

Yet funding for the IRS has continued to decline, hampering the agency's ability to replace its hardware or hire people to support it.

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Budget cuts take the "service" out of Internal Revenue Service

2015-Apr-15By: Barry Shatzman

For most Americans, tax season is over.

If you had questions for the Internal Revenue Service (IRS) or are due a refund, you're likely affected by an IRS budget that caused the agency to have 1,700 fewer employees than last year.

If you had a question for the IRS and you called them, there was less than a 50 percent chance your call was answered. Even if you did get through - often after waiting on hold for half an hour - the agent was only able to answer basic questions.

The IRS also was forced to close several field offices. Although many answers could be found at the IRS website, those without internet access had fewer options.

The budget cuts also affect enforcement. This not only benefited those with high incomes disproportionately, but it affected the government's overall financial position - since each dollar added to the agency's enforcement budget would have returned more than $4, according to the Treasury Department.

For more, read the Yahoo! News story.

Read our discussion of this issue for a clearer understanding, status updates, and suggestions on what you can do.

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IRS budget cut would hurt services and reduce enforcement

2014-Jul-10By: Barry Shatzman

Have a tax question? Been a victim of identity theft? If so, you'll find it much harder to get help from the Internal Revenue Service if the spending bill passed by the House of Representatives becomes law.

The IRS budget has been reduced every year since 2010. The result has been a reduced staff, leading to reduced customer service. The proposed funding levels would result in about half the calls made to the IRS going unanswered, IRS officials predict.

The lower funding also would limit the IRS's ability to perform audits and enforce tax laws - resulting in tens of billions of dollars in lost revenue - almost entirely from high-income earners and corporations. The Treasury Department estimates that every $1 spent on audits returns $6 in owed taxes.

The bill would have other impacts to the IRS as well. It effectively would prevent the agency from enforcing the Patient Protection and Affordable Care Act's individual mandate.

For more, read the story.

Read our discussion of this issue for a clearer understanding, status updates, and suggestions on what you can do.

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Taxes simple and for free? Not if Intuit has a say (and it does)

2013-Mar-27By: Barry Shatzman

If your tax situation is simple, you might have wondered why it's necessary to fill out a tax form. After all, the IRS already has all your information. You also might wonder why you might pay someone to do it for you, or pay for a service such as TurboTax.

The answer has little to do with technology. Other countries such as Spain and Sweden already do this.

The answer in the United States is much more ironic. The corporations you pay to help make your taxes simple are paying your elected representatives to keep them complex. Intuit - the maker of TurboTax - has spent more than $11 million in the past five years lobbying against making tax filing simple and free for the overwhelming majority of Americans.

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