Shaheen Introduces Legislation to Simplify and Decrease the Costs of Tax Preparation and Filing

April 15, 2019

**Taxpayers Spend an Average of 11 Hours Preparing and Filing Tax Returns and Pay $200 for Tax Preparation Services**

(Washington, DC) – U.S. Senator Jeanne Shaheen (D-NH) helped to reintroduce the Tax Filing Simplification Act with Senator Elizabeth Warren (D-MA) to ease the tax filing process for millions of American taxpayers and reduce their costs. Last tax season, American taxpayers spent an average of 11 hours and nearly $200 preparing their tax returns – a cost equal to almost 10 percent of the average federal tax refund.

"As millions of Americans file their taxes, we're reminded that too many people struggle to navigate an exceptionally burdensome tax system. Paying taxes doesn't have to be this complicated," said Senator Shaheen. "The average American will pay $200 and spend 11 hours to prepare their tax return -- money and time they will never get back. While Congressional Republicans promised and failed to simplify the tax system in the tax bill they rushed through Congress, this common-sense legislation will help make the process simpler and cheaper. This bill would positively impact hardworking, taxpaying Americans in every community throughout the country -- I urge members on both sides of the aisle to join in support of this effort."

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 -- including millions of low-income Americans -- 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.

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.

First introduced in 2016 and reintroduced in 2017, this approach to tax filing has been endorsed by tax scholars and a bipartisan set of policymakers. The bill is endorsed by 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.

Senator Shaheen has supported measures to simplify the current tax system and ease the tax burden on working middle class families. Last week, she introduced the Working Families Tax Relief Act, which would expand the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) – two of the most effective tools we have to put money back in the pockets of working people and help pull children out of poverty.

More information about this legislation is available here. The full bill text is available here.