The Honorable Peter RoskamThe Honorable Ron KindUnited States House of RepresentativesWashington, DC 20515
Dear Congressman Roskam and Congressman Kind:
Iwrite to offer the enthusiastic support of the 362,000-member National TaxpayersUnion (NTU) for H.R. 2569, the “Free File Program Act of 2011.” Yourlegislation, which has deservedly earned cosponsorship from 61 of yourcolleagues, would recognize the vital importance to taxpayers of the Free FileAlliance by permanently authorizing the program.
As you know, NTU has been a strident advocatefor the Free File Alliance, a public-private partnership for federal tax returnpreparation and electronic filing. Our position has been informed by fourdecades of experience with income tax administration policies at the federaland state levels. During that time, we have observed a steady rise in the incometax compliance burdens that governments have heaped upon taxpayers,particularly in the past 10 years. Since 1999, NTU has tracked this complexitythrough its ongoing “Taxing Trend” research project. Alarmingly, Americansspend at least 7.64 billion hours on meeting the demands of the federalpersonal and corporation income tax – an increase of nearly 1.5 billion hourssince the year 2000. In NTU’s estimation, the value of this time alone exceeds$227 billion. Unfortunately, Congress has displayed a persistent penchant foradding complexity to the tax laws, even as Government Accountability Office reportscontinue to show variable progress at the IRS in providing timely, consistent,and accurate advice to citizens with questions about those laws.
Inthis daunting environment, taxpayers need the best advice and service they canpossibly obtain in preparing and filing their returns. Unlike federal- andstate-level proposals to put government into the tax return preparationbusiness, the Free File Alliance has amply demonstrated the capacity to fulfillsuch requirements. The results from thisprogram have yielded impressive metrics: 33 million returns have been processedthrough Free File since the program was launched in 2003, at no cost totaxpayers. In fact, official federal estimates show a savings to the government from Free File. According to estimatesacknowledged among several executive and legislative branch agencies, nearly$92 million in paper-return handling costs have been avoided so far. In 2008,the tax advisory and filing services that Free File offered to middle- andmoderate-income taxpayers (comprising 70 percent of the taxpaying population) wassupplemented with “fillable” forms that permit Americans of all incomes toenter data and file electronically on their own.
Using very stringent standards that prohibittactics such as pop-up advertising, the private-sector partners who facilitateFree File have proven remarkably adroit at responding to the constant barrageof tax-law changes and making certain that customers are happy with theirchoices. This is reflected in consumer surveys showing near-100 percent satisfactionrates with Free File services – a phenomenon whose likelihood of beingreplicated by a government agency seems exceedingly small. To note just oneironic contrast, the IRS asked some itemizers to delay their returns during the2011 filing season due to last-minute computer-retooling the agency had to makeafter passage of the TaxRelief, Unemployment Insurance Reauthorization, and Job
CreationAct of 2010. Meanwhile, 22 states have embraced this modelas well, recognizing, as then-IRS Commissioner Mark Everson observed in 2006, thatit “provides taxpayers with high-quality services” while maximizing consumerchoice and promoting competition “at the least cost to taxpayers.”
Your legislation would give the acknowledgementthat the often-unsung Free File Alliance has long lacked, by ensuring itspermanence in federal law.
Clearly, systemic tax reform and simplificationshould be top goals on Congress’s fiscal policy agenda. Until that time,taxpayers should have every possible avenue of assistance open to them, andH.R. 2569 would ensure that such avenues are accessible at no cost to consumersand at a savings to the federal government (no minor consideration in thecurrent economic and fiscal environment). Indeed, the Free File Program Actwould also help to serve the cause of tax reform, by demonstrating theimportance and feasibility of a system that respects the “firewalls” that mustexist between government (which administers and processes tax returns) and theprivate sector (which prepares and enables the filing of tax returns). Withoutsuch boundaries, Americans might become less aware of the truly burdensomenature of the tax laws, and thus less able to effectively weigh the costs andbenefits of the government they are required to fund.
Accordingto the IRS Oversight Board’s annual report on e-filing released early thisyear, roughly 70 percent of all 2010 individual income tax returns weresubmitted electronically. Return-preparer mandates may soon push that figureabove 80 percent. NTU believes, however, that any further progress in e-filingwill be the result of individual taxpayers having sufficient confidence in the onlineadvice they receive, along with the convenience of multiple online filingoptions. To our members, only the private sector-driven approach that H.R. 2569affirms – not a government-driven “return-free” scheme – can properly reflectthese two qualities.
Because of the numerous other advantagesoutlined here, it is imperative that your colleagues in the House cosponsor andpass H.R. 2569 now. You may rest assured that NTU standsready to assist you in moving this legislation toward swift enactment. Any rollcall votes in favor of the Free File Program Act will be significantly weightedas pro-taxpayer votes in NTU’s annual Rating of Congress.
Sincerely,Pete SeppExecutive Vice President