Dear Chairman Anderson and Members of the Government Finance Committee:
On behalf of National Taxpayers Union’s (NTU) supporters in Minnesota, I am writing to share some concerns about H.F. 2336, which would create a government-run tax filing system. NTU believes that a public-private partnership can meet the tax filing needs of Minnesotans and the creation of a new system is unnecessary and wasteful.
NTU suggests you modify your legislation by making the Minnesota State Free File Program -- which is free for taxpayers and for governments -- permanent, rather than directing the State to spend millions of dollars to build its own system that would assume the role of tax preparer for all Minnesotans.
Creating a program of government tax preparation would be a mistake and would vest taxing authorities with even broader power over the paychecks of American families, creating a huge conflict of interest that works against the interests of taxpayers. That kind of government mission creep would expand the powers of tax authorities in ways that would fundamentally disadvantage Minnesota families and businesses.
These types of government-run programs have an unenviable history. California, for instance, created its own “free” online tax preparation service (CalFile). Very few Californians used the service (usage has actually declined in recent years) and it imposed enormous costs on taxpayers. Meanwhile, other states like Mississippi and Virginia have made their free file programs permanent. The advantage of the Free File Program is that the software services are not developed or provided at taxpayer expense. Instead, Free File services are donated by tax software companies under a formal Agreement with the Treasury Department at no cost to either the Federal or State governments.
NTU has long supported the Free File Program, in which Minnesota is already a full participant. Since its creation in 2003, the federal Free File program has served nearly 50 million taxpayers nationwide and saved an estimated $1.3 billion for the federal government in compliance costs for taxpayers.
A majority of Minnesotans are eligible for this program. The median income for Minnesota is just over $60,000 annually, and under this tax season’s eligibility requirements, taxpayers making $64,000 a year are eligible to use electronic filing software provided by leading private companies free of charge. We urge you to modify your legislation to make the Minnesota Free File program permanent rather than creating a new government-run system. If you do this, NTU would enthusiastically support the amended version of H.F. 2336.
Counsel and Government Affairs Manager