The IRS is seeking to take on the responsibility of managing the tax filing procedure for millions of American individuals.
The Inflation Reduction Act (IRA) mandated the IRS to assess the feasibility of an online tax-filing platform managed by the federal government.
Third-Party Analyzes IRS Direct Filing Initiative
Recently, the agency released its report, which unsurprisingly recommended considering the inclusion of a system called Direct File as a potential option for the future. From the beginning, there were ulterior motives at play.
The IRA directed the IRS to seek additional analysis from an independent third party, and the agency chose New America, a nonprofit organization known for its left-leaning tendencies, whose members have previously advocated for a direct filing system.
Furthermore, even before the report was made public, The Washington Post revealed that the agency had already begun developing a pilot program for direct filing, scheduled to undergo testing in 2024.
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Technical Issues With Healthcare.Gov Interface
The IRS, as an institution, has not managed to gain the trust of the general public. If Congress wishes to alleviate the burdensome nature of the tax season for Americans, it should focus on simplifying the tax code, rather than implementing a potentially error-prone mitigation mechanism.
Policymakers ought to refrain from granting the agency more authority and should also avoid discouraging citizens from utilizing private institutions such as tax-preparation services, which act as intermediaries between the federal government and everyday individuals.
The IRS often exercises an excessive level of control within its domain.
According to the IRS report, the annual cost of implementing a direct filing system ranges from $64 million to $249 million. However, the government has a history of underestimating the expenses associated with new programs, and more realistic estimates far exceed even the highest figure proposed by the IRS.
In 2021, Govini, a software company based in Virginia, compared the direct filing proposals to Healthcare.gov, which was established in 2010 under the Affordable Care Act. As of October 2021, Healthcare.gov had consumed $21.2 billion of taxpayers’ money.
The development of the Healthcare.gov interface cost $2.84 billion in 2014, which accounted for over 20% of the IRS’ allocated budget for 2023, amounting to $14.1 billion. Additionally, Govini highlights that despite its exorbitant costs, the launch of Healthcare.gov was marred by IT crashes, downtime, and deficiencies in data security.
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