WASHINGTON, D.C. – The Internal Revenue Service (IRS) tipped the scales on a $15 million feasibility study authorized in the so-called “Inflation Reduction Act” (IRA) which overstated taxpayers’ interest in establishing a government-run direct e-file program, according to an October 2 report by the Treasury Inspector General for Tax Administration (TIGTA). TIGTA’s report shows IRS surveys sent to taxpayers about the agency’s proposed e-file system may have been improperly designed to mislead Americans about their ability to file state taxes via direct e-file, and that the IRS may have downplayed the cost of implementation by billions of dollars.

In response to TIGTA’s findings, Ways and Means Committee Chairman Jason Smith (MO-08) said, “TIGTA’s report further underlines the trust gap between the IRS and American taxpayers. The Biden Administration’s so-called ‘study’ into establishing a direct e-file system was a foregone conclusion designed to further their goal of inserting the IRS into every aspect of Americans’ lives. Earlier this year we learned the IRS hired known supporters of direct e-file to run this study, but thanks to TIGTA it is now confirmed the agency cooked the books to manipulate the desired outcome and misled American taxpayers in the process.  

“Congress has not authorized a direct e-file program because the IRS has proven to be one of the least trustworthy agencies in Washington, and the American people are rightly opposed to making the already supercharged agency their tax preparer, filer, and auditor. The Ways and Means Committee will continue our oversight of the IRS and the Biden Administration to ensure they are complying with the law and American taxpayers are protected.”

Key Takeaways:

• The IRS study failed to provide a “neutral” option, putting survey participants in a forced-choice scenario where they were more likely to agree with the idea of establishing a direct e-file program.
• The survey prompt misled taxpayers by suggesting direct e-file would give them the ability to file both federal and state tax returns. An independent study shows 60 percent of taxpayers would stick with their current software if state returns were excluded.
• The IRS could not provide TIGTA with any documentation to support the agency’s cost estimates or its assertion that there would be at least 5 million users.

Background:

• The Inflation Reduction Act required an “independent third party” to report on “the overall feasibility, approach, schedule, cost, organization design, and Internal Revenue Service capacity to deliver such a direct efile tax return system.”
• To produce that report, President Biden’s IRS hired New America – an organization populated by Democrat Party operatives and other left-leaning officials – which has already stated “the government…can and should build this tool in the coming years.”
• The Biden Administration also appointed Professor Ariel Jurow-Kleiman to assist in the supposedly “independent” review of the e-file proposal – an individual that has previously been on the record openly championing the establishment of such a program at the IRS.
• An e-file program like that imagined in the IRA has been a long-time priority of Senator Bernie Sanders, Senator Elizabeth Warren, and Representative Alexandria Ocasio-Cortez to give the IRS control over both the filing and auditing of tax returns.

READ: Report on Direct E-File Program Confirms Biden Administration Always Intended to Make the IRS America’s Tax Preparer, Filer, and Auditor

READ: Smith, Schweikert Call Out Biden Administration for Cooking the Books on IRS E-File Study