STATEMENT BY U.S. SENATOR DANIEL K. AKAKA
I am delighted to reintroduce the Free Internet Filing Act as the tax filing deadline approaches. The bill requires the Internal Revenue Service (IRS) to provide universal access to individual taxpayers filing their tax returns directly through the IRS Web site. I thank Senator Bingaman for cosponsoring this bill and working with me on taxpayer rights issues.
Mr. President, it is frustrating that individual taxpayers completing their own returns are still not able to electronically file directly with the IRS. Taxpayers are dependent on commercial preparers to electronically file their taxes. If taxpayers take the time necessary to prepare their returns by themselves, they must be given the option of electronically filing directly with the IRS. My legislation would make this direct filing possible.
Mr. President, the current system, the Free File Alliance, provides only a select group of taxpayers with the ability to file electronically for free using third party intermediaries. The current Free File Alliance agreement is a failure because it leaves out too many taxpayers. Taxpayers that make more than $52,000 are not eligible.
Taxpayers should not have the additional worry associated with sharing their private financial information with a tax preparation company. In an era when there have been so many electronic breaches of financial information, taxpayers should not be forced to hand over their private information if they want to electronically file their return with the IRS. Taxpayers should not lose out on the benefits of electronic filing simply because they are worried about sending their data to third parties.
IRS Commissioner Mark Everson has stated, "E-file is the fastest, safest, and most accurate way to file a tax return. People will get their returns faster through E-file. E-file greatly reduces the chances for making an error compared to filing a paper 1040." Mr. President, I simply want to provide every individual taxpayer the ability to electronically file their taxes at no cost and without having to use a commercial tax preparer.
My legislation will lead to an increase in the number of electronically filed returns. Approximately 45 million returns prepared using software are mailed in rather than electronically filed. With universal access to free e-file, this number could be substantially reduced. Electronic filing helps taxpayers receive their refunds faster than mailing in paper returns.
My legislation would also reduce errors and IRS administrative costs. According to Mr. Bert Dumars, the Director of the IRS Electronic Tax Administration, it costs 55 to 75 cents to process an electronic return while it costs about two dollars to process a paper return. In addition, the error rate for electronic returns is one percent while the error rate for paper returns is 20 percent.
Mr. President, we have an obligation to make free electronic filing available to all individual taxpayers. Electronic filing benefits both taxpayers and the IRS. I have appreciated the attention paid to this issue by Senator Baucus and Senator Grassley. I will continue to work with my colleagues to enact the Free Internet Filing Act.
Mr. President, I ask unanimous consent that the full text of the bill be printed in the Record. I also ask unanimous consent that a letter of support from the Hawaii Alliance for Community-Based Economic Development be included in the Record. Finally, I ask unanimous consent that a letter of support from the National Consumer Law Center, Consumer Federation of America, U.S. Public Interest Research Group, California Reinvestment Coalition, Center for Economic Progress, Consumer Action, and the Neighborhood Economic Development Advocacy Project, be included in the Record.
LETTERS OF SUPPORT FOR THE FREE INTERNET FILING ACT:
March 28, 2007
By Fax and Email
The Honorable Daniel K. Akaka
United States Senate
Washington, DC 20510
Dear Senator Akaka:
The National Consumer Law Center (on behalf of its low-income clients), Consumer Federation of America, Consumer Action, U.S. Public Interest Research Group, California Reinvestment Coalition, Center for Economic Progress, and the Neighborhood Economic Development Advocacy Project write to support your bill entitled the "Free Internet Filing Act." Consumer groups have long advocated for what the Free Internet Filing Act would provide - the ability of taxpayers to electronically file their returns without the need for a third party intermediary.
Enabling taxpayers to file electronically directly with the Internal Revenue Service will benefit taxpayers tremendously. It will save taxpayers the fees charged by some commercial preparers for electronic filing. Unlike the current Free File program established by the IRS, the Free Internet Filing Act will provide taxpayers with free electronic filing without the potential of being subject to cross-marketing pitches for financial products which may not be in their best interests. While the marketing pitches for refund anticipation loans and other ancillary products were dropped this year from the Free File program, such a limitation is not enshrined in law or regulation.
The Free Internet Filing Act will also help taxpayers to keep their information private. By allowing free direct electronic filing with the IRS, taxpayers will have the ability to bypass commercial preparers that might exploit or share their personal, confidential tax information for non-tax purposes.
We believe the IRS should have been required a long time ago to establish free direct electronic filing. For many years, Americans have been able to apply for federal student financial aid on www.fafsa.ed.gov and Social Security retirement benefits at www.ssa.gov. A free direct electronic filing program at www.irs.gov is long overdue.
If you have any questions about this letter, please contact Chi Chi Wu at 617-226-0326. Thank you again for all your efforts to protect taxpayer rights.
Sincerely,
Chi Chi Wu, Staff Attorney, National Consumer Law Center
Jean Ann Fox, Director of Consumer Protection, Consumer Federation of America
David Marzahl, Executive Director, Center for Economic Progress
Ed Mierzwinski, Consumer Program Director, U.S. Public Interest Research Group (U.S. PIRG)
Linda Sherry, Director of National Priorities, Consumer Action
Rhea L. Serna, Policy Advocate , California Reinvestment Coalition
Chris Keeley, Campaigns Organizer, Neighborhood Economic Development Advocacy Project (NEDAP)
March 22, 2007
The Honorable Daniel K. Akaka
United States Senate
141 Hart Senate Office Building
Washington, DC 20510
Dear Senator Akaka:
The Hawai`i Alliance for Community Based Economic Development (HACBED) is writing in support of the "Free Internet Filing Act."
HACBED is a statewide 501(c) 3 organization established in 1992 to help maximize the impact of community-based economic development organizations (CBEDOs). We pursue our mission by helping CBEDOs to increase community control of their assets and means of production. We accomplish this in many ways -- by providing technical support to help CBEDOs deal with organizational issues; by networking on a local and national basis for funding and financing for community-based efforts; and, by advocating for communities to play a more active role in the political process in order to effect systemic change. To this end, HACBED has been facilitating statewide conversations to develop a comprehensive asset policy agenda. Core to this agenda is the recognition of the importance of creating policies that assist individuals, families and the broader community to build wealth.
Tax season is an essential time for low income families to take advantage of their tax related benefits, including the earned income tax credit. Electronic filing of taxes is a quicker, more efficient way to process a tax return. In many cases, working families must pay a professional tax preparer to prepare their return and file electronically. By providing free universal access to electronic filing these low income working families would be able to keep more of their hard earned dollars in their pocket.
HACBED fully supports this bill and we look forward to working with you in the future to insure free and low cost tax related services for low income families.
Sincerely,
Brent Dillabaugh, Deputy Director, Hawai`i Alliance for Community Based Economic Development
