Any law preventing IRS from offering pre-filled tax filing forms?

[Rapid Robert]

First, to clarify, I am not talking specifically about the Free File Alliance. At the end of 2019, a change was made to the Memorandum of Understanding that seems to have led to both Intuit and H&R Block dropping out of the alliance. Here is the key change that happened then:

The following sentence in Article 2 of the MOU is hereby stricken from the MOU: "In recognition of this commitment, the federal government has pledged to not enter the tax return software and e-file services marketplace."

I am talking about actually providing pre-filled tax forms that taxpayers could review and approve if they agree. This not only happens in many other countries, but for for most of this century so far, California has offered CalFile (previously known as ReadyReturn) which is a similar system. Originally it was limited to only single filers, no dependents, standard deduction, only wage income from one employer, and AGI below a low six-figure number. You can read all about it on Wikipedia if you wish.

My question is, does a specific existing law prohibit the IRS from doing the same? I realize that as a practical matter, they probably don't have the resources to do this anytime soon, and many may not believe it would be a good idea, but are they legally prohibited from doing so? I have searched through all the section descriptions in Title 26 Subtitle F - Procedure and Administration ?? 6001 - 7874, and can find nothing like this. Maybe it's in another title of the U.S. code?

I realize that bills have been introduced in recent years both ways (to allow and to prohibit) but I don't believe any of them made it out of committee in Congress. Anyone know of a different result?

[kathyc2]

My question is, does a specific existing law prohibit the IRS from doing the same?

Yep. Section 7801. IRS is under the administration and supervision of Secretary of Treasury.

[ATSMAN]

In theory I agree that it may make tax administration easier but I worry about he delivery mechanism. First I don't trust mailing a pre filled tax form to a mailing address. People move mail gets delivered to the wrong address etc. Ideally it could be made available in a secured portal that taxpayers after authentication can review. I am not sure what the appetite folks in this country have to go through all that, especially middle aged and older folks.

[Rapid Robert]

kathyc2, thank you for the reply but I don't understand how Sec. 7801 prohibits the IRS from offering pre-filled tax filing forms. Of course IRS is under the Secretary of the Treasury. Then it says Chapter 53 (CHAPTER 53-MACHINE GUNS, DESTRUCTIVE DEVICES, AND CERTAIN OTHER FIREARMS) is under the Attorney General. How does that relate to the filing of income tax returns?

Atsman, any of the proposals I've seen would not make this mandatory if implemented, it would always be at the taxpayer's option.

In principle, it could be as simple as taking the info from the current tax return transcript for the simplest set of taxpayers and plugging it into the "postcard" Form 1040. But I agree that security and the user interface would be critical to successful use, and the IRS just isn't there yet (and may never be, the way things are going). Plus, too many people would just sign off on the pre-filled return even if they knew that some income information had not been properly & timely reported to the IRS, on the mistaken theory the the IRS was assuming responsibility for complete and accurate reporting.

[kathyc2]

IRS does not have the authority to make a major changes. That is either the call of Treasury or Congress. Secretary of Treasury is a political appointment and it would be political suicide to try to push through such a disaster.