Resolution on Government Tax Preparation and Electronic Filing
WHEREAS, a program that is important to the citizens of the United States may be in jeopardy as the result of recent decisions;
WHEREAS, 50% of the states that have an individual income tax have banded together to implement an innovative solution to meet the needs of the low income and working poor taxpayers;
WHEREAS, this innovative solution, called the state Free File, has been developed where public need and private corporate citizenship work together, and is based on the Free File policy agreement reached between the Internal Revenue Service and the tax software industry several years ago, and recently extended through 2014, whereby working poor and other lower income families and individuals are able to obtain free online tax preparation and electronic filing for their federal and state tax returns;
WHEREAS, the program saves state budgets the high cost of creating and maintaining an alternate tax preparation and filing service. Twenty-one states participate in the Free File public-private partnership solution by having created Free File programs in their states, ultimately providing substantial savings to state governments;
WHEREAS, the IRS negotiated the terms of the national Free File agreement with the software providers, and this agreement is the common basis for all the Free File programs in the twenty-one Free File states;
WHEREAS, the Free File program provides competitive consumer choice among service providers, and relies upon private sector innovation and invention to simplify tax compliance while preserving the independence and objectivity of private tax preparation for the citizen;
WHEREAS, the state Free File programs are directly tied to the national policy agreement underlying the federal Free File program. The demise of the national IRS program could force states to invest in State tax preparation systems to replace the lost free program;
WHEREAS, a government-provided bill presentment tax system may not have all the information necessary to accurately determine what tax credits and deductions taxpayers and their families may be eligible to receive;
WHEREAS, in contrast to return preparation and bill presentment by the government tax collector, the Free File program can help eligible taxpayers properly claim the Earned Income Credit, and in so doing make a real difference in helping lift themselves and their families out of poverty. Similarly, Free File can help eligible taxpayers claim the Child and Elder Care Credits, and Retirement Savings Incentives, and minimize their lawful tax liability;
WHEREAS, the Free File states are not in a position to dedicate scare state resources to develop and maintain the type of state tax preparation systems necessary to effectively replace their Free File programs; and
WHEREAS, the Council of State Governments is concerned of the potential costs the demise of the state Free File program could place on states.
BE IT THEREFORE RESOLVED, that CSG urges the Congress to support the Free File Program, assuring its stability and continuity in service to the nation as a highly cost-effective solution that protects taxpayer privacy, preserves the independence and objectivity of their tax advice and assistance, and helps ensure that taxpayers receive all the tax credits and deductions they fairly deserve; and
BE IT THEREFORE RESOLVED, that CSG recommends that Congress reject any proposal that would convert the current voluntary compliance tax system into a Government-provided bill presentment tax system, where the tax collector would expand its role into routinely preparing the tax returns of millions of lower and middle income citizens; and
BE IT FINALLY RESOLVED, that copies of this resolution be transmitted to members of the U.S. Senate and House of Representatives; and the U.S. Department of Treasury.
Adopted this 22nd Day of May 2010 at the Economic Summit of the States in New York, New York.