The Internal Revenue Service (IRS) is pushing back on a Government Accountability Office (GAO) recommendation for the agency to develop more free online tax filing options for citizens, arguing that it doesn’t have the money to undertake the work, and that doing so might not accomplish the end results that GAO envisions.

In a new report by GAO, the agency said that IRS wants to improve its free tax filing service – including to enhance access for taxpayers with disabilities. At the same time, GAO said that increasing requirements on tax preparation companies may cause them to opt out.

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“Stakeholders had different views on whether maintaining the current program or IRS developing its own online filing system would provide a better experience for taxpayers,” wrote GAO. “Regardless, IRS is not managing the risk of relying on the Free File program as the way it helps taxpayers file for free online.”

According to GAO, companies can leave the Free File program at any time and the program can be ended by Free File, Inc. (FFI) if IRS develops its own system.

“By not managing these risks through the development of additional free online filing options for taxpayers, IRS may be unable to achieve its strategic goal to empower all taxpayers to meet their tax obligations,” wrote GAO.

GAO made three recommendations to IRS:  add relevant practices from Federal guidelines into the next agreement with FFI; identify and develop additional options for free online filing by the time the current Free File agreement expires; and seek agreement with FFI on eliminating the memorandum of understanding provision requiring IRS to notify FFI immediately if it commits funding to offer services for free taxpayers.

IRS agreed with the recommendation suggesting that it add relevant practices to improve the taxpayer experience in the next agreement.

But IRS Deputy Commissioner for Services and Enforcement Douglas O’Donnell pushed back against the others, saying he “does not believe a public free-filing option would significantly improve the taxpayer experience, nor do we have sufficient funding to develop this solution.”

“If new legislation and funding were approved, then the IRS would expect to assess the feasibility and utility of offering additional free tax preparation and filing options,” he said.

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Jordan Smith
Jordan Smith
Jordan Smith is a MeriTalk Senior Technology Reporter covering the intersection of government and technology.