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Republicans push back on Democrats’ call to expand IRS direct file: “clear conflict of interest”

After 57 Democratic Representatives and Senators sent a letter to the Internal Revenue Service (IRS) urging the agency to expand the controversial “direct file” program to include Americans overseas, Republicans pushed back, slamming both the IRS for its power grab and Democrats for enabling the agency to create a single-choice filing system run by the government.

“The IRS wants to be the tax collector, auditor, enforcer, and now tax preparer — a judge, jury, and Lord High Executioner,” Sen. John Barrasso (W., Wyo.) said in an interview with the Washington Reporter. “The private sector has provided taxpayers with free file options for years…The IRS is recklessly spending money on an unnecessary program that puts Americans and their private data at risk. It gives the government full control over the tax filing system. Republicans will continue to push policies that shrink the size of this supersized IRS.”

Barrasso led a push over the summer that “blast[ed] the IRS for wasting taxpayer dollars on an illegitimate and unnecessary direct file tax preparation program,” his office said.

The IRS’s latest move was met with condemnation from tax policy experts. “The IRS should prioritize answering the 74 of 76 taxpayer service calls it failed to answer in the Treasury Inspector General’s report,” Mike Palicz, the Director of Tax Policy at Americans for Tax Reform, told the Washington Reporter. “Instead, the IRS is focused on becoming its own version of software companies that already exist.”

The Direct File system has been criticized by Republicans and conservative organizations for a number of reasons, one being that it would create a conflict of interest for the IRS — tasked with maximizing revenue — to act as a filer for taxpayers, who are interested in paying the least amount of taxes owed under the law.

“IRS direct file presents a clear conflict of interest in which the IRS would be tax preparer and auditor, the agency would have every incentive to hand people the highest tax bill possible rather than seeking the best tax return for filers,” Palicz said.

The Reporter previously covered the IRS’s direct file system which was controversially created by the agency after receiving funding for a study of the plausibility of the program as part of the Inflation Reduction Act of 2021.

Rep. Claudia Tenney (R., N.Y.) told the Reporter that the Democrats’ push for direct file “sucks,” Rep. Beth Van Duyne (R., Texas) told the Reporter that “Direct File is nothing more than an excuse to supercharge the IRS at great cost to taxpayers,” and Rep. Kevin Hern (R., Okla.) told the Reporter that the Biden administration’s push for direct file “isn’t the political win [the administration] thinks it is.”

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