Smith, Edwards, Blackburn Introduce Bill to Protect Americans from Unfair Tax Preparation

Washington, D.C. – Today, Congressman Adrian Smith (R-NE), Congressman Chuck Edwards (R-NC), and Senator Marsha Blackburn (R-TN) introduced the Fostering Autonomy in Independent Returns by Prohibiting Redundant and Extralegal Programs (FAIR PREP) Act. The legislation builds upon a bill introduced by Smith and Edwards in 2024 to prohibit the IRS from continuing or developing a successor to its in-house Direct File pilot program.

The members released the following statements:

“Despite its supersized funding in the Democrats’ Inflation Act, the IRS has shown it is more focused on intruding on Americans’ financial privacy than helping them navigate our overly complex tax code,” said Rep. Smith. “Notwithstanding its poor record of customer service, the agency tasked with collecting federal revenue simply should not have the power to predetermine and dictate to hardworking Americans what they owe in taxes. This bill would protect Americans from further overreach and unnecessary audits while leaving existing free tax filing options intact. I thank Rep. Edwards, Sen. Blackburn, and my other colleagues for working with me to champion this legislative solution.”

“By taking on the role of both tax preparer and tax auditor, the IRS created an undeniable conflict of interest when it circumvented Congress to establish the Direct File program,” said Sen. Blackburn. “This legislation would right this wrong by stopping the IRS from preparing tax returns without explicit legislative approval and ending this wasteful and misguided program.”

“Without congressional approval, the Biden administration wasted millions of taxpayer dollars standing up the Direct File program, only for the program to have a less than 1 percent use rate last tax season,” said Rep. Edwards. “The IRS already offers a free tax filing program, called Free File, in partnership with private tax preparation companies. Instead of spending taxpayer dollars on a duplicative program, the IRS should be putting its resources toward better customer service and tax processing for the American people.”

Cosponsors of the bill in the House include: Reps. Andrew Garbarino (R-NY), Claudia Tenney (R-NY), Kevin Hern (R-OK), Mark Alford (R-MO), Vern Buchanan (R-FL), Steve Womack (R-AR), Beth Van Duyne (R-TX), and Carol Miller (R-WV).

Specifically, the FAIR PREP Act would:

Amend Section 6020 of the Internal Revenue Code to explicitly prohibit the IRS from preparing tax returns in unauthorized instances, beginning 30 days after the bill’s enactment
Name the Direct File program as an example of unlawful preparation; and
Bar the Treasury Department and IRS from circumventing the rule by contracting with or awarding grants to third parties to operate such a program, unless explicitly authorized by Congress.

The legislation is supported by numerous stakeholder groups including Americans for Tax Reform, Heritage Action, National Taxpayers Union, Taxpayers Protection Alliance, and Center for a Free Economy.

“The IRS lied to Congress about Direct File and was slapped down by its own internal watch dog for using a bogus analysis. The IRS should not be the tax preparer, collector and auditor. This illegal power grab by the IRS must be stopped. This important bill from Sen. Blackburn and Rep. Smith would prohibit the IRS from creating a Direct File program without consent from Congress. I applaud them for their leadership and Americans for Tax Reform proudly supports this bill,” said Grover Norquist, President of Americans for Tax Reform

“Government agencies like the IRS have routinely overstepped their authority and circumvented Congress to unconstitutionally push their own agendas. The IRS’s expensive tax filing program wastes taxpayer dollars by being unnecessary, unauthorized, and underutilized. The FAIR PREP Act puts the IRS in its place and returns to Congress its constitutional authority to authorize tax return preparation. Heritage Action supports this common sense legislation and urges members of Congress to hold government agencies accountable,” said Ryan Walker, Executive Vice President, Heritage Action

“National Taxpayers Union enthusiastically supports Senator Blackburn's FAIR PREP Act, which would terminate the IRS's unauthorized Direct File program. The IRS ought to be focused on improving customer service and modernizing its outdated technology instead of creating a duplicative tax prep service that could cost taxpayers hundreds of millions of dollars a year,” said Brandon Arnold, Executive Vice President, National Taxpayers Union

“TPA enthusiastically applauds Senator Blackburn for introducing the FAIR PREP Act. From bypassing congressional approval to its lack of transparency over costs, the IRS has shown that it is willing to pursue the Direct File program without any oversight or accountability. This legislation would undo the mess of Direct File, protecting American taxpayers from IRS overreach and ensuring that the agency focuses exclusively on its mission of being the nation's tax collector. We urge all members to support this important effort,” said Taxpayers Protection Alliance President David Williams

“The tax collector cannot be the tax preparer without a conflict of interest. The IRS wants to collect the maximum amount possible from taxpayers. Tax preparation is supposed to represent the perspective of the taxpayer, who wants to pay only what is legally owed. Getting the IRS into the tax preparation business is like getting the rooster into the hen house business,” said Ryan Ellis, President of the Center for a Free Economy

BACKGROUND:
In January 2023, Reps. Adrian Smith and Michelle Steel's (R-CA) bill to repeal the Biden Administration’s $80 billion IRS expansion, the Family and Small Business Taxpayer Protection Act, became the first bill passed by the House in the 118th Congress. That bill would have also repealed the IRS’s controversial initial study of providing direct file services.

In April 2024, Smith led his Ways and Means Committee colleagues in writing to the House Appropriations Committee asking them to defund the Direct File program for FY 2025.

In June 2024, Smith led Ways and Means colleagues in sending a letter to Commissioner of the Internal Revenue Service Daniel Werfel raising concerns about IRS’ announced expansion of the Direct File program and asking Commissioner Werfel to respond to questions regarding statutory authority and the origin of funds allocated for development and advertisement of the program.

Smith and Edwards introduced legislation in July 2024 to terminate the IRS’s unauthorized Direct File program. In December, Smith and Edwards led a letter asking President Trump to end the Direct File pilot program upon taking office in January.