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House bans ‘free’ government tax preparation software like TurboTax

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WASHINGTON — The House of Representatives passed a bill on Tuesday that includes language that would permanently ban the Internal Revenue Service (IRS) from creating a free electronic service for Americans to file their taxes, advancing a primary objective of the for-profit industry of companies like Intuit and H&R Block.

The bill passed by a voice vote, after being led through the House Committee on Ways & Means by a bipartisan group of lawmakers, many of whom have benefitted from campaign donations from for-profit tax preparation companies.

Read more:The 20 companies and groups that spend the most money to influence lawmakers

The Taxpayer First Act includes a handful of reforms for the IRS. But among the bill co-sponsored by Republican Rep. Mike Kelly of Pennsylvania and Democratic Rep. John Lewis of Georgia is a provision that bans the IRS from making its own free version of tax preparation, forever.

Companies like Intuit, which produces TurboTax, and H&R Block allow most Americans to file for free as long as they earned less than $66,000 on the year. Despite that, most eligible Americans do not take advantage of the free filing, with just 3% filing for free.

The new bill, if it becomes law, ensures that system will continue, which has been a longtime goal of major for-profit tax preparation companies.

Companies like H&R Block and Intuit are big donors to the many members of the committees on Financial Services and Ways & Means.

In 2018, H&R Block gave campaign donations to the provision’s leading sponsors in Kelly and Lewis. H&R Block also contributed to the campaigns for 11 of the 25 Democrats on the Ways & Means Committee, including its Chairman, Rep. Richard Neal. H&R Block gave to nine of the 17 Republicans on the committee, including ranking Republican Rep. Kevin Brady.

Neal also received a sizable chunk from Intuit, who in 2018 gave his campaign $6,500, along with donations to dozens of other lawmakers.

The bill also has a companion in the Senate, which also has a bipartisan component banning the IRS from developing its own electronic system. The Senate version is sponsored by Democratic Sen. Ron Wyden of Oregon and Republican Sen. Chuck Grassley of Iowa.

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