Tax Filing Simplification Act of 2016

Summary: Tax Filing Simplification Act of 2016  This bill amends the Internal Revenue Code to require the Internal Revenue Service (IRS) to establish and operate the following programs free of charge:    online tax preparation and filing software,  a program for taxpayers to download third-party provided return information relating to individual income tax returns, and  a program to permit individuals with simplified tax situations to elect to have the IRS prepare their returns.   The IRS may not enter into any agreement which restricts its legal right to provide tax return preparation services, software, or tax return filing services. An individual participating in the programs established by this bill must verify their identity to the satisfaction of the IRS. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tax Filing Simplification Act of 
2016''.

SEC. 2. PROHIBITION ON AGREEMENTS RESTRICTING GOVERNMENT TAX 
              PREPARATION AND FILING SERVICES.

    The Secretary of the Treasury, or the Secretary's delegate, may not 
enter into any agreement after the date of the enactment of this Act 
which restricts the Secretary's legal right to provide tax return 
preparation services or software or to provide tax return filing 
services.

SEC. 3. GOVERNMENT-ASSISTED TAX PREPARATION AND FILING SERVICES.

    (a) In General.--Chapter 77 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new section:

``SEC. 7529. GOVERNMENT-ASSISTED TAX-RETURN PREPARATION PROGRAMS.

    ``(a) Establishment of Programs.--The Secretary shall establish and 
operate the following programs:
            ``(1) Online tax preparation and filing software.--Not 
        later than January 31, 2018, software for the preparation and 
        filing of individual income tax returns for taxable years 
        beginning after 2016.
            ``(2) Taxpayer data access.--Not later than March 1, 2018, 
        a program under which taxpayers may download third-party 
        provided return information relating to individual income tax 
        returns for taxable years beginning after 2016.
            ``(3) Tax return preparation.--Not later than March 1, 
        2018, a program under which eligible individuals (as defined 
        under subsection (c)(1)) may elect to have income tax returns 
        for taxable years beginning after 2016 prepared by the 
        Secretary.
    ``(b) Requirements for Taxpayer Data Access Program.--
            ``(1) In general.--Return information under the program 
        established under subsection (a)(2) shall be made available--
                    ``(A) not later than 15 days after the Secretary 
                receives such information, and
                    ``(B) through a secure function that allows a 
                taxpayer to download such information from the 
                Secretary's website in both a printable document file 
                and in a computer-readable form suitable for use by 
                automated tax preparation software.
            ``(2) Third-party provided return information defined.--For 
        purposes of this section, the term `third-party provided return 
        information' means--
                    ``(A) information reported to the Secretary through 
                an information return (as defined in section 
                6724(d)(1)),
                    ``(B) information reported to the Secretary 
                pursuant to section 232 of the Social Security Act, and
                    ``(C) such other information reported to the 
                Secretary as is determined appropriate by the Secretary 
                for purposes of the program established under 
                subsection (a)(2).
    ``(c) Tax Return Preparation.--
            ``(1) Eligible individual.--For purposes of the program 
        established under subsection (a)(3)--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), the term `eligible 
                individual' means, with respect to any taxable year, 
                any individual who--
                            ``(i) elects to participate in the program 
                        established under subsection (a)(3),
                            ``(ii) is an unmarried individual (other 
                        than a surviving spouse (as defined in section 
                        2(a))) or the head of a household (as defined 
                        in section 2(b)),
                            ``(iii) does not claim any deduction 
                        allowed under section 62 for purposes of 
                        determining adjusted gross income,
                            ``(iv) claims the standard deduction under 
                        section 63,
                            ``(v) claims no deduction under section 151 
                        for any individual who is a dependent (as 
                        defined in section 152),
                            ``(vi) does not file Schedule C, and
                            ``(vii) has no income other than income 
                        from--
                                    ``(I) wages (as defined in section 
                                3401),
                                    ``(II) interest, or
                                    ``(III) dividends.
                    ``(B) Limitation on eligibility for tax year 
                2017.--With respect to any taxable year beginning in 
                2017, the term `eligible individual' shall only include 
                such populations of individuals described in 
                subparagraph (A) as is determined by the Secretary.
                    ``(C) Expansion of eligibility after tax year 
                2017.--
                            ``(i) In general.--At the discretion of the 
                        Secretary, with respect to any taxable year 
                        beginning after December 31, 2017, the term 
                        `eligible individual' may include populations 
                        of individuals who would not otherwise satisfy 
                        the requirements established under subparagraph 
                        (A), such as married individuals, heads of 
                        households, taxpayers who are eligible to claim 
                        the earned income tax credit under section 32 
                        and have dependents, taxpayers who are eligible 
                        to claim the child tax credit under section 24, 
                        taxpayers who claim deductions allowed under 
                        section 62 for purposes of determining adjusted 
                        gross income, and taxpayers with income from 
                        nonemployee compensation.
                            ``(ii) Report.--Not later than August 31, 
                        2019, the Secretary shall submit a report to 
                        Congress that contains recommendations for such 
                        legislative or administrative actions as the 
                        Secretary determines necessary with respect to 
                        expanding the populations of individuals that 
                        may qualify as eligible individuals for 
                        purposes of the program established under 
                        subsection (a)(3).
            ``(2) Return must be filed by individual.--No return 
        prepared under the program established under subsection (a)(3) 
        shall be treated as filed before the date such return is 
        submitted by the taxpayer as provided under the rules of 
        section 6011.
    ``(d) Verification of Identity.--An individual shall not 
participate in any program described in subsection (a) or access any 
information under such a program unless such individual has verified 
their identity to the satisfaction of the Secretary.
    ``(e) Taxpayer Responsibility.--Nothing in this section shall be 
construed to absolve the taxpayer from full responsibility for the 
accuracy or completeness of his return of tax.
    ``(f) Prohibition on Fees.--No fee may be imposed on any taxpayer 
who participates in any program established under subsection (a).
    ``(g) Information Provided for Wage and Self-Employment Income.--
For purposes of subsection (a)(2), in the case of information relating 
to wages paid for any calendar year after 2016 required to be provided 
to the Commissioner of Social Security under section 205(c)(2)(A) of 
the Social Security Act (42 U.S.C. 405(c)(2)(A)), the Commissioner 
shall make such information available to the Secretary not later than 
February 15 of the calendar year following the calendar year to which 
such wages and self-employment income relate.''.
    (b) Filing Deadline for Information Returns.--Section 6071(b) of 
such Code is amended to read as follows:
    ``(b) Information Returns.--Returns made under part III of this 
chapter shall be filed on or before January 31 of the year following 
the calendar year to which such returns relate. Section 6081 shall not 
apply to returns under such part III.''.
    (c) Conforming Amendment to Social Security Act.--Section 
205(c)(2)(A) of the Social Security Act (42 U.S.C. 405(c)(2)(A)) is 
amended by adding at the end the following new sentence: ``For purposes 
of the preceding sentence, the Commissioner shall require that 
information relating to wages paid be provided to the Secretary of the 
Treasury not later than February 15 of the year following the calendar 
year to which such wages and self-employment income relate.''.
    (d) Clerical Amendment.--The table of sections for chapter 77 of 
such Code is amended by adding at the end the following new item:

``Sec. 7529. Government-assisted tax-return preparation programs.''.
    (e) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out the amendments made by this section such sums 
as may be necessary for each of fiscal years 2017 through 2021.
    (f) Effective Date.--The amendments made by this section shall 
apply to returns for taxable years beginning after December 31, 2016.