Free File Act of 2016

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Free File Act of 2016''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The Internal Revenue Service Free File program 
        (hereinafter referred to as the ``IRS Free File Program'') as 
        established by the IRS pursuant to public rulemaking and set 
        forth in the Federal Register, Vol. 67, No. 213, Monday, 
        November 4, 2002, pages 67247-67251, and in implementing 
        agreements and governing rules and requirements between the IRS 
        and the tax software and electronic industry between 2003 and 
        2015, has been successful and significant in the efforts of the 
        Federal Government to increase the electronic filing of 
        individual income tax returns of low and moderate income 
        taxpayers.
            (2) By the end of the current tax return filing season more 
        than 45,000,000 Federal individual income tax returns will have 
        been prepared and filed electronically for free over the life 
        of the IRS Free File program.
            (3) The IRS Free File program offers Federal individual 
        income tax return preparation and electronic filing services to 
        more than 70 percent of taxpayers, approximately 100,000,000 
        taxpayers at the end of the current tax filing period, with tax 
        software and electronic filing provided at no cost to the 
        taxpayers who use the service or to the Federal Government from 
        tax software and electronic filing companies participating in 
        the program.
            (4) By the end of the current tax return filing season, it 
        is estimated that the IRS Free File program will have saved 
        taxpayers approximately $1,300,000,0000 and will have saved the 
        Federal Government about $125,000,000 in processing costs.
            (5) In addition to the IRS Free File Program, the Internal 
        Revenue Service also provides Taxpayer Assistance Centers, Tax 
        Counseling for the Elderly, and Volunteer Income Tax Assistance 
        (VITA) programs. Each of these programs represent important 
        sources of taxpayer assistance and provide taxpayer services 
        through different modalities to serve low and moderate income 
        taxpayers.

SEC. 3. FREE FILE PROGRAM.

    (a) The Secretary of the Treasury, or the Secretary's delegate, 
shall continue to operate the IRS Free File Program as established by 
the Internal Revenue Service and published in the Federal Register on 
November 4, 2002 (67 Fed. Reg. 67247), including any subsequent 
agreements and governing rules established pursuant thereto.
    (b) The IRS Free File Program shall continue to provide free 
commercial-type online individual income tax preparation and electronic 
filing services to the lowest 70 percent of taxpayers by income. The 
number of taxpayers eligible to receive such services each year shall 
be calculated by the Internal Revenue Service annually based on prior 
year aggregate taxpayer adjusted gross income data.
    (c) In addition to the services described in subsection (b), and in 
the same manner, the IRS Free File Program shall continue to make 
available to all taxpayers (without regard to income) a basic, online 
electronic fillable forms utility.
    (d) The IRS Free File Program shall continue to work cooperatively 
with the private sector to provide the free individual income tax 
preparation and the electronic filing services described in subsections 
(b) and (c).
    (e) The IRS Free File Program shall work cooperatively with State 
government agencies to enhance and expand the use of the program to 
provide needed benefits to the taxpayer while reducing the cost of 
processing returns.
    (f) Nothing in this Act is intended to impact the continuity of 
services provided under Taxpayer Assistance Centers, Tax Counseling for 
the Elderly, and Volunteer Income Tax Assistance programs.

SEC. 4. INNOVATIONS.

    (a) The Secretary of the Treasury, or the Secretary's delegate, 
shall work with the private sector through the IRS Free File Program to 
identify and implement, consistent with applicable law, innovative new 
program features to improve and simplify the taxpayer's experience with 
completing and filing individual income tax returns in voluntary 
compliance.
    (b) The Internal Revenue Service, and members of the tax software 
and electronic industry with whom the Internal Revenue Service works 
through the Free File Program, shall support and promote improvements 
within the program by mutually testing, piloting, and offering 
innovative solutions to--
            (1) simplify taxpayer compliance with the internal revenue 
        laws,
            (2) reduce taxpayer compliance burdens,
            (3) increase individual income tax return accuracy through 
        financial data authentication,
            (4) strengthen the tax system against existing and emerging 
        fraud and threats of fraud through cybersecurity collaboration,
            (5) avoid duplication of effort in the tax system,
            (6) simplify the tax system,
            (7) maximize the use of electronic technology, and
            (8) reduce information reporting burdens.

Summary: Free File Act of 2016 This bill requires the Department of the Treasury to continue to operate the Internal Revenue Service (IRS) Free File Program. The program must work with state government agencies to enhance and expand the use of the program, while continuing to: provide free commercial-type online individual income tax preparation and electronic filing services to the lowest 70 of taxpayers by income. Provide all taxpayers with a basic, online electronic fillable forms utility. And work with the private sector to provide the free tax preparation and electronic filing services. Treasury must work with the private sector through the program to identify and implement innovative new program features to improve and simplify the taxpayer's experience with completing and filing individual income tax returns. The IRS and members of the tax software and electronic industry involved in the program must support and promote improvements within the program by mutually testing, piloting, and offering innovative solutions to: simplify the tax system, reduce compliance and reporting burdens, increase tax return accuracy through financial data authentication, strengthen the tax system against fraud through cybersecurity collaboration, avoid duplication, and maximize the use of electronic technology.