Tax Filing Simplification Act of 2022
Bill: S.4508 | Sponsor: Sen. Warren, Elizabeth (D-MA)
Policy area: Taxation

Summary:
Tax Filing Simplification Act of 2022
This bill directs the Internal Revenue Service (IRS) to establish a free on-line tax preparation and filing service and allows taxpayers to access third-party provided tax return information and information held by the IRS.
The bill prohibits the IRS from entering into any agreement that restricts its legal right to provide tax return preparation services or to provide tax return filing services.
The bill requires the IRS to establish and operate programs to (1) facilitate claims for the child care and the earned income tax credits, (2) provide software for the preparation and filing of individual income tax returns for taxable years beginning after 2022, (3) allow taxpayers to download third-party provided return information and IRS-held information to their tax returns, and (4) allow taxpayers to elect to have their tax returns prepared by the IRS.
The bill also requires verification of taxpayer identity and requires the IRS to conduct an outreach campaign to provide the public with information about this bill's programs and software.

To amend the Internal Revenue Code of 1986 to establish a free on-line 
tax preparation and filing service and programs that allow taxpayers to 
access third-party provided tax return information and information held 
                    by the Internal Revenue Service.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tax Filing Simplification Act of 
2022''.

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. 7531. GOVERNMENT-ASSISTED TAX-RETURN PREPARATION PROGRAMS.

    ``(a) Establishment of Programs.--The Secretary shall establish and 
operate the following programs:
            ``(1) Simplified tax benefits portal for non-filers.--Not 
        later than March 1, 2023, a program through which any eligible 
        taxpayer (as defined in subsection (b)(1)) can claim any credit 
        allowed under subpart C of part IV of subchapter A of chapter 1 
        (including the earned income tax credit under section 32 and 
        the portion of the child tax credit allowed under section 
        24(d)) for the taxable year without being required to report 
        any additional income data to the Internal Revenue Service.
            ``(2) Online tax preparation and filing software.--Not 
        later than January 31, 2024, software for the preparation and 
        filing of individual income tax returns for taxable years 
        beginning after 2022.
            ``(3) Taxpayer data access.--Not later than March 1, 2024, 
        a program under which taxpayers may download third-party 
        provided return information and IRS-held information relating 
        to individual income tax returns for taxable years beginning 
        after 2022.
            ``(4) Expedited tax filing.--Not later than March 1, 2024, 
        a program under which eligible individuals (as defined in 
        subsection (e)(1)) may elect to have income tax returns for 
        taxable years beginning after 2022 prepared by the Secretary.
    ``(b) Simplified Tax Benefits Portal for Non-Filers.--
            ``(1) Eligible taxpayer.--
                    ``(A) In general.--For purposes of subsection 
                (a)(1), the term `eligible taxpayer' means a taxpayer 
                who is not required to file a return of tax for the 
                taxable year.
                    ``(B) Expansion to include populations other than 
                non-filers.--At the discretion of the Secretary, with 
                respect to any taxable year beginning after 2023, the 
                term `eligible taxpayer' may include taxpayers who are 
                required to file a return of tax for the taxable year.
            ``(2) Requirements.--
                    ``(A) In general.--The program described in 
                subsection (a)(1) shall--
                            ``(i) request no information other than 
                        that which--
                                    ``(I) is strictly required for 
                                purposes of determining the amount of 
                                any credit described in subsection 
                                (a)(1), and
                                    ``(II) is not already contained in 
                                the records of the Internal Revenue 
                                Service or to which the Internal 
                                Revenue Service does not have access,
                            ``(ii) be user-tested,
                            ``(iii) use plain language and be made 
                        available in all languages for which 
                        translations are provided on the public website 
                        of the Internal Revenue Service,
                            ``(iv) be accessible on mobile devices,
                            ``(v) conform to all guidelines under 
                        section 508 of the Rehabilitation Act of 1973 
                        (29 U.S.C. 794d),
                            ``(vi) be available for use by taxpayers 
                        throughout the calendar year,
                            ``(vii) be displayed in a prominent 
                        position on the website of the Internal Revenue 
                        Service,
                            ``(viii) be advertised through direct 
                        mailings, and
                            ``(ix) provide real-time feedback to 
                        taxpayers using the program and, in the case of 
                        a claim for any credit described in subsection 
                        (a)(1) which is not allowed to the taxpayer, 
                        provide additional information to the taxpayer 
                        on subsequent actions with respect to such 
                        claim.
                    ``(B) Exception.--Subparagraph (A)(i) shall not 
                apply with respect to any information relating to 
                demographic characteristics which--
                            ``(i) is collected by the Internal Revenue 
                        Service for the purposes of improving equity, 
                        and
                            ``(ii) is not required to be submitted by 
                        the taxpayer for purposes of using the program 
                        described in subsection (a)(1).
            ``(3) Determination of credit amount.--
                    ``(A) In general.--For purposes of determining the 
                amount of any credit described in subsection (a)(1), 
                the Secretary shall determine such amount based on--
                            ``(i) any information which the taxpayer 
                        elects to provide through the program described 
                        in such subsection, and
                            ``(ii) any information available to the 
                        Internal Revenue Service at the time that the 
                        taxpayer is claiming such credit through the 
                        program described in such subsection.
                    ``(B) Subsequent third-party information.--In the 
                case of any third-party provided return information 
                which is received by the Secretary after any 
                determination made under subparagraph (A) with respect 
                to a taxpayer, if such information would have resulted 
                in an increase in the amount of any credit described in 
                subsection (a)(1) had it been included in the prior 
                determination made under such subparagraph, the 
                Secretary may make a payment to the taxpayer in an 
                amount equal to the difference between--
                            ``(i) the amount determined under 
                        subparagraph (A) with respect to such credit 
                        prior to receipt of such information, and
                            ``(ii) the amount that would have otherwise 
                        been determined under subparagraph (A) if such 
                        subparagraph had been applied subsequent to the 
                        receipt of such information.
    ``(c) Requirements for Online Tax Preparation and Filing 
Software.--The software described in subsection (a)(2) shall--
            ``(1) satisfy the requirements described in subsection 
        (b)(2), except that, for purposes of subparagraph (A)(i)(I) of 
        such subsection, such subparagraph shall be applied by 
        substituting `the preparation and filing of an individual 
        income tax return' for `determining the amount of any credit 
        described in subsection (a)(1)', and
            ``(2) be compatible with the program described in 
        subsection (a)(1) so as to permit a taxpayer to--
                    ``(A) submit any required information once for use 
                by both programs, and
                    ``(B) based on such information, be directed to the 
                appropriate program.
    ``(d) Requirements for Taxpayer Data Access Program.--Return 
information under the program established under subsection (a)(3) shall 
be made available--
            ``(1) for any calendar year beginning after December 31, 
        2024, not later than 15 days after the Secretary receives such 
        information, and
            ``(2) through a secure function that allows a taxpayer to 
        download such information from the website of the Internal 
        Revenue Service in both a printable document file and in a 
        computer-readable form suitable for use by automated tax 
        preparation software.
    ``(e) Expedited Tax Filing.--
            ``(1) Eligible individual.--For purposes of the program 
        established under subsection (a)(4)--
                    ``(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)(4),
                            ``(ii) does not claim any deduction allowed 
                        under section 62 for purposes of determining 
                        adjusted gross income,
                            ``(iii) claims the standard deduction under 
                        section 63,
                            ``(iv) does not file schedule C, and
                            ``(v) 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 
                2023.--With respect to any taxable year beginning in 
                2023, 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 
                2023.--
                            ``(i) In general.--At the discretion of the 
                        Secretary, with respect to any taxable year 
                        beginning after 2023, the term `eligible 
                        individual' may include populations of 
                        individuals who would not otherwise satisfy the 
                        requirements established under subparagraph 
                        (A).
                            ``(ii) Report.--Not later than August 31, 
                        2025, 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)(4).
            ``(2) Return must be filed by individual.--No return 
        prepared under the program established under subsection (a)(4) 
        shall be treated as filed before the date such return is 
        submitted by the taxpayer as provided under the rules of 
        section 6011.
            ``(3) Interaction with software.--Not later than March 1, 
        2024, the Secretary shall provide for interaction between the 
        software described in subsection (a)(2) and the program 
        established under subsection (a)(4) such that an individual may 
        elect to have their income tax return partially prepared by the 
        Secretary pursuant to such subsection (based on such 
        information as is available to the Secretary) and made 
        available through the software described in subsection (a)(2) 
        for the individual to complete and file.
    ``(f) Verification of Identity.--
            ``(1) In general.--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.
            ``(2) Accessibility.--For purposes of verifying the 
        identity of any individual seeking to participate in any 
        program described in subsection (a) or to access any 
        information under any such program, the Secretary shall ensure 
        that--
                    ``(A) any verification procedures are accessible to 
                a significant majority of taxpayers, and
                    ``(B) for any taxpayer who cannot access or use 
                such verification procedures, a secondary verification 
                procedure (or multiple secondary verification 
                procedures) that is accessible by such taxpayer, 
                including in-person verification procedures.
            ``(3) Online verification.--Not later than 3 years after 
        the date of enactment of this section, the Secretary shall 
        ensure that any verification procedures established under this 
        section are able to be used successfully by--
                    ``(A) 70 percent of households in the United 
                States, and
                    ``(B) 80 percent of taxpayers who are eligible to 
                claim the earned income tax credit under section 32.
            ``(4) Study and report.--Not later than 3 years after the 
        date of enactment of this section, and annually thereafter, the 
        Secretary shall conduct a study and make publicly available a 
        report on the verification pass rates by taxpayers under this 
        section, with such information to be disaggregated by income 
        levels and subpopulation groups, including disadvantaged 
        populations such as--
                    ``(A) individuals without access to desktop or 
                laptop computers,
                    ``(B) individuals without internet service at home,
                    ``(C) individuals without credit histories,
                    ``(D) individuals experiencing homelessness, and
                    ``(E) individuals with limited English proficiency.
    ``(g) Other Definitions.--For purposes of this section--
            ``(1) IRS-held information.--The term `IRS-held 
        information' means--
                    ``(A) any information relating to payments made to 
                a taxpayer with respect to any credit allowed under 
                subpart C of part IV of subchapter A of chapter 1, and
                    ``(B) any other information, as identified and 
                determined appropriate by the Secretary for the 
                purposes of this section, which--
                            ``(i) is contained in the records of the 
                        Internal Revenue Service or to which the 
                        Internal Revenue Service has access, and
                            ``(ii) is not third-party provided return 
                        information.
            ``(2) Third-party provided return information.--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--
                            ``(i) the program established under 
                        subsection (a)(2), and
                            ``(ii) any determination described in 
                        subsection (b)(3)(B).
    ``(h) Taxpayer Responsibility.--Nothing in this section shall be 
construed to absolve the taxpayer from full responsibility for the 
accuracy or completeness of their return of tax.
    ``(i) Prohibition on Fees.--No fee may be imposed on any taxpayer 
who participates in any program established under subsection (a).
    ``(j) Information Provided for Wage and Self-employment Income.--
For purposes of subsection (a)(3), in the case of information relating 
to wages paid for any calendar year after 2022 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 
the February 15 of the calendar year following the calendar year to 
which such wages and self-employment income relate.
    ``(k) Outreach Campaign.--
            ``(1) In general.--The Secretary, in coordination with 
        local community-based organizations, shall conduct an outreach 
        campaign to--
                    ``(A) provide information to the public regarding 
                the programs and software described in subsection (a), 
                and
                    ``(B) enroll individuals in the programs described 
                in such subsection.
            ``(2) Methods.--With respect to the outreach campaign 
        described in paragraph (1), the Secretary shall--
                    ``(A) provide relevant information on the public 
                website of the Internal Revenue Service, and
                    ``(B) send direct mailings to individuals who have 
                been identified as not having filed a return of tax for 
                the taxable year.
    ``(l) State Income Tax Returns.--Subject to any applicable 
requirements under section 6103, the Secretary shall establish 
intergovernmental cooperative agreements with State and local 
governments to exchange taxpayer return information which is provided, 
imputed, calculated, or used to make calculations under the programs 
described in subsection (a) for purposes of the administration of State 
and local tax laws and the preparation of State income tax returns.''.
    (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. 7531. 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 2022 through 2026.
    (f) Effective Date.--The amendments made by this section shall 
apply to returns for taxable years beginning after December 31, 2021.
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