Tax Filing Simplification Act of 2022

Bill: 117-s-4508
Sponsor: full_name: Sen. Warren, Elizabeth [D-MA]
Introduced: 2022-07-12
Policy area: Taxation
Latest action: action_date: 2022-07-12
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2022-07-12
action_desc: Introduced in Senate
text: <p><strong>Tax Filing Simplification Act of 2022</strong></p> <p>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. </p> <p>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. </p> <p>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.</p> <p>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.</p>

tv_txt: II 117th CONGRESS 2d Session S. 4508 IN THE SENATE OF THE UNITED STATES July 12, 2022 Ms. Warren (for herself, Mrs. Shaheen , Mr. Whitehouse , Ms. Baldwin , Mr. Sanders , Mr. Blumenthal , Mr. Markey , Ms. Duckworth , Ms. Hassan , Mr. Merkley , Mr. Booker , Mr. Leahy , Mr. Padilla , Mrs. Feinstein , Mrs. Gillibrand , Mr. Schatz , Mr. Kaine , Ms. Smith , Ms. Klobuchar , Mr. Casey , Ms. Stabenow , Mr. King , and Ms. Hirono ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL 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.

1. Short title This Act may be cited as the Tax Filing Simplification Act of 2022 . 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. 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: 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.