WASHINGTON, D.C. – Recently, U.S. Senator Shelley Moore Capito (R-W.Va.) joined a group of 10 Senate Republican colleagues—led by U.S. Senator Marsha Blackburn (R-Tenn.)—to introduce the Fostering Autonomy in Independent Returns by Prohibiting Redundant and Extralegal Programs (FAIR PREP) Act.

This legislation would terminate the Internal Revenue Service’s (IRS) unauthorized “Direct File” tax filing program. By further barring the agency from unlawfully preparing taxpayer returns without Congressional approval, the bill would establish crucial safeguards to prevent future attempts to sidestep Congress.

“Unfortunately, this program was a solution for a problem that doesn’t exist in a universe where free filing options are already available for millions of Americans. The IRS was not authorized to create this program, and the funds being used to prop it up should be redirected toward improvements for existing issues within the agency. By passing the FAIR PREP Act, we can reassert Congressional authority, demand accountability and oversight, and restore institutional integrity for the taxpayers of our nation,” Senator Capito said.

BACKGROUND:

  • In 2024, the Biden-Harris IRS launched the “Direct File” tax-preparation program without congressional authorization. Roughly 140,000 taxpayers utilized the new filing option – less than 1% of the estimated 19 million eligible taxpayers.
  • Last year, Attorneys General from 13 states, sent a letter to the U.S. Department of Treasury suggesting that the IRS’s unilateral decision to create the program was “unnecessary and unconstitutional.” Despite low utilization rates and objections from congressional Republicans, including Senator Capito, the IRS announced that it would make the program permanent.
  • The IRS estimates the program could cost up to $249 million annually, diverting resources from addressing longstanding agency shortfalls. Last month, a U.S. Government Accountability Office (GAO) report revealed the agency has already abandoned plans to hire additional staff and is reallocating hundreds of employees from its taxpayer-services account.

WHAT THE FAIR PREP ACT DOES:

Section 6020 of the Internal Revenue Code provides authority for the IRS to “prepare” or “execute” tax returns in limited, defined circumstances. This legislation would:

  • Add a new subsection to Section 6020 explicitly prohibiting the IRS from preparing tax returns in unauthorized instances, beginning 30 days after the bill’s enactment;
  • Name the Direct File program as an example of unlawful preparation; and
  • Bar the Treasury Department and IRS from circumventing the rule by contracting with or awarding grants to third parties to operate such a program, unless explicitly authorized by Congress.
  • Under this bill, longstanding programs and functions of the IRS would not be prevented, including the Volunteer Income Tax Assistance Program, Tax Counseling for the Elderly, the Free File partnership, fillable forms, and the correction of math errors. 

Companion legislation was introduced in the U.S. House of Representatives by U.S. Reps. Adrian Smith (R-Neb.) and Chuck Edwards (R-N.C.)

Full text of the bill can be found here. 

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