[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4508 Introduced in Senate (IS)]
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117th CONGRESS
2d Session
S. 4508
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.
_______________________________________________________________________
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.
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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