President Biden’s Deputy Treasury Secretary instructed the IRS to begin a pilot program for a government-run tax preparation service, exactly one day after it was reported the IRS had exceeded its authority from Congress and secretly completed a prototype system.
On Tuesday, Deputy Treasury Secretary Wally Adeyemo released a letter instructing the IRS to “pilot a Direct File option in the 2024 filing season.” Notably, the letter was released after the Washington Post reported Monday that the IRS had already “quietly built its own prototype system.”
This post hoc request from the Treasury Department is a pathetic attempt to provide cover for the IRS after it was caught exceeding its authority by developing government software to directly compete with private companies in the tax preparation industry.
Democrats included $15 million in the Inflation Reduction Act passed last August for the IRS to conduct a report of the cost, feasibility and public trust of an IRS-run “direct file” tax system. The legislation did not provide the IRS with the funding or authority to create a pilot program. Both the Treasury Department and the IRS are exceeding their ability from Congress by using taxpayer funds to build software for an IRS-run tax preparation service.
The Treasury Department’s request for the IRS to take the first step in creating a government-run tax preparation service would be a sweeping expansion of the IRS’s powers in which the agency would become tax preparer, filer, and auditor.
The letter from Treasury reveals a predetermined outcome and contradicts multiple promises and statements made by IRS Commissioner Danny Werfel to Congress and the American people.
IRS Commissioner Daniel Werfel repeatedly asserted that the IRS was simply doing a feasibility study as authorized by the Inflation Reduction Act. The IRS contracted the New America Foundation, a progressive leaning think tank already publicly advocating for a direct file system, to conduct the feasibility study.
As the Washington Post reported, “IRS Commissioner Daniel Werfel had previously told lawmakers that the IRS would consult Congress after the think tank made its recommendation and had not yet determined whether to pursue its own software program.”
For example, on April 19th, Werfel testified before the the Senate Finance Committee that “no decision has been made on moving forward with direct file solution.”
It is now clear from reporting and the Treasury Department letter that Werfel mislead Congress as the IRS built a direct file prototype without consulting Congress or even waiting for the results of the study.
Below is the full content of the letter sent by Deputy Treasury Secretary Wally Adeyemo: