[Congressional Record Volume 153, Number 55 (Thursday, March 29, 2007)]
[Senate]
[Pages S4212-S4213]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. AKAKA (for himself and Mr. Bingaman):
  S. 1074. A bill to provide for direct access to electronic tax return 
filing, and for other purposes; to the Committee on Finance.
  Mr. AKAKA. Mr. President, I am delighted to reintroduce the Free 
Internet Filing Act as the tax filing deadline approaches. The bill 
requires the Internal Revenue Service (IRS) to provide universal access 
to individual taxpayers filing their tax returns directly through the 
IRS Web site. I thank Senator Bingaman for cosponsoring this bill and 
working with me on taxpayer rights issues.
  It is frustrating that individual taxpayers completing their own 
returns are still not able to electronically file directly with the 
IRS. Taxpayers are dependent on commercial preparers to electronically 
file their taxes. If taxpayers take the time necessary to prepare their 
returns by themselves, they must be given the option of electronically 
filing directly with the IRS. My legislation would make this direct 
filing possible.
  The current system, the Free File Alliance, provides only a select 
group of taxpayers with the ability to file electronically for free 
using third party intermediaries. The current Free File Alliance 
agreement is a failure because it leaves out too many taxpayers. 
Taxpayers that make more than $52,000 are not eligible.
  Taxpayers should not have the additional worry associated with 
sharing their private financial information with a tax preparation 
company. In an era when there have been so many electronic breaches of 
financial information, taxpayers should not be forced to hand over 
their private information if they want to electronically file their 
return with the IRS. Taxpayers should not lose out on the benefits of 
electronic filing simply because they are worried about sending their 
data to third parties.
  IRS Commissioner Mark Everson has stated, ``E-file is the fastest, 
safest, and most accurate way to file a tax return. People will get 
their returns faster through E-file. E-file greatly reduces the chances 
for making an error compared to filing a paper 1040.'' I simply want to 
provide every individual taxpayer the ability to electronically file 
their taxes at no cost and without having to use a commercial tax 
preparer.
  My legislation will lead to an increase in the number of 
electronically filed returns. Approximately 45 million returns prepared 
using software are mailed in rather than electronically filed. With 
universal access to free e-file, this number could be substantially 
reduced. Electronic filing helps taxpayers receive their refunds faster 
than mailing in paper returns.
  My legislation would also reduce errors and IRS administrative costs. 
According to Mr. Bert Dumars, the Director of the IRS Electronic Tax 
Administration, it costs 55 to 75 cents to process an electronic return 
while it costs

[[Page S4213]]

about two dollars to process a paper return. In addition, the error 
rate for electronic returns is one percent while the error rate for 
paper returns is 20 percent.
  We have an obligation to make free electronic filing available to all 
individual taxpayers. Electronic filing benefits both taxpayers and the 
IRS. I have appreciated the attention paid to this issue by Senator 
Baucus and Senator Grassley. I will continue to work with my colleagues 
to enact the Free Internet Filing Act.
  I ask unanimous consent that the text of the bill be printed in the 
Record. I also ask unanimous consent that a letter of support from the 
Hawaii Alliance for Community-Based Economic Development be included in 
the Record. Finally, I ask unanimous consent that a letter of support 
from the National Consumer Law Center, Consumer Federation of America, 
U.S. Public Interest Research Group, California Reinvestment Coalition, 
Center for Economic Progress, Consumer Action, and the Neighborhood 
Economic Development Advocacy Project, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1074

       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 ``Free Internet Filing Act''.

     SEC. 2. DIRECT ACCESS TO E-FILE FEDERAL INCOME TAX RETURNS.

       (a) In General.--The Secretary of the Treasury shall 
     provide individual taxpayers with the ability to 
     electronically file their Federal income tax returns through 
     the Internal Revenue Service website without the use of an 
     intermediary or with the use of an intermediary which is 
     contracted by the Internal Revenue Service to provide free 
     universal access for such filing (hereafter in this section 
     referred to as the ``direct e-file program'') for taxable 
     years beginning after the date which is not later than 3 
     years after the date of the enactment of this Act.
       (b) Development and Operation of Program.--In providing for 
     the development and operation of the direct e-file program, 
     the Secretary of the Treasury shall--
       (1) consult with nonprofit organizations representing the 
     interests of taxpayers as well as other private and nonprofit 
     organizations and Federal, State, and local agencies as 
     determined appropriate by the Secretary,
       (2) promulgate such regulations as necessary to administer 
     such program, and
       (3) conduct a public information and consumer education 
     campaign to encourage taxpayers to use the direct e-file 
     program.
       (c) Authorization of Appropriations.--There is authorized 
     to be appropriated such sums as are necessary to carry out 
     the direct e-file program. Any sums so appropriated shall 
     remain available until expended.
       (d) Reports to Congress.--
       (1) Report on implementation.--The Secretary of the 
     Treasury shall report to the Committee on Finance of the 
     Senate and the Committee on Ways and Means of the House of 
     Representatives every 6 months regarding the status of the 
     implementation of the direct e-file program.
       (2) Report on usage.--The Secretary of the Treasury, in 
     consultation with the National Taxpayer Advocate, shall 
     report to the Committee on Finance of the Senate and the 
     Committee on Ways and Means of the House of Representatives 
     annually on taxpayer usage of the direct e-file program.
                                  ____

                                                   March 28, 2007.
     Hon. Daniel K. Akaka,
     U.S. Senate,
     Washington, DC.
       Dear Senator Akaka: The National Consumer Law Center (on 
     behalf of its low-income clients), Consumer Federation of 
     America, Consumer Action, U.S. Public Interest Research 
     Group, California Reinvestment Coalition, Center for Economic 
     Progress, and the Neighborhood Economic Development Advocacy 
     Project write to support your bill entitled the ``Free 
     Internet Filing Act.'' Consumer groups have long advocated 
     for what the Free Internet Filing Act would provide--the 
     ability of taxpayers to electronically file their returns 
     without the need for a third party intermediary.
       Enabling taxpayers to file electronically directly with the 
     Internal Revenue Service will benefit taxpayers tremendously. 
     It will save taxpayers the fees charged by some commercial 
     preparers for electronic filing. Unlike the current Free File 
     program established by the IRS, the Free Internet Filing Act 
     will provide taxpayers with free electronic filing without 
     the potential of being subject to cross-marketing pitches for 
     financial products which may not be in their best interests. 
     While the marketing pitches for refund anticipation loans and 
     other ancillary products were dropped this year from the Free 
     File program, such a limitation is not enshrined in law or 
     regulation.
       The Free Internet Filing Act will also help taxpayers to 
     keep their information private. By allowing free direct 
     electronic filing with the IRS, taxpayers will have the 
     ability to bypass commercial preparers that might exploit or 
     share their personal, confidential tax information for non-
     tax purposes.
       We believe the IRS should have been required a long time 
     ago to establish free direct electronic filing. For many 
     years, Americans have been able to apply for federal student 
     financial aid on www.fafsa.ed.gov and Social Security 
     retirement benefits at www.ssa.gov. A free direct electronic 
     filing program at www.irs.gov is long overdue.
       If you have any questions about this letter, please contact 
     Chi Chi Wu. Thank you again for all your efforts to protect 
     taxpayer rights.
           Sincerely,
         Chi Chi Wu, Staff Attorney, National Consumer Law Center; 
           Jean Ann Fox, Director of Consumer Protection, Consumer 
           Federation of America; David Marzahl, Executive 
           Director, Center for Economic Progress; Ed Mierzwinski, 
           Consumer Program Director, U.S. Public Interest 
           Research Group (U.S. PIRG); Linda Sherry, Director, 
           National Priorities, Consumer Action; Rhea L. Serna, 
           Policy Advocate, California Reinvestment Coalition; 
           Chris Keeley, Campaigns Organizer, Neighborhood 
           Economic Development Advocacy Project (NEDAP).
                                  ____

         Hawai'i Alliance for Community-Based Economic 
           Development,
                                     Honolulu, HI, March 22, 2007.
     Hon. Daniel K. Akaka,
     U.S. Senate,
     Washington, DC.
       Dear Senator Akaka: The Hawai'i Alliance for Community 
     Based Economic Development (HACBED) is writing in support of 
     the ``Free Internet Filing Act.''
       HACBED is a statewide 501(c)3 organization established in 
     1992 to help maximize the impact of community-based economic 
     development organizations (CBEDOs). We pursue our mission by 
     helping CBEDOs to increase community control of their assets 
     and means of production. We accomplish this in many ways--by 
     providing technical support to help CBEDOs deal with 
     organizational issues; by networking on a local and national 
     basis for funding and financing for community-based efforts; 
     and, by advocating for communities to play a more active role 
     in the political process in order to effect systemic change. 
     To this end, HACBED has been facilitating statewide 
     conversations to develop a comprehensive asset policy agenda. 
     Core to this agenda is the recognition of the importance of 
     creating policies that assist individuals, families and the 
     broader community to build wealth.
       Tax season is an essential time for low income families to 
     take advantage of their tax related benefits, including the 
     earned income tax credit. Electronic filing of taxes is a 
     quicker, more efficient way to process a tax return. In many 
     cases, working families must pay a professional tax preparer 
     to prepare their return and file electronically. By providing 
     free universal access to electronic filing these low-income 
     working families would be able to keep more of their hard-
     earned dollars in their pocket.
       HACBED fully supports this bill and we look forward to 
     working with you in the future to insure free and low cost 
     tax-related services for low-income families.
           Sincerely,
                                                 Brent Dillabaugh,
                                                  Deputy Director.
                                 ______