Tax Filing Simplification Act of 2019

II 116TH CONGRESS 1ST SESSION S. 1194 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. IN THE SENATE OF THE UNITED STATES APRIL 11, 2019 Ms. WARREN (for herself, Mrs. SHAHEEN, Mr. WHITEHOUSE, Ms. BALDWIN, Mr. SANDERS, Mr. UDALL, Mr. MARKEY, Ms. DUCKWORTH, Ms. HAS- SAN, Mr. MERKLEY, Mr. BOOKER, and Mr. BLUMENTHAL) 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 pro- vided tax return information. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Tax Filing Simplifica- 4 tion Act of 2019’’. 5 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1194.IS S1194 kjohnson on DSK79L0C42 with BILLS 2 •S 1194 IS SEC. 2. PROHIBITION ON AGREEMENTS RESTRICTING GOV- 1 ERNMENT TAX PREPARATION AND FILING 2 SERVICES. 3 The Secretary of the Treasury, or the Secretary’s del- 4 egate, may not enter into any agreement after the date 5 of the enactment of this Act which restricts the Sec- 6 retary’s legal right to provide tax return preparation serv- 7 ices or software or to provide tax return filing services. 8 SEC. 3. GOVERNMENT-ASSISTED TAX PREPARATION AND 9 FILING SERVICES. 10 (a) IN GENERAL.—Chapter 77 of the Internal Rev- 11 enue Code of 1986 is amended by adding at the end the 12 following new section: 13 ‘‘SEC. 7529. GOVERNMENT-ASSISTED TAX-RETURN PREPA- 14 RATION PROGRAMS. 15 ‘‘(a) ESTABLISHMENT OF PROGRAMS.—The Sec- 16 retary shall establish and operate the following programs: 17 ‘‘(1) ONLINE TAX PREPARATION AND FILING 18 SOFTWARE.—Not later than January 31, 2021, soft- 19 ware for the preparation and filing of individual in- 20 come tax returns for taxable years beginning after 21 2019. 22 ‘‘(2) TAXPAYER DATA ACCESS.—Not later than 23 March 1, 2021, a program under which taxpayers 24 may download third-party provided return informa- 25 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1194.IS S1194 kjohnson on DSK79L0C42 with BILLS 3 •S 1194 IS tion relating to individual income tax returns for 1 taxable years beginning after 2019. 2 ‘‘(3) TAX RETURN PREPARATION.—Not later 3 than March 1, 2021, a program under which eligible 4 individuals (as defined under subsection (c)(1)) may 5 elect to have income tax returns for taxable years 6 beginning after 2019 prepared by the Secretary. 7 ‘‘(b) REQUIREMENTS FOR TAXPAYER DATA ACCESS 8 PROGRAM.— 9 ‘‘(1) IN GENERAL.—Return information under 10 the program established under subsection (a)(2) 11 shall be made available— 12 ‘‘(A) not later than 15 days after the Sec- 13 retary receives such information, and 14 ‘‘(B) through a secure function that allows 15 a taxpayer to download such information from 16 the Secretary’s website in both a printable doc- 17 ument file and in a computer-readable form 18 suitable for use by automated tax preparation 19 software. 20 ‘‘(2) THIRD-PARTY PROVIDED RETURN INFOR- 21 MATION DEFINED.—For purposes of this section, the 22 term ‘third-party provided return information’ 23 means— 24 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1194.IS S1194 kjohnson on DSK79L0C42 with BILLS 4 •S 1194 IS ‘‘(A) information reported to the Secretary 1 through an information return (as defined in 2 section 6724(d)(1)), 3 ‘‘(B) information reported to the Secretary 4 pursuant to section 232 of the Social Security 5 Act, and 6 ‘‘(C) such other information reported to 7 the Secretary as is determined appropriate by 8 the Secretary for purposes of the program es- 9 tablished under subsection (a)(2). 10 ‘‘(c) TAX RETURN PREPARATION.— 11 ‘‘(1) ELIGIBLE INDIVIDUAL.—For purposes of 12 the program established under subsection (a)(3)— 13 ‘‘(A) IN GENERAL.—Except as provided in 14 subparagraphs (B) and (C), the term ‘eligible 15 individual’ means, with respect to any taxable 16 year, any individual who— 17 ‘‘(i) elects to participate in the pro- 18 gram established under subsection (a)(3), 19 ‘‘(ii) is an unmarried individual (other 20 than a surviving spouse (as defined in sec- 21 tion 2(a)) or the head of a household (as 22 defined in section 2(b))), 23 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1194.IS S1194 kjohnson on DSK79L0C42 with BILLS 5 •S 1194 IS ‘‘(iii) does not claim any deduction al- 1 lowed under section 62 for purposes of de- 2 termining adjusted gross income, 3 ‘‘(iv) claims the standard deduction 4 under section 63, 5 ‘‘(v) does not file schedule C, and 6 ‘‘(vi) has no income other than income 7 from— 8 ‘‘(I) wages (as defined in section 9 3401), 10 ‘‘(II) interest, or 11 ‘‘(III) dividends. 12 ‘‘(B) LIMITATION ON ELIGIBILITY FOR 13 TAX YEAR 2020.—With respect to any taxable 14 year beginning in 2020, the term ‘eligible indi- 15 vidual’ shall only include such populations of in- 16 dividuals described in subparagraph (A) as is 17 determined by the Secretary. 18 ‘‘(C) EXPANSION OF ELIGIBILITY AFTER 19 TAX YEAR 2020.— 20 ‘‘(i) IN GENERAL.—At the discretion 21 of the Secretary, with respect to any tax- 22 able year beginning after December 31, 23 2020, the term ‘eligible individual’ may in- 24 clude populations of individuals who would 25 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1194.IS S1194 kjohnson on DSK79L0C42 with BILLS 6 •S 1194 IS not otherwise satisfy the requirements es- 1 tablished under subparagraph (A), such as 2 married individuals, heads of households, 3 taxpayers who are eligible to claim the 4 earned income tax credit under section 32 5 and have dependents, taxpayers who are el- 6 igible to claim the child tax credit under 7 section 24, taxpayers who claim deductions 8 allowed under section 62 for purposes of 9 determining adjusted gross income, and 10 taxpayers with income from non-employee 11 compensation. 12 ‘‘(ii) REPORT.—Not later than August 13 31, 2022, the Secretary shall submit a re- 14 port to Congress that contains recommen- 15 dations for such legislative or administra- 16 tive actions as the Secretary determines 17 necessary with respect to expanding the 18 populations of individuals that may qualify 19 as eligible individuals for purposes of the 20 program established under subsection 21 (a)(3). 22 ‘‘(2) RETURN MUST BE FILED BY INDI- 23 VIDUAL.—No return prepared under the program es- 24 tablished under subsection (a)(3) shall be treated as 25 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1194.IS S1194 kjohnson on DSK79L0C42 with BILLS 7 •S 1194 IS filed before the date such return is submitted by the 1 taxpayer as provided under the rules of section 2 6011. 3 ‘‘(d) VERIFICATION OF IDENTITY.— 4 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 5 an individual shall not participate in any program 6 described in subsection (a) or access any information 7 under such a program unless such individual has 8 verified their identity to the satisfaction of the Sec- 9 retary. 10 ‘‘(2) PROHIBITION.— 11 ‘‘(A) IN GENERAL.—For purposes of 12 verifying the identity of any individual seeking 13 to participate in any program described in sub- 14 section (a) or to access any information under 15 such a program, the Secretary shall not employ 16 any knowledge-based verification procedures. 17 ‘‘(B) KNOWLEDGE-BASED VERIFICATION 18 PROCEDURE.—For purposes of this paragraph, 19 the term ‘knowledge-based verification proce- 20 dure’ means any procedure for verification of 21 the identity of an individual by means of asking 22 detailed and personal questions for which only 23 that individual is presumed to know the an- 24 swers, including any such procedures which are 25 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1194.IS S1194 kjohnson on DSK79L0C42 with BILLS 8 •S 1194 IS provided through service agreements with a 1 credit reporting agency. 2 ‘‘(e) TAXPAYER RESPONSIBILITY.—Nothing in this 3 section shall be construed to absolve the taxpayer from 4 full responsibility for the accuracy or completeness of his 5 return of tax. 6 ‘‘(f) PROHIBITION ON FEES.—No fee may be im- 7 posed on any taxpayer who participates in any program 8 established under subsection (a). 9 ‘‘(g) INFORMATION PROVIDED FOR WAGE AND SELF- 10 EMPLOYMENT INCOME.—For purposes of subsection 11 (a)(2), in the case of information relating to wages paid 12 for any calendar year after 2019 required to be provided 13 to the Commissioner of Social Security under section 14 205(c)(2)(A) of the Social Security Act (42 U.S.C. 15 405(c)(2)(A)), the Commissioner shall make such infor- 16 mation available to the Secretary not later than the Feb- 17 ruary 15 of the calendar year following the calendar year 18 to which such wages and self-employment income relate.’’. 19 (b) FILING DEADLINE FOR INFORMATION RE- 20 TURNS.—Section 6071(b) of such Code is amended to 21 read as follows: 22 ‘‘(b) INFORMATION RETURNS.—Returns made under 23 part III of this chapter shall be filed on or before January 24 31 of the year following the calendar year to which such 25 VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1194.IS S1194 kjohnson on DSK79L0C42 with BILLS 9 •S 1194 IS returns relate. Section 6081 shall not apply to returns 1 under such part III.’’. 2 (c) CONFORMING AMENDMENT TO SOCIAL SECURITY 3 ACT.—Section 205(c)(2)(A) of the Social Security Act (42 4 U.S.C. 405(c)(2)(A)) is amended by adding at the end the 5 following new sentence: ‘‘For purposes of the preceding 6 sentence, the Commissioner shall require that information 7 relating to wages paid be provided to the Secretary of the 8 Treasury not later than February 15 of the year following 9 the calendar year to which such wages and self-employ- 10 ment income relate.’’. 11 (d) CLERICAL AMENDMENT.—The table of sections 12 for chapter 77 of such Code is amended by adding at the 13 end the following new item: 14 ‘‘Sec. 7529. Government-assisted tax-return preparation programs.’’. (e) AUTHORIZATION OF APPROPRIATIONS.—There is 15 authorized to be appropriated to carry out the amend- 16 ments made by this section such sums as may be necessary 17 for each of fiscal years 2020 through 2024. 18 (f) EFFECTIVE DATE.—The amendments made by 19 this section shall apply to returns for taxable years begin- 20 ning after December 31, 2019. 21 Æ VerDate Sep 11 2014 03:54 Apr 20, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\S1194.IS S1194 kjohnson on DSK79L0C42 with BILLS