Bill Summary
The **Fostering Autonomy in Independent Returns by Prohibiting Redundant and Extralegal Programs Act of 2025** (FAIR PREP Act of 2025) aims to amend the Internal Revenue Code to restrict the Secretary of the Treasury from preparing tax returns and claims for refunds, thus promoting taxpayer autonomy and independent tax preparation.
Key provisions include:
1. **Prohibition of Return Preparation**: The Secretary of the Treasury is generally prohibited from preparing tax returns or claims for refunds, with specific exceptions for certain existing programs like the IRS Free File Program.
2. **Definition of Preparation**: The act defines what constitutes preparation, including the completion and filing of tax forms, and clarifies that merely providing fillable forms does not count as preparation.
3. **Effective Date**: The new regulations will apply to tax returns filed 30 days after the enactment of the legislation.
4. **Limitations on Expenditures**: It restricts the Secretary from entering into contracts for developing or operating electronic tax preparation services unless authorized by law, thereby limiting executive actions that could circumvent Congressional authority.
Overall, the legislation seeks to ensure that taxpayers independently manage their tax filings and reduces the government's role in the preparation of tax returns.
Possible Impacts
The "Fostering Autonomy in Independent Returns by Prohibiting Redundant and Extralegal Programs Act of 2025" (FAIR PREP Act of 2025) could affect people in several significant ways:
1. **Reduction of Government-Provided Tax Preparation Services**: By prohibiting the Secretary of the Treasury from preparing tax returns or claims for refunds, individuals who previously relied on government-operated tax preparation services may find themselves needing to seek out private tax preparers or software solutions. This could create added financial burdens for those who may not be able to afford professional tax preparation services, particularly low-income individuals and families.
2. **Encouragement of Independent Filing**: The Act aims to foster autonomy among taxpayers by limiting the government’s involvement in tax return preparation. This could encourage individuals to learn more about the tax filing process, potentially increasing financial literacy and the ability to navigate tax laws independently. However, it may also lead to increased confusion and errors for those unfamiliar with tax preparation, resulting in potential penalties or missed deductions.
3. **Impact on Electronic Filing Options**: The prohibition of certain electronic tax preparation services operated by the Secretary could limit access to user-friendly online filing options that many taxpayers have come to rely on. This could lead to decreased convenience for those who prefer or require digital submission of their tax returns, resulting in longer wait times and increased frustration during tax season. Additionally, the lack of free electronic filing options could disproportionately affect those with lower incomes, as they may not have the resources to access paid tax preparation services.
These effects highlight the potential shifts in taxpayer behavior and access to resources as a result of the legislation, which could have broader implications for tax compliance and financial well-being.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 96 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 96
To amend the Internal Revenue Code of 1986 to prohibit certain
activities constituting preparation of tax returns by the Secretary of
the Treasury, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 15, 2025
Mrs. Blackburn (for herself, Mr. Daines, Mr. Tillis, Mr. Barrasso, Mr.
Ricketts, Mr. Schmitt, Mr. Hagerty, Mr. Risch, Mrs. Capito, Mr.
Marshall, and Mr. Cramer) 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 prohibit certain
activities constituting preparation of tax returns by the Secretary of
the Treasury, and for other purposes.
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 ``Fostering Autonomy in Independent
Returns by Prohibiting Redundant and Extralegal Programs Act of 2025''
or the ``FAIR PREP Act of 2025''.
SEC. 2. PROHIBITION OF CERTAIN RETURN PREPARATION.
(a) In General.--Section 6020 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(c) Prohibited Preparation by Secretary.--
``(1) In general.--Except as provided in section 6014 and
subsections (a) and (b) of this section, the Secretary shall
not prepare any return of tax imposed by this title or any
claim for refund of tax imposed by this title.
``(2) Prohibition of direct file and comparable programs.--
For purposes of paragraph (1), any return or claim for refund
prepared using an electronic tax preparation service operated
by the Secretary shall be treated as if such return or claim
were prepared by the Secretary.
``(3) Qualified return preparation programs and irs free
file partnership.--Paragraph (2) shall not apply to any return
or claim for refund solely because such return or claim for
refund was prepared via, or with the assistance of--
``(A) a qualified return preparation program (as
defined in section 7526A(e)), or
``(B) the IRS Free File Program as established by
the Internal Revenue Service and published in the
Federal Register on November 4, 2002 (67 Fed. Reg.
67247), including any subsequent agreements and
governing rules established pursuant thereto.
``(4) Definitions.--For purposes of this subsection--
``(A) Tax return preparation.--
``(i) In general.--The term `prepare' with
respect to any return or claim for refund
means--
``(I) the completion of any form
and schedule needed to compute and
report any tax imposed by this title or
any claim for refund of such a tax, and
``(II) the filing of any such
return or claim for refund, regardless
of whether such return or claim is
submitted electronically or on paper.
For purposes of the preceding sentence, the
preparation of any portion of a return or claim
for refund shall be treated as if it were the
preparation of such return or claim for refund.
``(ii) Computation and correction of
errors, etc.--
``(I) In general.--Such term shall
not include any computation authorized
by section 6102 or any other
computation or correction of
mathematical or clerical errors
required or authorized by any provision
of chapter 63.
``(II) Fillable forms.--Such term
shall not include the provision of
fillable forms by the Secretary merely
because such forms include an automated
calculation feature.
``(B) Electronic tax preparation service.--The term
`electronic tax preparation service operated by the
Secretary' means the free direct e-file tax return
system as established by the Internal Revenue Service
and published in the Federal Register on December 15,
2023 (88 Fed. Reg. 87057), and September 5, 2024 (89
Fed. Reg. 72699), and any successor program of the
Internal Revenue Service which provides an electronic
tax preparation service option.''.
(b) Effective Date.--The amendment made by this section shall apply
to returns filed after the date which is 30 days after the date of the
enactment of this Act.
(c) No Inference.--The amendment made by this section shall not be
construed to create any inference with respect to the authority of the
Secretary of the Treasury (or any delegate of such Secretary) to
develop and offer for use any electronic tax filing or tax preparation
service option, or otherwise engage in the preparation of any return of
tax or any claim for refund of tax imposed by the Internal Revenue Code
of 1986, with respect to any taxable year beginning on or before the
date of the enactment of this Act.
SEC. 3. LIMITATION ON FURTHER EXPENDITURES CIRCUMVENTING CONGRESSIONAL
AUTHORITY.
The Secretary of the Treasury (or any delegate of such Secretary)
may not award or make payment of grants or enter into or maintain any
contract, other transaction, or reimbursable agreement for the
development or operation of an electronic tax preparation service
option after the date of the enactment of this Act unless otherwise
authorized by law.
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