Overview
Title
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.
ELI5 AI
The bill says that the people in charge of collecting taxes can't help people make or file their tax forms electronically unless there are special rules that say it's okay.
Summary AI
H.R. 451, also known as the "FAIR PREP Act of 2025," seeks to amend the Internal Revenue Code to stop the Secretary of the Treasury from preparing tax returns or claims for refunds, except in certain specific cases. The bill prohibits the Secretary from operating electronic tax filing services like "Direct File," though it allows exceptions for programs like IRS Free File and qualified return preparation programs. It also restricts the Treasury from spending funds on new electronic tax preparation services unless specifically permitted by Congress. This measure is aimed at ensuring the Treasury doesn't bypass legislative guidelines in providing tax preparation services.
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AnalysisAI
General Summary of the Bill
The proposed legislation, known as the "Fostering Autonomy in Independent Returns by Prohibiting Redundant and Extralegal Programs Act of 2025" or the FAIR PREP Act of 2025, aims to amend the Internal Revenue Code of 1986 to limit the role of the Secretary of the Treasury in preparing tax returns. It specifically bars the Secretary from preparing tax returns and claims for refunds, except through certain established programs such as the IRS Free File Program. Additionally, the bill restricts the expenditure of funds by the Treasury for developing or operating electronic tax preparation services unless legally authorized.
Summary of Significant Issues
There are several challenges and issues presented by this bill. Firstly, the prohibition on tax return preparation by the Secretary as outlined might remove a potentially useful service for taxpayers, limiting available options and potentially increasing costs. Furthermore, restricting funding for these services could hinder necessary updates, impacting the efficiency and accessibility of tax filing options.
There is also ambiguity in the language surrounding what constitutes "qualified return preparation programs" and the extent to which these programs are exempt from the restrictions. Another vague aspect is the clause allowing exceptions "unless otherwise authorized by law," which could lead to inconsistent application. Additionally, the reference to future successor programs for electronic tax preparation could introduce vagueness in enforcement.
Impact on the Public
For the general public, particularly those who rely on free or government-provided tax preparation services, this bill could lead to decreased accessibility and increased complexity in filing taxes. The removal of options could mean that taxpayers have to resort to paid services, thereby increasing their financial burden. Moreover, the potential delay or limitation on improvements to current systems might result in less efficient service during tax season.
Impact on Specific Stakeholders
Specific stakeholders, including taxpayers who depend on free tax services, electronic tax preparation service providers, and the Treasury Department itself, may experience varied impacts.
For taxpayers, particularly those with lower incomes, the bill could be disadvantageous due to the narrowed scope of free services and potential increased costs if they must seek commercial preparation assistance. On the other hand, commercial tax preparation businesses might benefit from increased demand as government assistance options diminish.
For contractors currently operating electronic tax preparation services for the government, there is potential economic instability as existing contracts may be impacted, leading to uncertainty and potential service delivery disruptions.
Overall, the proposal seeks to ensure that tax preparation remains an independent civic duty while raising concerns about accessibility, clarity, and service continuity.
Issues
The prohibition of the Secretary of the Treasury from preparing any tax returns as outlined in Section 2(a)(1) might significantly impact the public, as it removes a tax preparation service option that could otherwise simplify filing for taxpayers, potentially leading to less accessible and more costly alternatives for tax preparation.
The limitation on expenditures for electronic tax preparation services in Section 3 might hinder necessary and prompt updates or improvements to these services, negatively affecting the efficiency and accessibility of tax filing options for the public and potentially causing disruptions to existing services.
The language in Section 2(a)(3) regarding 'qualified return preparation programs' and 'IRS Free File Partnership' could foster confusion among taxpayers and tax professionals due to its lack of clarity on the criteria for which programs are considered exempt, possibly leading to reliance on improper services.
The clause 'unless otherwise authorized by law' in Section 3 adds ambiguity and could lead to inconsistent application of the bill's limitations, as it is unclear what specific laws or authorizations might supersede these restrictions, raising concerns over legislative intent and implementation.
The definition of 'electronic tax preparation service' in Section 2(a)(4)(B) mentions future successor programs, which introduces vagueness and potential for arbitrary enforcement without clear guidelines and could result in confusion and legal challenges related to which services are covered.
Subsection (4)(A)(i) in Section 2 uses the broad term 'prepare', which may lead to misinterpretation or legal challenges, particularly in actions that involve providing assistance versus full preparation of tax returns, potentially creating conflicts over roles and responsibilities within tax preparation services.
The potential impact on existing contracts as outlined in Section 3 might create instability and economic repercussions for contractors currently operating electronic tax preparation services for the government, impacting service delivery and contractor relationships.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill states its official title, which is the “Fostering Autonomy in Independent Returns by Prohibiting Redundant and Extralegal Programs Act of 2025,” or simply the “FAIR PREP Act of 2025.”
2. Prohibition of certain return preparation Read Opens in new tab
Summary AI
The section amends the Internal Revenue Code to prohibit the Secretary of the Treasury from preparing tax returns or claims for refunds, with exceptions for specific programs like IRS Free File. It clarifies definitions related to tax preparation and states that the changes apply to returns filed after a certain date while maintaining the Secretary's authority to offer tax filing services.
3. Limitation on further expenditures circumventing congressional authority Read Opens in new tab
Summary AI
The section prohibits the Secretary of the Treasury or their delegates from spending money on electronic tax preparation services unless it receives specific legal authorization to do so after the law's enactment date.