Since the mid-1990s, members of Congress, especially Republicans, have been pressing the Internal Revenue Service to do more electronically -- and the agency has been striving mightily to comply.
Now it turns out that the IRS is doing too much to suit some GOP lawmakers.
Last week, eight House Republicans wrote Mitchell E. Daniels Jr., director of the Office of Management and Budget, complaining that something called the "EZ Tax Filing project" violates OMB's Circular A-76, a 1983 directive that governs government policy when it performs services that might be done by the private sector. The letter cites what it called the circular's "basic tenets," that the government should not compete with private enterprise.
Leading this charge is Rep. Randy "Duke" Cunningham (R-Calif.), whose district is home to Intuit Inc., maker of Quicken TurboTax tax preparation software.
Cunningham is a strong supporter of most IRS efforts to increase electronic filing and other online assistance to taxpayers, his spokeswoman Harmony Allen said. "But as far as getting involved in tax preparation software, we want to leave that to the private sector," she said.
"It's not really a point of contention" at the moment, she said, and the letter is meant merely to put OMB and IRS on notice of congressional concerns.
"As you know, income tax preparation software and interactive online preparation is well-established non-governmental commercial activity," said the Republicans' letter. "We see no compelling reason for the federal government to compete in this field." The letter was also signed by GOP Reps. Christopher Cox (Calif.), John T. Doolittle (Calif.), Robert L. Ehrlich Jr. (Md.), Mark Foley (Fla.), Robert W. Goodlatte (Va.), Darrell Issa (Calif.) and Gerald C. Weller (Ill.).
Daniels in late October announced a new "e-government plan" to "accelerate federal government improvements in effectiveness, efficiency and customer service."
The plan involves 23 e-government initiatives spread across at least 30 agencies. It covers areas ranging from government asset sales, disaster assistance and grant eligibility to training and recruitment. One initiative involves streamlining wage and tax reporting by businesses. Another is EZ Tax Filing.
Terry Lutes, director for the IRS Electronic Tax Administration, said the EZ project is a wide-ranging look at "additional ways for taxpayers to interact with the IRS" electronically. It will consider everything from easier filing to having the IRS collect documents, such as W-2s and 1099s (wage and income forms), and provide them to taxpayers, instead of having employers and other payors send them to taxpayers separately.
Online tax preparation will be in the mix, he said, but "we will lay out all the issues, including private-sector concerns. That will be part of the analysis we lay out for the administration."
In fact, the IRS has been doing a form of tax preparation via push-button telephone for many years. With the agency's TeleFile system, taxpayers with simple returns can call in, key in their W-2 wages and other data, and the IRS will compute their tax along with any refund or balance due.
People have asked, "Why couldn't you just migrate that same application to [the] Internet," Lutes said.
Scott Gulbransen, a spokesman for Intuit, said the company is a strong advocate of increased electronic filing but agrees with the lawmakers that "responsibility for [return] preparation lies with the taxpayer."
OMB officials said yesterday the agency had not yet received the letter, which was dated Nov. 28 and, apparently, not sent electronically.