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Law360 (March 31, 2020, 8:04 PM EDT ) Tax preparation companies that offer free tax-filing products to lower-income earners should assist nonfilers who will receive government rebates meant to cushion the novel coronavirus pandemic's economic fallout, House Ways and Means Chairman Richard Neal said Tuesday.
Companies such as Intuit and H&R Block that participate in the Free File Alliance — a government-mandated program — should assist nonfilers who will now need to file "simple tax returns" in order to receive their rebates, Neal, D-Mass., said in a letter to Tim Hugo, the executive director of Free File Inc.
"I believe that free tax preparation assistance can go a long way in easing the burden on nonfilers who may need to file a return and helping our country during this pandemic," he said.
Under the Coronavirus Aid, Relief and Economic Security Act, which President Donald Trump signed last week, the Internal Revenue Service will send $1,200 to individuals and $2,400 to couples filing joint tax returns. The payments will be reduced for those with incomes above $75,000, or $150,000 for couples, and they will be eliminated for those with incomes of more than $99,000, or $198,000 for couples.
The U.S. Department of the Treasury and the Internal Revenue Service will begin processing those payments within the next three weeks, the agencies said in a press release on Monday. While most individuals will not be required to submit any additional documentation to the government, as the agencies will rely upon previous filings, seniors and others who have not recently submitted returns will need to furnish "simple tax returns" to receive their rebates, the agencies said.
Because that can be a tall order for some nonfilers, companies participating in the Free File Alliance should provide assistance, Neal said.
"I am concerned that the preparation of this form and the filing process will be confusing for nonfilers, many of whom are unaccustomed to preparing yearly tax filings and have vision or cognitive challenges," he said.
The companies in the alliance should collaborate with the IRS to make a "simplified" return available and should provide assistance to nonfilers, Neal said.
The alliance offers free online tax preparation to the bottom 70% of income earners through private companies. The alliance's agreement with the IRS bars the agency from offering a competing service. Of the roughly 100 million individuals who qualify for the Free File option, only about 3% have actually used it, according to the IRS.
Tim Hugo, executive director of the Free File Alliance, told Law360 that the companies in the program "look forward to helping Americans quickly access these funds."
The group is "working on the details with the IRS and Chairman Neal on the simplest and quickest method to get funding to Americans," Hugo said.
The IRS could not immediately be reached for comment.
--Additional reporting by Stephen Cooper. Editing by Neil Cohen.
Update: This story has been updated to expand on a response to Neal's letter.
For a reprint of this article, please contact reprints@law360.com.
