The FAIR PREP Act of 2025 prohibits the IRS from creating its own free, direct e-file tax return system, ensuring taxpayers continue using existing qualified programs and the IRS Free File Program. It also restricts the Treasury Secretary from funding or developing new electronic tax preparation services without explicit congressional approval.
Marsha Blackburn
Senator
TN
The FAIR PREP Act of 2025 prohibits the IRS from preparing tax returns or offering free direct e-file tax return systems, with exceptions for existing programs like the IRS Free File Program. It restricts the Treasury Secretary from funding or developing electronic tax preparation services without explicit congressional authorization. This act aims to limit the IRS's role in tax preparation, ensuring reliance on existing programs and preventing unauthorized expansion into new services. The changes apply to returns filed more than 30 days after the law is enacted.
FAIR PREP Act: IRS Banned from Offering Free E-Filing, Starting 30 Days Post-Enactment
The FAIR PREP Act of 2025 basically blocks the IRS from creating its own free, online tax filing system. Instead, the bill pushes people toward existing options like the IRS Free File Program and other "qualified" tax prep services. This goes into effect 30 days after it's signed into law.
No Free Filing, No New Services?
The core of the FAIR PREP Act is a double whammy: it not only stops the IRS from offering a free direct e-file system (Section 2), but it also ties the Treasury Secretary's hands (Section 3). The Treasury can't spend any money on developing or running any new electronic tax prep service unless Congress specifically says so in a future law. That means unless there is new legislation, the IRS is stuck with what it has now. For example, if you were hoping for a government-run, user-friendly alternative to commercial tax software, this bill effectively kills that idea, at least for the foreseeable future.
Real-World Rollout
Imagine you're a freelance graphic designer or a gig worker who usually relies on free tax software. Under this law, you're steered toward existing private sector options, including the IRS Free File Program, which is a partnership with private companies. The catch? Not everyone qualifies for Free File (it often has income limits), and navigating the different private providers can be confusing. The bill also allows "qualified return preparation programs," but it's not immediately clear how those will be defined or if they'll offer truly free options for everyone. It's like being told you can only eat at certain restaurants, even if they don't all fit your budget or dietary needs. Section 2 of the bill clarifies that "prepare" means actually filling out and filing your forms, so basic fillable forms with calculators are still okay. But a full-service, free, IRS-run system? Forget about it.
The Bigger Picture and Potential Challenges
This bill seems to lock in the current system, where private tax prep companies play a major role. While the bill's supporters might argue it prevents government overreach, it also raises concerns about access and cost. If you're a lower-income taxpayer or someone with a simple tax situation, you might have fewer free options. And while the IRS Free File Program exists, it's not always the easiest to use or find. The bill also prevents future improvements. What if a better, cheaper, more user-friendly system could be developed by the IRS? This law makes that nearly impossible without another act of Congress. It's like saying we should stick with landlines because cell phones might be a bad idea – without ever trying to make a good cell phone.