FAIR PREP Act of 2025
FAIR PREP Act of 2025
Plain Language Summary
# FAIR PREP Act of 2025 Summary **What the Bill Would Do** The FAIR PREP Act would prohibit the IRS from preparing federal tax returns or refund claims for taxpayers. Specifically, it would shut down the IRS's Direct File program, which currently allows eligible taxpayers in 25 states to prepare and file their federal taxes for free through the IRS website. The bill defines "preparation" broadly to include completing any part of tax forms or schedules and filing them electronically or on paper. **Who It Affects and Key Provisions** This bill would primarily affect low- to moderate-income taxpayers who currently use or could benefit from the IRS's free Direct File program.
It would eliminate a government-provided alternative to private tax preparation companies. The bill does allow for some exceptions, though the text appears incomplete in the provided summary. The legislation reflects a debate about whether the government should offer free tax filing services or leave that function entirely to private tax preparation firms. **Current Status** The bill (HR 451) was introduced in the 119th Congress by Representative Adrian Smith (R-NE) and is currently in committee, meaning it has not yet been voted on by the full House of Representatives.
CRS Official Summary
Fostering Autonomy in Independent Returns by Prohibiting Redundant and Extralegal Programs Act of 2025 or the FAIR PREP Act of 2025This bill prohibits the Internal Revenue Service (IRS) from preparing federal tax returns or refund claims, with some exceptions. The bill specifically prohibits the preparation of federal income tax returns or refund claims through the IRS’s Direct File program. (The Direct File program currently allows qualified taxpayers in 25 participating states to prepare and electronically file free federal tax returns through a portal on the IRS’s website.)The bill defines prepare with respect to federal tax returns and refund claims as (1) the completion (in whole or in part) of any form or schedule for the purpose of calculating federal taxes or refunds, and (2) the filing (either electronically or on paper) of such federal tax returns or refund claims.However, under the bill, federal and state tax returns and refund claims may be prepared through the IRS’s Free File program (a program that allows certain taxpayers to prepare and file free federal and state income tax returns using third-party tax-preparation software) or the Volunteer Income Tax Assistance grant program (through which the IRS partners with local community organizations to help low-income and disabled individuals and persons with limited English proficiency prepare and file free federal and state income tax returns). Further, the Department of the Treasury may not award grants or enter into contracts or other transactions for the development or operation of an electronic tax preparation service.
Latest Action
Referred to the House Committee on Ways and Means.