Reschenthaler backs bill that would keep consumers paying for tax preparation software

The Internal Revenue Service and U.S. Department of the Treasury announced in May that after a successful pilot program, it would offer a permanent free electronic tax filing system called Direct File and invited all states to join. This program was made possible by the 2022 Inflation Reduction Act.

A group of congressional Republicans, including one from Pennsylvania, filed a bill on July 23 to ban the service.

Americans spend an average of $270 and 13 hours each year on filing their taxes, according to an IRS survey. Direct File enables taxpayers to go online and file their tax returns directly with the agency for free, instead of having to pay a preparation company like H&R Block or buy tax preparation software like Intuit’s TurboTax. 

A national survey by David Binder Research of people who used Direct File during its 2024 pilot found 74% recommended it over other options. A GSA Touchpoint survey found 90% of participants rated their experience “above average” or “excellent.”

Pennsylvania Republican Rep. Guy Reschenthaler is an original co-sponsor. A spokesperson did not respond to a request for comment and he has not posted a statement explaining his rationale for backing the bill. 

According to an analysis by the progressive nonprofit Economic Security Project, Direct File will save Americans $11 billion annually on tax preparation and would allow lower-income families to access about $12 billion more in unclaimed tax credits. 

U.S. Treasury Secretary Janet Yellen announced on July 30 that Pennsylvania would offer the Direct File option starting in 2025.

It estimated that Pennsylvanians would benefit by $747 million annually by 2029, including paying $311 million less in filing fees.

But the plan imperils profits for tax preparation businesses, which have spent more than $90 million on lobbying efforts since 2003, according to OpenSecrets, and are now aggressively fighting against Direct File.

Just weeks before signing on as a co-sponsor, Reschenthaler received a $1,000 campaign contribution from H&R Block’s corporate political action committee.
He also received thousands of dollars in donations from the corporate PAC for Akin, Gump, Strauss, Hauer, & Feld LLP, a lobbying firm whose clients include Intuit.

“People love Direct File because it saves them time, money, and headaches when filing taxes,” Economic Security Project senior director of campaigns Anna Aurilio said in an email. “The only ones who benefit from blocking this public free tax filing option are the tax preparation companies who want to continue pocketing profits off a service that should be free and simple. We are excited to see new states expanding tax filing options for taxpayers. Congressional leaders should make things easier for taxpayers by supporting, not blocking, Direct File.”