How Rep. John Lewis Quashed A Progressive Revolt Over A Controversial IRS Measure

A bill with widely backed reforms almost got snagged over a provision blocking the IRS from creating free electronic filing.

WASHINGTON ― For a brief moment on Capitol Hill Tuesday, a package of reforms to the Internal Revenue Service ― which had been gliding to easy bipartisan passage ― looked like it might suddenly be doomed. And then Rep. John Lewis (D-Ga.) showed up.

The legislation, aimed at modernizing the IRS through a host of changes, included language that would block the agency from creating a free electronic filing system.

That provision drew considerable ire from progressives after ProPublica published a story characterizing the language as a sop to the tax filing industry ― companies like Intuit and H&R Block.

An IRS version of TurboTax could be free ― and could make filing tax returns significantly easier. And the online reaction to the ProPublica story was swift and unforgiving. Dan Riffle, the legislative director for Rep. Alexandria Ocasio-Cortez (D-N.Y.), sarcastically congratulated the tax industry on its “successful acquisition” of House Ways and Means Committee Chairman Richard Neal (D-Mass.) and the chamber’s other Democratic leaders.

Former Rep. Beto O’Rourke of Texas, now seeking the 2020 Democratic presidential nomination, tweeted that the bill had been written by “special interests.”

And progressive Rep. Ro Khanna (D-Calif.) tweeted that he’d oppose the overall bill.

Except Khanna never really got his chance to vote no ― at least not in a way that counted. Because before a progressive backlash could ever really form, civil rights icon Lewis was squashing it.

Lewis, one of the authors of the sweeping IRS bill, worked quickly to tamp down the revolt. He met with two progressives who seemed ready to try to sink the legislation ― Ocasio-Cortez and Rep. Katie Hill (D-Calif.), both first elected last November. And he not only persuaded them to let the bill pass on a voice vote, he actually got them to speak in support of it.

“We talked, and explained the bill, and in the end, they supported it,” Lewis told HuffPost Wednesday.

“Sometimes you just have to talk to people,” he said.

Lewis said he told them that the Senate could work on the free-filing issue, though he stopped short of making a firm commitment on the matter.

“It’s going to be left up to the Senate to do it,” Lewis said. “We’re not going to dictate what to do or not to do.”

Lewis, in his conversations with Ocasio-Cortez and Hill, stressed aspects of the bill that Democrats like. It contains language preventing the IRS from referring debts from some lower-income taxpayers to debt collectors. And it includes provisions to improve IRS customer service, address identity theft and authorize grants for nonprofits to provide free tax-filing assistance to low-income people.

“Sometimes you just have to talk to people.”

- John Lewis

Lewis also told them that similar legislation had passed the House three times previously and with Senate Republicans finally onboard with the measure, this was the opportunity to get it signed into law.

Ocasio-Cortez said Wednesday that Lewis took seriously the concerns she and Hill raised, and she anticipates working with him on separate legislation addressing the electronic filing issue.

She and Hill “are certainly planning to draft that legislation,” Ocasio-Cortez told HuffPost.

Floor speeches by the two new lawmakers made clear that, while they were supporting the legislation, they took issue with the electronic tax-filing provisions.

“Long-term, we should be looking at a solution where everyday people do not necessarily have to spend hours every year preparing tax returns when the majority of Americans have relatively simple and straightforward returns,” Ocasio-Cortez said in her speech.

Hill noted some of the bill’s positives before calling out the language prohibiting the IRS from making available electronic tax filing software of its own.

“In this freshman class, I and many of my colleagues were sent to reject corporate influence and stand up for people,” Hill said. “This puts us in a difficult spot.”

But she added that “the rest of this bill is too important” to try to block its passage over the electronic filing issue.

Another freshman, Rep. Katie Porter (D-Calif.), said she is planning to work with her colleagues on that legislation.

“This is not a done deal,” she said of the dispute over electronic filing.

The bill the House passed codifies what had previously been an arrangement between the IRS and a group of tax preparation companies called the Free File Alliance. While the current “memorandum of understanding” between the IRS and the Free File Alliance says the agency could terminate the arrangement that keeps it from developing a free electronic filing service, consumer advocates say the bill’s text in effect would make the deal permanent.

Lewis said he hoped the Senate might fix the offending provision, but that seems unlikely.

Sen. Ron Wyden (D-Ore.), who cosponsored the Senate version of the bill with Sen. Chuck Grassley (R-Iowa), said Tuesday that his staff had “pushed back” against the free file provision. But on Wednesday, Wyden seemed to recant, saying that IRS counsel had explained to him that the IRS can actually terminate its agreement with the Free File Alliance. But he hasn’t provided details yet.

Mandi Matlock, a tax attorney who does contract work for the National Consumer Law Center, said the bill’s text clearly would override any memorandum that the IRS might cancel or renegotiate, meaning she believes the IRS would be permanently barred from creating its own electronic filing program.

“We stand by our interpretation,” Matlock said.

CORRECTION: A previous version of this story misstated Ocasio-Cortez’s party affiliation as Republican.