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.
If enacted, the FAIR PREP Act could significantly alter the landscape of tax preparation in the United States. With the proposed amendments, the IRS would no longer be allowed to initiate or continue federal tax preparation programs that are seen as redundant or extralegal, mandating that taxpayers engage with independent service providers instead. This change is expected to promote individual responsibility in tax preparation while maintaining the integrity of the tax system. The effective date of these amendments is set to apply to returns filed after 30 days following the enactment of the Act.
House Bill 451, officially named the Fostering Autonomy in Independent Returns by Prohibiting Redundant and Extralegal Programs Act of 2025 (FAIR PREP Act), aims to amend the Internal Revenue Code of 1986 by prohibiting certain return preparation activities by the Secretary of the Treasury. The bill specifically restricts the Secretary from preparing tax returns or claims for tax refunds, effectively limiting the IRS's ability to operate electronic tax preparation services that would facilitate direct filing by taxpayers. This legislation seeks to ensure that taxpayers maintain autonomy in preparing their financial documents without the influence of government-operated systems.
One of the notable points of contention associated with HB 451 is its potential opposition to existing programs aimed at simplifying the tax filing process for American taxpayers. Critics may argue that inhibiting the IRS's ability to assist taxpayers through automated services could lead to confusion and discrepancies during tax season. Furthermore, the bill raises questions regarding access to tax preparation services, particularly among lower-income families who may struggle to afford professional assistance. This friction underscores the ongoing debate over the role of government in facilitating equitable tax compliance among diverse populations.