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Could the state expand free tax filing options?

What if everyone did it?

Perhaps a parent asked you that question after some questionable decision you’d made. But the query took on a more positive tone at Tuesday’s meeting of the House Taxes Committee.

What would happen if everyone was able to have assistance preparing their income tax returns for free? The answer? We don’t know right now.

HF3496, sponsored by Rep. Cheryl Youakim (DFL-Hopkins), would fund a Department of Revenue study on whether the state could provide a free electronic preparation and filing option. The bill would spark a survey of tax preparation software vendors, ideally yielding information that could shape a free filing program.

A Department of Revenue fiscal note says the cost to the General Fund would be $175,000 for fiscal year 2021. Assistant Revenue Commissioner Robert Doty said that total is consistent with similar state studies.

The bill was laid over for possible inclusion in a House omnibus tax bill. Its companion, SF3320, sponsored by Sen. Ann Rest (DFL-New Hope) awaits action by the Senate Taxes Committee.

Rep. Paul Marquart (DFL-Dilworth), the committee chair, said the committee has been striving to simplify the system for filers, including making taking the standard deduction a more appealing option. Marquart said 92 percent of tax filers now go that route.

In addition to speaking in favor of the bill, Doty put in a plug for free filing options currently available to taxpayers, and that they could be found by searching for “free file” on the Department of Revenue website.

“Over 60 percent of Minnesota taxpayers may qualify for free filing,” Doty said. “However, over 780,000 qualified Minnesotans didn’t use a (free) preparer and didn’t take advantage of free filing options last year.”

Rep. Lyndon Carlson Sr. (DFL-Crystal) asked if the department knows why such a large number of taxpayers don’t use available free filing programs. Doty believes the study would help determine that.

Doty also encouraged those who haven’t yet filed their taxes to do so electronically and choose direct deposit for possible refunds.

 


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