# Plain Language Summary: FAIR PREP Act of 2025

The IRS currently offers a free tax filing service called "Direct File" that lets eligible taxpayers prepare and file their taxes directly through the government without paying a private tax company. This bill would shut down that program and prevent the IRS from offering any similar service in the future. Essentially, it says the IRS is no longer allowed to prepare tax returns or help people file them electronically—that job would be left entirely to private tax preparation companies like TurboTax, H&R Block, and others.

The bill does carve out a couple of exceptions. It still allows the IRS to work with nonprofit organizations that provide free tax preparation services to low-income people, and it preserves the existing "IRS Free File" program where private companies offer free filing to eligible taxpayers. The bill also allows the IRS to provide blank fillable forms with basic calculation features—you just can't have the government actually prepare your return for you. Additionally, the IRS can still fix math errors on returns you've already filed.

For most people, this means you'll need to either pay for tax software, hire a tax professional, or use a nonprofit service if you want help filing. The main impact falls on people who were using or could have used the Direct File program—typically lower to middle-income taxpayers with straightforward tax situations. The bill also prevents the IRS from spending any money developing new government tax filing services going forward, unless Congress specifically approves it. The changes take effect 30 days after the bill becomes law.

FAIR PREP Act of 2025

Smith, Adrian

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&nbsp;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&nbsp;income tax returns). Further, the Department of the Treasury may not award grants or enter into contracts&nbsp;or other transactions for the development or operation of an electronic tax preparation service.&nbsp;&nbsp;