By Chuck Flint, AIA CEO
Following the midterm elections, the balance of power in Washington has shifted. That change raises the risk of renewed efforts to expand IRS authority and roll back progress on agency accountability, and Congress has a narrow window during the lame-duck session to protect the progress already made before the new majority takes power in January.
Direct File was launched without congressional authorization and never justified its cost. In 2022, Congress gave the IRS $15 million to commission an independent study of whether a government-run filing system made sense, and the agency used that funding to build one anyway. In 2024, the IRS spent an average of $814 on each return filed through it, more than five times what most taxpayers pay for private options. The program also put the agency on both sides of the same return: the office that helps you fill out the form is the one that audits it and decides what you owe. Even so, proponents have made clear they would like to bring this costly, duplicative program back and write it into law permanently, reigniting concerns about taxpayer privacy and further IRS overreach.
An even greater threat than Direct File is the push to tax wealth and unrealized gains. In California, Proposition 40, which would impose a one-time tax on wealth above $1 billion, is trailing as votes continue to be counted, but one loss in California will not end the effort. Supporters see the federal level as the real prize, and proposals like Sen. Elizabeth Warren’s Ultra-Millionaire Tax Act are likely to resurface in the new Congress. In the coming weeks, AIA will release a white paper examining the impact of wealth taxes and the threat they pose to taxpayers.
These proposals would require the IRS to value assets and unrealized gains, exposing taxpayers to intrusive scrutiny, subjective valuations, and more opportunities for costly disputes with the agency. They would also give the IRS unprecedented authority over Americans’ personal finances and businesses, with consequences reaching well beyond the wealthy. History suggests thresholds that start high rarely stay there.
Rather than expanding the agency’s power, Congress should prioritize streamlining and depoliticizing it. The IRS’s history of overreach and politically charged treatment of taxpayers is a warning about what happens when government power outpaces accountability. Stronger oversight is needed to ensure the tax code is applied fairly, irrespective of political affiliation. Without these safeguards, the agency risks eroding the trust that our tax system, based on voluntary compliance, depends on.
To that end, lawmakers have an opportunity to advance a taxpayer-first agenda that restores accountability and confidence in the IRS. AIA's Presumption of Rights Agenda starts with a principle most Americans assume already exists: the government should have to prove its case. That means shifting the burden of proof back onto the IRS in Tax Court and arbitration proceedings, requiring the agency to cover taxpayers' legal and accounting fees when it loses disputes, and strengthening protections against unnecessary audits.
AIA will continue advocating for these reforms during the lame-duck session and into the new Congress. These are not partisan privileges. They are basic safeguards every American deserves, regardless of who controls Congress or the White House.