Two lawmakers are leading an effort to expand a direct tax-filing system in the state and make it easier for New Yorkers to file their income taxes and streamline the process for families eligible to receive recently expanded tax credits.
Sen. Andrew Gounardes and Assemblyman Alex Bores sent a letter to state Department of Taxation and Finance acting director Amanda Hiller on Thursday on the heels of the news the IRS will test a new electronic free-file tax return system next year.
They say it's an opportunity for the state department to collaborate with the federal agency to create such a system in New York.
"As lawmakers, we are constantly looking for ways to create a fairer and more accessible tax code," they wrote. "...Free, direct tax filing is an idea whose time has come."
State agencies' budget requests are due Oct. 11.
They argue other countries and U.S. states, like California, have had such a direct system in place to file residents' taxes for several years, and would reduce the amount of the state's unclaimed tax refunds each year.
"There is no reason why any eventual state direct file system, either on its own or as part of the IRS program, cannot do the same," according to the letter.
Americans relinquish a median $900 in unclaimed tax refunds each year. Lawmakers argue it's imperative to address that gap as the state and federal governments expand tax credits to help low- and middle-income families and ensure those eligible receive the targeted assistance. The 2023-24 budget expanded the state's child tax credit to include families with children 3 years old and under, estimated to include 630,000 more New York children.
"A direct file system, run by a trusted state agency that already has requisite filer information, can ensure that tax benefits reach those who need them most while saving taxpayers time and money," lawmakers wrote.
Sen. Gounardes says he'll focus next session to get his legislation to create a Working Families Tax credit be included in the next budget. If created, the new tax credit would give families between $500 to $1,500 per child.
"Adding New York state to the IRS's Free File Alliance will allow New Yorkers to utilize a free, direct tax filing program and provide them with free tools from the IRS to more easily file their taxes," Gounardes said in a statement Friday. "Filing taxes is a necessary requirement for families to claim our expanded Empire State Child Tax credit, and we must do all that we can to make that process as easy and accessible as possible for working families throughout the state."