By Brant Goldwyn, Washington Staff Writer
Well it's that time of year again--time to sit down, crunch the numbers and figure out just how big of a bite Uncle Sam wants from your annual income. And to add insult to injury, you also may have to pay someone for this privilege--unless you check in with the IRS first.
The Internal Revenue Service has announced the opening of its fifth season of the agency's free (yes, FREE) electronic filing program. Under the Free File program, taxpayers can obtain free preparation and electronic filing of their tax return.
According to Bert DuMars, the IRS head of electronic filing, the IRS provides the Free File program in conjunction with 17 different private-sector tax preparation software firms. Another three companies also my be joining the Free File Alliance, DuMars indicated.
The Free File program is available to taxpayers with adjusted gross
income of $32,000 or less. The program hopes to provide these free services to 70 percent of the nation's taxpayers, a potential total of 95 million filers.
Several new changes and features have been added to the Free File program:
- Participants using Free File will no longer be offered Refund
Anticipation Loans (RALs) or other ancillary products--"Free is free," DuMars
stated.
- Taxpayers can use Free File to claim the Telephone Excise Tax
Refund
- Enhanced access is provided to companies offering Free File in
Spanish
- Some companies will offer free preparation and filing of state
returns as well
How To Use the Service
Taxpayers can access Free File on the IRS website (www.IRS.gov) and choose from a list of vendors, or use a wizard to search for vendors handling particular states and income levels.
Security measure are in place for this program as the IRS does not retain the information and vendors cannot sell any taxpayer information without taxpayer consent.
The vendors will continue to offer links to RALs and other products,
but the links will clearly point out that the user would be leaving Free File,
DuMars pointed out. In addition, the product web page will have a link for returning to the Free File service. DuMars said that half of one percent of Free File users bought RALs. He noted that RALs had become a lightning rod for criticism of the Free File program.
The IRS does not pay any fees to the vendors, DuMars said. He speculated that their goal is to build a base of younger clients and customers who may want future services.
Number of Users
In 2006, 73 million returns were filed electronically, including 3.9
million returns that used Free File. The IRS estimates that 80 million returns
will be e-filed this year but has no estimates for Free File. DuMars said
that the IRS's goal is to increase awareness of the availability of Free File.
Initially, Free File was available to 60 percent of all taxpayers. Several
software companies raised that to 100 percent, but decided that was too costly,
DuMars explained. The negotiated level is now 70 percent, he indicated. At
this percentage, the AGI level was $50,000 and has increased to $52,000. It
will continue to rise as AGI rises and the number of taxpayers grows.
Returns With Extenders
DuMars pointed out that electronic returns that claim tax benefits under
extender provisions passed right before year's end--state and local sales taxes, educator expenses, tuition and fee deductions--should not be filed before February 3. Any "extender" returns e-filed before February 3 will be rejected. Paper returns will not be rejected but will not be processed. Other electronic returns are being accepted.
- Related items:
- IRS Begins Tax Season With Important Issues Unresolved
- IRS Officials Highlight Tax Return Changes For Individuals
- Final Tax Package Extended; Congress Adjourns
- Failure to Renew Expired Tax Extenders Subject of Concern, Debate
- Congressional Panel Examines Business Tax Reform
- Rules Change for Hybrid Vehicle Tax Credit
- IRS Outlines Taxpayer Protections in Private Debt Collection Program
- IRS Outsources Some Debt Collection Activity
Added to the news on January 19, 2007.
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