Tax Group Asks Senate to Stop IRS Free File Site
By Allan Holmes | Friday, May 25, 2007 | 02:57 PM
By Allan Holmes | Friday, May 25, 2007 | 02:57 PM
The head of a group of tax preparers who provide free tax-preparation services under an IRS program sent a letter yesterday to members of the Senate Finance Committee complaining about the IRS' plans to create an agency web site that will offer the same service, according to a press release issued by the Free File Alliance.
In the letter, Tim Hugo, executive director of the alliance, which provides tax-preparation and electronic-filing services for low-to-moderate income families under an agreement with the IRS, wrote, "If Congress enacts the web portal proposal, it would abrogate the current agreement between the Free File Alliance and the IRS. Per the terms of that Agreement, the Alliance would dissolve and cease to be an entity providing free Income Tax Returns and electronic filing to millions of Americans."
Hugo argues that the IRS web portal would make the government a direct and subsidized competitor to the private companies. Alliance members include H&R Block and Intuit's Turbo Tax. Families with adjusted gross incomes of $52,000 a year are eligible to take part in the Free File program. The Free File Alliance prepared and filed taxes for 20 million Americans this past tax season.
Congress and the IRS are concerned that hidden fees and the poor quality of tax preparation services offered to Free File customers is holding back e-filing of taxes and is driving the government to consider building an IRS web portal for tax filing. "If the tax preparation industry cannot provide free basic filing services without hidden costs and traps, perhaps it is time to consider having the IRS provide a direct filing portal to enable all taxpayers to file electronically without cost," wrote Sens. Charles Grassley, R-Iowa, then chairman of the Senate Finance Committee, and Max Baucus, D-Mont., then the committee's ranking member, in a November 2006 letter to IRS Commissioner Mark Everson.
Most taxpayers using Free File must pay a fee to have their taxes electronically filed to the IRS, and alliance members make money by providing other services.
Comments
Although I can certainly understand TaxPayerLew's frustration, I have to disagree.
There are sites out there, such as TaxACT.com, that do not charge for e-filing like TurboTax and H&R Block do. The IRS bureacracy is bad enough right now without a venture into the private sector. If the IRS wants to push everyone toward e-filing, then they can require all tax preparation vendors to provide e-filing free of charge, that would save us all money. After all, if the IRS did setup it's own web portal for this, who would pay for it? The tax-payers, so it wouldn't really be free would it?
Stephenhero | Monday, June 11, 2007 | 10:01 AMAs a taxpayer who used one of the vendors named above in the Alliance to prepare my 2006 federal income taxes, only to be blocked from electronically filing--for a fee--because of a bug in that vendor's software that was not going to be fixed until after the filing deadline, I am inclined to side with the IRS here.
But it would make more sense to make e-filing free for everyone. THAT's how you get people to file online. When some vendors charge $20.00 for the privilege of saving the government processing costs, who wants to do it? Especially if one owes taxes already.
TaxPayerLew | Thursday, May 31, 2007 | 07:23 PMABOUT THIS BLOG
Allan Holmes on what's happening and what's being discussed in the world of federal information technology.
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