WASHINGTON - The Internal Revenue Service announced on Monday an agreement with Free File, Inc. (FFI) to “strengthen” a free online filing option for taxpayers.
The IRS said the updated agreement is “designed to bring more clarity for taxpayers choosing to use free online software during the 2020 filing season.”
“The agreement reached will help make the Free File program more taxpayer-friendly while strengthening consumer protections in several key areas,” the agency said in a release.
IRS Commissioner Chuck Rettig said the updated agreement “is part of a larger effort by the IRS to help taxpayers meet their tax obligations.”
“It continues to show the partnership we enjoy with the Free File partners and the commitment we both share in helping taxpayers since the program’s creation 18 years ago. The improved process will make Free File stronger and give taxpayers another reason to consider this valuable software option,” Rettig said.
Each year, Free File partners, acting through FFI, offers its software free of cost to eligible taxpayers. Taxpayers who earn $69,000 or less can find one or more free commercial software products available by visiting IRS.gov/freefile. Some providers offer both free federal and free state tax preparation, the release said.
“The IRS and FFI will also continue to work together to identify and explore ways to better help low- to moderate-income taxpayers and to pursue meaningful opportunities to enhance taxpayer awareness and use of the Free File Program beyond the 2020 filing season,” Rettig added.
FILE: The Internal Revenue Service (IRS) building stands on April 15, 2019 in Washington, DC. April 15 is the deadline in the United States for residents to file their income tax returns. (Photo by Zach Gibson/Getty Images)
The program would also offer "Free File Fillable Forms," which is a fillable version of the IRS’ printed forms best suited for taxpayers experienced in preparing returns by hand and who need limited assistance. The Fillable Forms program, which is available to anyone regardless of income, will be available again in the 2020 tax season for people completing their tax year 2019 returns, according to the release.
Highlights of the new agreement reached on the Free File program include several features designed to make the program more taxpayer-friendly. The Free File landing page from an organic internet search will not be excluded. A link on their sites would be available to return taxpayers to the IRS Free File Website at the earliest feasible point in the preparation process if they do not qualify for the Member’s Free File offer.
The new features also include regularly surveying taxpayers who successfully e-filed tax returns through the Free File program and reporting their results quarterly to the IRS.
“These steps will help further protect taxpayers and make important improvements to the program,” Rettig said. “The IRS is committed to improving the Free File program and providing a great option for taxpayers to consider when preparing their taxes.”
Monday’s announcement came after ProPublica reported earlier this year that TurboTax had allegedly "tricked" some people into paying to file taxes through a tactfully worded program called "TurboTax Free Edition." It contained the word “free,” but it also put many customers who were likely eligible for the truly free option on track to eventually pay, the report said.
Many lower-income filers have reportedly ended up filing with the “TurboTax Free Edition,” which is different from “TurboTax Free File,” also known as the “TurboTax Freedom Edition.”
Intuit, the maker of TurboTax, and other tax software companies spent millions in lobbying dollars to ensure that the IRS doesn't offer its own free tax preparation and filing service, ProPublica reported.
Instead, companies, including Intuit, have entered into an agreement with the IRS to offer a “free file” product. The “TurboTax Free File” program was created to meet that requirement.
“TurboTax Free File Program is geared towards lower-income filers, regardless of tax return complexity, and is only offered through the IRS Free File Alliance (FFA) program,” the company's website says.
But Intuit hid its “TurboTax Free File” edition from search engines, ProPublica reported in April.
When reporters for the publication searched for the term “IRS free file taxes,” they were led to the “Turbo Tax Free Edition” instead.
After ProPublica revealed that Intuit hid its “TurboTax Free File” product from search engines, the company changed its source code, but the change was made after April 15, the deadline to file taxes, making it too late for those eligible to file for free, the outlet reported.
On Monday, Intuit said in a blog post that it "strongly supports these changes because they increase the focus on the taxpayer experience."
“We applaud the IRS and FFA, who worked together to bring about these important reforms,” the company said. “Along with the other FFA members, Intuit will work with the IRS to lead implementation of these measures as quickly as possible... Today’s reforms to the Free File program are a meaningful step forward.”
For taxpayers whose income is higher than $69,000, the IRS offers “Free File Fillable Forms.”
This story was reported from Los Angeles.