It began back in 2002, when the then-Commissioner of the IRS Charles Rossotti formed a public-private partnership with the technology industry to create IRS Free File. The common goal of this alliance: to help reduce the burden and expense of tax compliance and filing for millions of Americans.
Today, with the support of Congress, the IRS and the software industry, the Free File Program provides consumers with a choice among 13 software makers, including Intuit. Each of these companies donate products, time and resources to offer free Federal tax preparation and electronic tax filing services to millions of low and moderate income Americans at no cost to either the end-user or the public treasury. And many offer free state tax preparation as well.
Through this successful public-private partnership, the members of the Free File Alliance have provided taxpayers with the tools to prepare and electronically file more than 46 million tax returns for free – an industry-wide donation of goods and services conservatively valued at more than $1 billion over the years since the Free File service was first offered in January 2003.
In addition to providing these benefits to millions of taxpayers, Free File has had the unintended consequence of spurring the creation of a private sector market of free tax software. Today, virtually every tax software company offers taxpayers opportunities to use versions of their products at no cost – a response to the Free File Program’s demonstration that taxpayers want this service. In short, Free File has greatly expanded consumer choices for millions of low and moderate-income taxpayers.
Providing products and services at no charge may seem counterintuitive – especially for companies in the very competitive tax preparation services industry. But we share a common belief that claiming EITC, child credits, and obtaining refunds owed to millions of needy families, shouldn’t be complex or costly, especially for those least able to afford it. Moreover, the Free File Program eliminated the need for Government to invest scarce public dollars trying to duplicate services readily available from the private sector. Consequently, there is no need for the government to maintain, evolve and enhance those products and services year by year to keep up with public expectations for innovation and ongoing simplification and ease of use.
For all of these reasons, and more, the program has always had strong bi-partisan support and benefits from the leadership of the Free File Congressional Caucus led Representative G.K. Butterfield (D-NC) and Representative Mike Conaway (R-TX).
As we enter the height of the annual tax-filing season, it’s a good time to take note of the ongoing commitment of the Free File public-private partnership to reduce the nation’s tax filing burden, and the very real results it has produced, including:
- Increased eligibility: The IRS adjusts the eligibility level each year, with the Free File Program now available to anyone with an Adjusted Gross Income at or below $62,000 a year, making some 100 million Americans eligible for free tax preparation software. In addition to the original program with full-featured software, any taxpayer, regardless of their income level, has full access to use simple Free File Fillable Forms to electronically complete and file their taxes.
- Free state filing: Twenty states and the District of Columbia also have companion Free File programs based on the same rules and requirements, allowing eligible taxpayers to file both their federal and state tax returns at no cost.
- Consumer Safety Zone: To avoid commercialization of this benefit, the Free File program operates under a code of best practice standards and consumer-friendly rules governing the program. They do not sell ancillary products or services and they do not include advertisements, cross-sells or up-sells in the Free File offering.
- Free online access: Taxpayers who don’t have a computer can go to local libraries, schools, senior centers, community centers and other public facilities that provide free access to computers and the Internet. Some of the Free File programs are available on mobile devices.
By making tax software available at no cost, Free File has also introduced millions of Americans to the efficiency and ease of e-filing, which also helps save the government money since electronic tax returns are processed at about 5% of the cost of paper returns.
According to IRS survey research, 95 percent of users found Free File easy to use, and 98 percent said they would recommend the program to others.
Intuit and the other Free File Alliance take pride in words of support from people like Adrienne Ross of United Way of Rappahannock, Va.
“Using Free File can save an average of $220 on a tax return [and] can make a big difference for low to moderate income families. That can buy an extra month’s worth of groceries for a family… [and] it can go a long way to helping their budget balance every month.”
That alone makes the program worthwhile and is reward in itself.