While Congress debates tax reform, and the need to truly simplify the tax code for average taxpayers, we highlight two programs aimed at helping taxpayers in need of assistance to prepare and file their taxes for free.
All across the country, in churches, libraries, schools, community centers and other public meeting halls, thousands of Volunteer Income Tax Assistance (VITA) volunteers turn out each year to provide free tax preparation assistance to people in need.
VITA volunteers are certified by the Internal Revenue Service (IRS) to help low and moderate income earners, older Americans, tax filers with disabilities and limited English speaking skills file their taxes electronically. But not all taxpayers can get to a VITA site or need the hands-on attention that a VITA site provides, and that’s where the Free File Program steps in.
The Free File program, which also operates with IRS guidance and oversight, allows taxpayers to prepare tax returns on their own, and offers low and moderate-income taxpayers a choice of free tax preparation software, donated by 12 tax preparation software companies, including Intuit.
Free File began in 2002, when then-Commissioner of the IRS, Charles Rossotti, formed a public-private partnership with the technology industry. The common goal of the alliance was to help reduce the burden and expense of tax compliance and filing for millions of Americans.
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 $64,000 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.
Today, both the VITA and Free File programs continue to enjoy broad, bi-partisan support in Congress, as well as with the IRS and virtually all of the tax software industry.
Since the program began, over 49 million taxpayers have securely filed their taxes online through Free File – saving more than $1.3 billion in tax preparation costs while maximizing their refunds, as the software helps identify all the credits and deductions they are eligible to receive. Because the companies that participate in the program donate their products, Free File also comes at no cost to the government. In fact, Free File saves taxpayers $13 million every year by encouraging e-filing.
To avoid commercialization of this benefit, the Free File program also operates under a code of best practice standards and consumer-friendly rules governing the program. Companies participating in Free File do not sell ancillary products or services and they do not include advertisements, cross-sells or up-sells in the Free File offering.
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.
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.
All Free File products also follow the strict security standards set forth in the IRS Security Summit. This continues to help prevent tax refund fraud. The Free File Program eliminates the need for government to invest scarce public dollars trying to duplicate services and product innovations readily available from the private sector. Instead, the Government can focus on assisting taxpayers and preventing tax refund fraud.
For these reasons and more, the program has always had strong bi-partisan support in Congress and the states.
In Virginia, for example, Virginia Congresswoman Barbara Comstock has said, the “[Free File] program will save taxpayers money each year, a perfect example of how government, the private sector, and community groups can work together to help Americans.”
And at a Free File event in Richmond, Governor Terry McAuliffe said, “Free File is an incredible resource for eligible Virginians to receive the full amount of their well-earned tax refund. Free File is a tremendous example of a public-private partnership that provides important services to Virginia without costing the government one dime, and in fact saves Virginians money at tax time.”
Boston Mayor, Martin J. Walsh, has also made educating taxpayers about Free File and VITA a part of the mission of his office of Financial Empowerment, stating on their website that “In addition to visiting one of the Boston Tax Help Coalition’s free tax sites staffed by IRS certified volunteers, the BTHC also promotes a service called Free File that is also approved by the IRS…Free File is fast, easy, and it’s free! This is just one of many resources that Boston residents can use to effectively file their taxes this year.”
We encourage Congress to simplify the tax code and to make needed programs like VITA and Free File the permanent philanthropic programs for millions of taxpayers. As we enter the final weeks of the annual tax-filing season, we also thank the ongoing commitment of VITA volunteers and the Free File Alliance.