RealTime IT News

IRS Debuts Free (For Some) File Tax Site

The Internal Revenue Service (IRS) officially debuted its much-touted Free File Web site Thursday, offering "most Americans" the opportunity to prepare and file their taxes online for free.

Last fall, the IRS struck a new deal with an alliance of tax preparers and software publishers that will allow up to 78 million Americans to file their tax returns electronically without charge. Tax preparers such as H&R Block usually charge taxpayers a fee for online filing in addition to charges for the actual tax return preparation.

According to the IRS, the average online filing fee is $12.50. Under the terms of the agreement between the government and the Free File Alliance, tax preparers and other filing services that are members of the alliance must provide free online filing services to at least 10 percent of their customers.

In return, members of the alliance are promoted on the Free File website that provides taxpayers links to the free services. President Bush proposed free online tax filing last February as one of his E-Government initiatives.

Each Free File alliance member company sets taxpayer eligibility requirements for its own program. The requirements differ from company to company, but, generally, eligibility is based on factors such as age, adjusted gross income, state residency, military status or eligibility to file a Form 1040EZ or for the Earned Income Tax Credit.

According to the IRS, the primary candidates for Free File are those taxpayers who prepare their own taxes and still file paper returns. Last filing season, the IRS received nearly 85 million paper returns and nearly 47 million e-filed returns.

"No one likes paying taxes -- it's too confusing and time consuming. The launch of this new Web site is great news for millions of Americans. Free File makes it easy," said Acting Treasury Secretary Kenneth W. Dam. "Now they can save time, money and get their refunds in half the time by filing their taxes online for free."