Reported drop in free tax e-filings revives criticisms

The popularity of the Free File program for electronically filing federal income-tax returns continues to decline, according to a new report by government auditors.

"Taxpayers' use of the Free File program -- an alliance of companies that offer free return preparation and electronic filing on their Web sites to eligible taxpayers -- is 5.5 percent below last year at this time," the Government Accountability Office said in a report released Wednesday. The report addressed interim results of the 2007 tax-filing season and the Bush administration's fiscal 2008 budget request for the program.

Free File, now five years old, is available to taxpayers with an adjusted gross income of up to $52,000. About 70 percent of U.S. individuals are eligible this tax season.

This year, the participating companies, which include H&R Block and the TurboTax manufacturer Intuit, cannot advertise tax-refund anticipation loans and other commercial products on the Free File Web site. In previous years, pitches for refund anticipation loans and pop-up advertisements stirred controversy over the "free-ness" of the program.

While participation in the program is decreasing, the Internal Revenue Service reports that complaints are down to one per every 2,193 returns, compared with one in 654 returns last year.

"There have been some extraordinarily negative criticisms of Free File -- which have been partly based on fact" with regard to cross-marketing and pop-ups, said Bernie McKay, the vice president of corporate affairs for Intuit. But the IRS "took the bull by the horns" and eliminated the corporate plugs.

McKay attributed any reported decline "to the undermining of the program by severe critics who didn't come out and say anything when the reforms were instituted."

McKay said the IRS should increase Free File's media exposure via public service announcements to counteract the negative publicity.

With other e-filing options and Free File, all taxpayer data goes through a third-party software company before reaching IRS computers. The IRS' dependency on commercial preparers has prompted privacy advocates to question the ability of tax preparers to use that data for cross-marketing financial products.

Before the April 17 deadline for filing income-tax returns, Sen. Daniel Akaka, D-Hawaii, plans to reintroduce legislation that would require the IRS to offer all individual taxpayers free and direct e-filing through its Web site.

"The declining use of the Free File program cited in the report is just another indication that the program is not working," he said in a statement on Monday.

According to the report, the IRS responded to a draft of the document by stating that the agency "will soon release its strategic plan for taxpayer service delivery, which will serve as the foundation for future decisions for service improvements and efficiencies."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

    Download
  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

    Download
  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

    Download
  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

    Download
  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

    Download
  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.

    Download

When you download a report, your information may be shared with the underwriters of that document.