![]() ![]() TurboTax paid a $141 million settlement in 2022 to people who were eligible for free filing but were steered away to costly upgrades.Įven with the new Direct File initiative, "the established position of companies such as TurboTax and H&R Block could limit how many taxpayers use an IRS program beyond the pilot phase," Richard Rubin reported in The Wall Street Journal. "That's because the tax-prep companies sabotaged the program, so they could keep raking in money," said Sen. Some 70% of taxpayers are eligible to use Free File software, but fewer than 3% do, according to the Government Accountability Office. taxpayers already have several free options, including filling out the IRS's tax forms on paper or online and using the Free File options at participating commercial sites. Many other countries have such government-run online tax-filing systems, including Australia, Chile and Estonia. They can use a paper tax return." But the IRS surveys also found that 72% of taxpayers are "very interested" or "somewhat interested" in a free system that allows them to file directly to the government. ![]() "Taxpayers will always have choices for how they file their taxes," Werfel added. In fact, The Washington Post reported, the IRS has already "quietly built its own prototype system to allow Americans to file tax returns digitally and free of charge," with help from the White House's U.S. The IRS's first report to Congress, released earlier this month, found that "many taxpayers are interested in using a free IRS-provided tool to prepare and file taxes and that the agency is technically capable of delivering a Direct File program," the IRS stated in a press release. With that deal expired, President Biden and congressional Democrats gave the IRS $15 million in 2022 to explore the feasibility, cost and interest level for a government-run Direct File program. In return, the IRS was barred from creating its own online tax-filing service until 2019. The IRS and commercial tax-prep services reached a deal in 2006 in which a number of the tax-filing companies agreed to provide free services for taxpayers earning $73,000 or less. The Internal Revenue Service is planning to test out new software in 2024 that will let taxpayers file their returns online for free, pitting the IRS more directly against the $14 billion tax-preparation industry dominated by Intuit's TurboTax and H&R Block. IRS building and sign Illustrated / Getty Images ![]()
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