WASHINGTON – The Internal Revenue Service and its private sector partners on Tuesday began the fifth year of the Free File program that provides free tax preparation software to low and middle-income taxpayers.
The tax agency said the program, available to taxpayers with an adjusted gross income of $52,000 or less, is more consumer-friendly and comes with added protections: the tax software companies will no longer promote side products such as refund anticipation loans — cash advances that allow customers to immediately take home expected refunds but that sometimes carry high interest rates and fees.
The IRS said up to 20 tax preparation software companies in the Free File Alliance will participate in the program this year. Some 70 percent of the nation's taxpayers, 95 million Americans, qualify for the program, which is available only through the IRS Web site, http://www.irs.gov/.
The agency said 3.9 million taxpayers used Free File last year, compared with 2.8 million users when the service debuted in 2003.
This year, taxpayers will be able to use Free File to request the telephone excise tax refund. The government stopped collecting the federal excise tax on long-distance service last August. Taxpayers can either request the standard amount of refund, ranging from $30 to $60, or file for the actual amount.
The IRS said two companies will offer Free File in Spanish, and said some Free File Alliance members are also offering state returns for free.