About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (May 30, 2024)

handle is hein.crs/govepqv0001 and id is 1 raw text is: Congre Won I Fesedrch Service I ~ or ning legi I live I ta ~ 'e 914 0 Updated May 30, 2024 The Internal Revenue Service's Free File Program (FFP): Current Status and Policy Issues The Internal Revenue Service first allowed individual income tax returns to be filed electronically (e-filed) through a pilot program involving five tax preparers during the 1986 tax filing season. Since then, e-filing has grown to the point that 97% of individual tax returns for the 2022 tax year were e-filed. E-filing has advantages for both tax administrators and taxpayers. For the former, e-filing substantially lowers the cost of processing returns and results in lower error rates, relative to paper returns. For the latter, e-filing allows individuals to receive a tax refund sooner than they would with a paper return. A key element of the IRS's efforts to promote e-filing is the Free File Program (FFP). The FFP makes it possible for individuals, regardless of filing status, with adjusted gross incomes (AGIs) at or below a specified amount ($79,000 in the 2023 tax year) to e-file their federal income tax returns, free of charge, using software provided by participating tax preparation companies. Seven such companies participated in the FFP during the 2024 filing season. Taxpayers wishing to file through the FFP must use a secure portal on the IRS's website to access the websites of participating companies. Taxpayers with AGIs above the FFP limit may e-file their returns free of charge through the same portal, using a service called Free File Fillable Forms. Or n of the FFP The FFP has its origin in two sources. One was the IRS Restructuring and Reform Act of 1998 (RRA, P.L. 105- 206). The act directed the IRS to increase the share of e- filed individual returns to 80% by 2007 from 23% in 1998, with input from the private sector. A second source was a 2001 directive from the Office of Management and Budget's (OMB's) Quicksilver Task Force implementing President George W. Bush's E- Government Initiative. The taskforce identified 24 projects to achieve the initiative's main objectives, one of which was the EZ Tax Filing Initiative. It was intended to help the IRS reach an 80% individual e-filing rate by 2007 by drawing on the experience and resources of tax preparation software companies. Initially, the IRS tried to accomplish the aims of the EZ Tax Filing Initiative by developing digitized versions of Form 1040 and related schedules and instructions that could be accessed at no cost through WhiteHouse.gov. When it became apparent that the IRS would not complete this project anytime soon, Treasury Secretary Paul O'Neill asked IRS Commissioner Charles Rossetti in January 2002 to establish a partnership with tax software companies to develop a free online filing system that would be managed by the IRS for low-income taxpayers, who were most likely to file paper returns. The resulting private-public partnership was initially called the Free File Alliance (FFA), which is now known as Free File, Inc. (FH). Despite this collaboration, the IRS did not achieve the 2007 e-filing goal until 2012, when 83% of individual returns were e-filed. Structure and Evokuton ofthe FFP The FFP began when the IRS signed an agreement with the 17 original FFI member companies on October 30, 2002. The agreement laid down a clear division of authority and responsibility between the IRS and the member companies. It required the companies to provide their tax preparation and filing services through IRS.gov at no cost to the bottom 60% of individual taxpayers, ranked by AGI. The companies, not the IRS, set the eligibility requirements for free filing based on a taxpayer's age, income, and state residence. To participate in the FFP, a company had to prove that it was capable of providing such a filing service to at least 10% of individual filers. The agreement made the IRS responsible for enforcing member company compliance with the terms of the agreement. The agency had the authority to cancel the agreement with one year's advance notice, if it determined that member companies were failing to provide the required coverage. A controversial element of the agreement was a commitment by the IRS to not compete in the market for tax filing and preparation. Preventing the IRS from becoming a competitor was a major incentive for tax software companies to create and participate in the FFP. The IRS and FFI have extended and revised the original agreement five times. These subsequent agreements are linked to various memoranda of understanding (MOU) intended to implement the revised agreements. The second agreement (2005) reduced the free services a member company could offer eligible taxpayers, including refund anticipation loans. In addition, the agreement barred any member company from providing free filing to more than 50% of eligible taxpayers, and increased the share of taxpayers eligible for free filing through the FFP to the bottom 70% of individuals ranked by AGI. The 2009 agreement expanded the scope of the FFP by making free fillable individual income tax forms available

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Already a HeinOnline Subscriber?

Log In

profiles profiles most