IRS improves taxpayer protections for Free File services

The IRS and the Free File Alliance have agreed to extend their partnership for free tax services and electronic filing to a growing number of taxpayers and provide new consumer protections.

The public-private arrangement will mean enhanced services to taxpayers, improved disclosure regarding refund anticipation loans and greater assurances of privacy protection.

Free File made its debut during the 2003 tax filing season as a way to provide free services to moderate- and low-income taxpayers. Free File Alliance members are a consortium of tax software manufacturers that set their own criteria for taxpayer eligibility for free use of their software.

Taxpayers access Free File through IRS.gov. Alliance members and their services will be available beginning in January 2006 on the IRS Web site. During this tax-filing year, the Free File program served more than 5 million taxpayers with free tax software.

Under the new agreement, Free File Alliance companies will:
  • Provide the highest consumer protection standards on refund anticipation loans (RALs)to uphold greater disclosure and consent requirements related to ancillary financial products, such as fees and interest rates, information on other options for refunds and full disclosure of RALs as loans rather than refunds

  • Offer additional tax forms such as Form 4868 that allows for extensions to file and

  • Display on their Web sites whether state online tax preparation and filing services are available and the associated fees, if any.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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