17 E-Filing Firms Compete Through The IRS Portal

by Leroy James, Tax-News.com, New York

23 January 2003

With the IRS's Free File tax-filing program now out in the open, the seventeen commercial firms who have banded in the Free File Alliance to offer free e-filing to more than 78 million US taxpayers are themselves setting out their stalls for the remainder of taxpayers who won't be eligible for the free product.

Last year 45 million tax returns were filed electronically, and the commercial firms must be hoping that not too many of them are eligible under Free File. You can find out if you are eligible from the irs.gov and firstgov.gov sites, where you can use the "Free File Wizard," a simple questionnaire - and if you're eligible you can link through to any of the 17 tax preparers whose criteria you match.

Intuit, for instance is offering its online product, TurboTax for the Web, free to every taxpayer with an adjusted gross income under $27,000 as well as those who qualify for the federal Earned Income Tax Credit (EITC). If you're not eligible, then Intuit will of course be happy to sell you its services either direct or through its partner Yahoo.

Major competitor H&R Block, also a member of the Alliance, has teamed up again for the fourth year running with Microsoft which offers tax preparation along with other financial products through its MSN Tax Center.

The IRS is aiming to have 80% of taxpayers e-filing by 2007, saving itself an estimated $250m annually. President Bush proposed free online tax filing last February as one of his E-Government initiatives. “No one likes paying taxes—it’s too confusing and time consuming. . . . Free File makes it easy. Now they can save time, money and get their refunds in half the time by filing their taxes online for free,” said Acting Treasury Secretary Kenneth W. Dam last week, launching the service.

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