US Treasury Offers Free E-Filing To 78m Taxpayers

by Mike Godfrey, Tax-News.com, New York

01 August 2002

On Wednesday the US Treasury announced a program under which as many as 78 million Americans will be able to file their taxes online at no cost next year under an agreement with the Office of Management and Budget (OMB). The agreement provides easier, secure, and free opportunities for Americans to file their taxes via the Internet, says the Treasury.

"Our current tax code is needlessly time consuming and confusing. We need to make it easier to understand and easier to comply. This new e-filing partnership is one positive step forward. We’re taking advantage of technology to reduce the cost and the hassle of filing for millions of taxpayers," stated Treasury Secretary Paul O’Neill.

"Paying taxes is burden enough. It’s our duty to do anything we can to make the process simpler and easier," said OMB Director Mitchell E. Daniels, Jr.

According to the proposed agreement, a consortium of private sector companies will work together to offer free online tax filing services, an option that could benefit some 60 percent of taxpayers. Taxpayers will find links to the online tax filing services through a single, centrally-located Web portal at www.irs.gov and available through www.firstgov.gov.

The proposed agreement will produce significant advantages for both citizens and their government.

• 78 million will no longer have to pay to file their tax returns online. Currently, taxpayers who choose to file online can pay an average of $12.50 in filing fees in addition to the cost of purchasing tax preparation software.
• Taxpayers who file electronically will get their refund checks twice as fast on average as those who file on paper.
• Electronic filing reduces government processing costs and improves efficiency.

The terms of the proposed agreement will be published shortly for public comment. After a 30-day comment period, all suggestions will be reviewed. The new free tax filing consortium Web page is slated to be online by December 31, in anticipation of the 2003 filing season.

This project fulfills one of the President Bush’s 24 E-government initiatives and was proposed in his February 2002 budget. The President also proposed a 15 day filing extension for all taxpayers who file electronically, including those under this initiative. That proposal awaits final Congressional action.

Forty-six million taxpayers filed online this year, and Wednesday's proposal would offer the electronic option to 78 million Americans, a step toward achieving the IRS goal of 80% e-filing by 2007, IRS Commissioner Charles O. Rossotti said.

Companies interested in participating will send proposals to the Council for Electronic Revenue Communication Advancement, a nonprofit corporation acting as an external third party to the public-private sector agreement. Each company must offer services to at least 10% of the U.S. population, based on regional, income or demographic sectors of its choosing. The companies may overlap, but the proposal requires that the group as a whole cover at least 60% of taxpayers.

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