May 02,2006

Final Free File Numbers from IRS Show Sharp Decline

Baucus continues call for more direct, truly free filing on IRS website

Washington, DC – U.S. Senator Max Baucus (D-Mont.), Ranking Member on the Senate Finance Committee, today commented on an IRS report showing a precipitous drop in the use of the “Free File” program by Americans filing their 2005 tax returns. Reports showing various filing season statistics are compiled weekly by the IRS. The latest, dated April 28 and provided to Baucus, reveals that nearly 23 percent fewer American taxpayers chose to use “Free File” to complete and turn in their taxes this year than did last year. The Free File Program is a partnership between IRS and for-profit preparers, in which the private preparers are meant to provide no-cost tax preparation and filing services. The program may only be used by taxpayers with an adjusted gross income of $50,000 or less. Many preparers also have age restrictions for Free File participants.

“Fewer Americans are seeing Free File as the best way to turn in their taxes,” said Baucus. “From age and income restrictions to frequent hidden fees, folks are finding roadblocks rather than reasons to use this program. It’s time to look for a more direct route for taxpayers to e-file for free with the IRS.”

The IRS filing report dated April 22, 2006, indicates that 1.2 million fewer taxpayers used the Free File service to file their 2005 tax returns than in the prior year. At an April 4 Senate Finance Committee hearing on the 2005 filing season, Baucus questioned whether the “Free File” program is working as it should. Taxpayers who use the program often encounter hidden costs and offers to buy upgrades or products such as refund anticipation loans. At the time of the hearing, weekly IRS filing season reports were already showing consistent decreases in Free File use. At the conclusion of the hearing, Baucus urged the IRS to find a way to provide truly no-cost online tax preparation and filing to American taxpayers directly on the IRS website.

See 2006 filing season data in the printer-friendly version of this release.

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