The federal government has unveiled a plan whereby as many as 60 percent of taxpayers will be able to file their tax returns electronically for free next spring.
Tax preparers and tax software manufacturers have praised the plan that provides for a government/private industry consortium to provide free tax filing services via a link on the IRS Web site.
"We're taking advantage of technology to reduce the cost and the hassle of filing for millions of taxpayers," said Treasury Secretary Paul O'Neill.
Under the plan, the tax preparers and software companies who choose to participate in the consortium will each agree to provide free services to a minimum of 10 percent of taxpayers, and it is estimated that the consortium as a whole will provide free services to 60% of the nation's taxpayers. Taxpayers will be able to browse through a list of participating tax preparers and choose the program they prefer. The IRS is still trying to meet its congressionally mandated burden of having 80 percent of tax returns filed electronically by 2007.
Intuit, maker of TurboTax software, and H&R Block, maker of TaxCut software, have both said they plan to join the consortium. "We plan to vigorously participate in the consortium," said Intuit spokeswoman Julie Miller, who mentioned that 47 percent of taxpayers are already eligible for free e-filing services from Intuit. Intuit offers free filing for taxpayers with adjusted gross income under $25,000.
As an added incentive to file electronically, President Bush has asked Congress to give e-filing taxpayers an extra 15 days to file their tax returns. So far no decision has been made on that suggestion.