Consumer Groups Object to IRS E-File Program

Last month the IRS unveiled a new plan to offer links to online tax software vendors on its Web site. In return for the links, each of the vendors promise to provide free tax preparation services for at least 10% of taxpayers. It is estimated that the total free services made available through this program will benefit 60% of the nation's taxpayers.

Four consumer groups have banded together to urge the IRS to cancel the plan, stating that the plan is "seriously deficient" and that the vendors would most likely attempt to sell other services to the taxpayers receiving free tax preparation. The groups also criticized the plan for its alleged failure to benefit taxpayers who are recipients of the Earned Income Tax Credit (EITC).

The consumer groups who co-signed the letter are the Consumer Federation of America, the Consumers Union, the National Consumer Law Center, and the U.S. Public Interest Research Group.

The groups suggest that the IRS provide the tax preparation service on its own Web site instead of using the services of other retailers, and they recommend that the IRS attempt to cater more to the EITC taxpayers.

Specifically the groups warn of tax preparation companies offering short-term, high-interest refund anticipation loans to a captive audience, and they also expressed concern that although these companies are willing to provide free federal tax preparation, they would charge higher rates to the free users for services such as state tax preparation.

"Instead of doing its job and assisting taxpayers directly, the IRS is leading them into the clutches of companies that make hundreds of millions from predatory tax loans," said Ed Mierzwinski, Consumer Program Director at U.S. Public Interest Research Group. The consumer groups are also concerned that low-income taxpayers will not be able to access the free services because statistics show that these taxpayers do not use the Internet and do not have a bank account through which they can take advantage of direct deposit of refunds.

Intuit and H&R Block, the two leaders in tax preparation software, have not responded to the claims of the consumer groups. IRS spokesman Victor Omelczenko responded by stating that the IRS's objective with this program "is to help many more people take advantage of e-filing with all of its benefits."

You may like these other stories...

The IRS cautions freelancers and other self-employed individuals to stay on top of the deadlines for filing federal tax returns and the due dates for making payments. Miss just one, says the IRS, and it might exact a sizable...
Bipartisan Cooperation on Tax Refund FraudAs noted in Politico, Senators Wyden and Hatch have introduced a tax refund fraud bill. According to a summary from Senator Hatch's office, the bill would enhance "the...
Camp Hopes Estate Tax Will Be on Its Way OutAn article in Bloomberg said that Republicans are considering voting this year to repeal the U.S. estate tax, according to House Ways and Means Chairman Dave Camp (R.-Mich.). He...

Upcoming CPE Webinars

Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.