The Internal Revenue Service recently entered an agreement with the Free File Alliance aimed at removing barriers to taxpayers getting free software via the Alliance. One provision not highlighted by the IRS in its announcement was it has ended its agreement to stay out of the tax software and e-filing market.
The change came as the annual report of the National Taxpayer Advocate to Congress said more must be done to promote the Free File program
The alliance is aimed at provided taxpayers who fall below certain income thresholds the ability to receive free software from participating vendors. The IRS announcement highlighted the agreement software vendors will not hide their free file landing pages from Internet search engines and will make it easier for taxpayers to return to the IRS Free File website if they do not qualify for an alliance member’s Free File offer.
Those points were included in the section in which the IRS posts press releases. But the provision about staying out of the software and services market was in the agreement text itself, not on the press release page.
Because all parties agreed to the changes, apparently the IRS got a concession because the agreement states that the following sentence will be removed from the memorandum of understanding it and the alliance agreed to on Oct. 31, 2018. “In recognition of this commitment, the federal government has pledged not to enter the tax return software and e-file services market.”
The new agreement also tries to clarify any confusion between the vendor “free” offerings and the Free File Alliance. Intuit and H&R Block had been faulted by ProPublica for not making their Free File pages available to search engines. ProPublica also complained about the fact Intuit’s entry in the Alliance Program was called the TurboTax Freedom Edition while its commercial offerings include the TurboTax Free Edition.
Under the new agreement, a naming convention has been implemented. Members must use the language “IRS Free File program delivered by [name of company or product]”
The Advocate’s report says, “the Free File program is failing to promote the best interests of taxpayers, citing low usage and taxpayer confusion.” Only 2 percent of those eligible use the service the report said, and most of the 2.5 million who participated in the program would have been able to file for free through software company offerings.
