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Tuesday, March 28, 2006

Free File for All Is No More

From Yahoo Finance:
IRS' Free File now restricted to lower-income taxpayers

SAN FRANCISCO (MarketWatch) -- Last year, any taxpayer could go to the IRS Free File program to file their return online without a fee. Not anymore.

Starting next year, the Free File program is limited to taxpayers earning about $50,000 or less a year in adjusted gross income -- or 70% of filers each year, the IRS announced Tuesday.
That means about 93 million taxpayers will be eligible, still "a large population," said Bert Dumars, the IRS' director of electronic tax administration.
It's essentially a return to normal. In the first two years of the program, the participating companies offered their free services to disparate groups: You had to be over 55-years-old, say, or live in a particular state.

Then, at the start of the filing season earlier this year, some companies started vying for top spot on the provider list -- and the way to ensure that was to offer services to the largest number of taxpayers, with some companies eventually offering free online tax services to all.
But the tax providers weren't eager to repeat their free giveaway in the upcoming filing season.
"They all felt this was a death march, basically, and it was going to ruin the industry and it was going to impact the quality and services being delivered," Dumars said.
"We felt the best thing to do was find the balance that would allow us to make sure we had a good free program for a very large population of taxpayers, but also allow the industry to maintain its health and stability," Dumars said.