The IRS Free File Alliance has existed for the last 16 years. This is a program to allow taxpayers who qualify to be able to do their tax returns themselves, and file it for free, using the portal at irs.gov/free file.
There are about 12 free file alliance software vendor partners that work with the IRS to provide their software for use through the IRS web portal, for free. There are some restrictions as to who can use free file. A taxpayer who earns less than $66,000 per year can access one of the free file commercial software vendors by going to the irs.gov portal. Some of the software providers offer the federal and state returns, some only allow the federal for free and might charge for the state. There might be other charges involved depending on options and forms, with the different vendors.
Care should be exercised in choosing the right software provider. In the past, some of the software vendors have tried to steer taxpayers visiting the IRS free file portal to options for their paid products that resulted in a charge.
The IRS just recently revised the agreements it had with these software providers to require them to provide more clear options and instructions about the free filing tools, and to lessen the efforts of these companies to steer people toward some of their products that incurred a charge. In the past, the software companies participating in the free file alliance program would have things like a “value-added” button or link somewhere that would try to get people to click on it where it would take them to products for which the company could charge.
The new IRS standards now require that these participating companies remove this type of link or button and not try to steer people so aggressively into their chargeable products. Also, previously if a taxpayer did not qualify for free file, the provider would steer him or her toward products that incurred a charge. Now, the software provider must take the taxpayer who does not qualify for free file back to the irs.gov/free file portal.
Also, in the past, the software provider company would send out reminder emails in the current year to taxpayers who used their free file program the previous year with links to their products for which they charged, without reminding the person that he or she may still qualify for or even mention free file. Now, if emails are sent out to previous free file users, the IRS requires the email to remind the recipient that he or she may still qualify for a free file and that the first option presented to the taxpayer in the email must be Free File, and not a paid product offering.
These changes mean that the 12 companies participating in the Free File Alliance program should be offering a better and more clearly understood process when offering their software product to the alliance. The new IRS Commissioner Charles Rettig apparently played a big part in bringing about these changes. These changes to the Free File Alliance program really should make it a more consumer-friendly offering going forward.
Still, it is good to keep in mind that a great deal of the tax returns that are done wrong and eventually end up with the IRS placing them into collection, were self-prepared returns. So, care should be exercised and professional help sought when necessary. Sometimes it is just best to seek help or just pay someone qualified to do it for you. It can pay in the long run. QCBN
By Ernie Gallardo, EA
Ernie L Gallardo, EA can be reached at 928-899-2434.