The Internal Revenue Service no longer restricts taxpayers with requirements that keep individuals from using the Free File System. All US taxpayers are entitled to use the system for preparing their taxes and filing documents free of charge. The practice of filing free was limited to individuals meeting certain standards set by organized tax preparation specialist organizations. However, three leading tax preparers retired the restrictions imposed by such standards which had been set for taxpayers such as age cohort, annual income and residency status. Turbo Tax, TaxACT.com and eSmartTax were the first to move the restrictions aside. Other tax preparation enterprises soon followed this lead action.
Cost Cutting and Spirit of Free Enterprise. Interestingly enough, the federal government had determined the cost cutting benefits of electronic preparation and filing. It is dramatically less expensive for the Internal Revenue Service to process the files electronically than to process tons of paper files. Storage and pre-process handling alone costs hundreds of thousands, even before a tax return is processed by an IRS agent. Private tax processing firms were aware of the government’s cost cutting concerns and were themselves concerned over the IRS developing software to changeover to an e-filing system altogether. This led TurboTax and the others to set up the Free File partnership and ensured they would remain in the business side of assisting taxpayers.
Tax Company Minimums Set by IRS. There is an agreement governing IRS and private tax preparation firms in this innovative area known as the Free File program. The agreement sets a minimum percentage at 60 of the total number of taxpayers who will use the free service. The percentage minimum standard is the only performance requirement to which private preparation services are held each year. This creates an incentive for private firms to market the Free File system while creating add-on services for which they can charge modest fees which are outside the scope of the free system.
IRS Window Only for Free Filing Services. The Free File program is sponsored by the Internal Revenue Service and hosts participation by private tax preparation services. If a taxpayer goes to a TaxACT.com site, for example, the service is available for around .00 for the identical service offered online by the IRS. To get the same service free, go to the IRS online and select “Free File.” The link will show private tax preparation services participating in the free program. There is no charge for service when the taxpayer accesses private services through the IRS online.
Free Filing Helps Taxpayers. Free File is good for taxpayers too. Electronic filing has error identification features not available when preparing returns by hand on paper. Common errors can be costly and, too many of them, might trigger an audit. The error identification feature saves on tax preparation costs, penalties and taxpayer labor spent of filing income taxes. One other fact of life with e-filing income taxes: taxpayers get their returns FASTER which means more money in taxpayer pockets sooner than paper filing can deliver.
The evolution of tax preparation software and the Internet have made possible the Free File Tax Preparation system, a great innovation for the IRS and the taxpayer.
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Community Tax Relief was created by Attorneys and Bankers with years of experience in both tax resolution and financial services. Our mission is to create a new standard for the industry, in which the customer and their best interest truly come first. We have grown tired of seeing clients getting taken advantage of and paying outrageous fees for which they receive little to no service in return. Too many clients are turned away from our competitors because they couldn’t pay high upfront fees.
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