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Jan. 21, 2020, 6:30 a.m. EST

This IRS service saved Americans $1.7 billion, so why have so few people used it?

Free filing is now open to millions of working Americans

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By Andrew Keshner


Getty Images/iStockphoto
The IRS Free File program is now open ahead of tax season.

People who want to submit their taxes for free can start preparing Friday with this season’s launch of the IRS Free File program.

The program lets taxpayers with 2019 adjusted gross incomes below $69,000 per year file their federal and state returns for free using tax preparation software from ten providers including H&R Block and Turbo Tax.

Though eligible taxpayers can now start using the program to get their returns prepared, IRS will start processing the returns once tax season starts on Jan. 27.

That all sounds like a good deal, but the Taxpayer Advocate Service , a watchdog within the IRS, noted less than 2% of all individual returns, about 2.5 million returns, came through the Free File program in the most recent tax year.

Last year, the non-profit news website ProPublica alleged Intuit /zigman2/quotes/203136605/composite INTU -3.74% , TurboTax’s maker, and H&R Block /zigman2/quotes/207406664/composite HRB -2.51%  were using web coding to downplay the links to their Free File offerings. Federal lawmakers demanded an investigation.

The companies challenged the ProPublica reporting and told MarketWatch they were trying to expand program participation.

After an outside consulting firm’s study, the IRS said it was making changes in order to make the public-private partnership program more accessible to users.

“Free File online products offer free federal tax return preparation, free electronic filing and free direct deposit of refunds to help get your money faster,” IRS Commissioner Chuck Rettig said in a statement on Friday.

“The IRS has worked to improve the program for this year, and we encourage taxpayers to visit IRS.gov, and consider using the Free File option to get a head start on tax season.”

Almost 57 million taxpayers have used the Free File program since its 2003 start, the IRS said. That’s saved participants an estimated $1.7 billion over the years, according to the IRS.

On Friday, an H&R Block spokeswoman said the company “is proud to have helped millions of Americans file their returns for free, including under the IRS Free File program. We continue to support the IRS Free File program and are again participating in the program as recently amended for the tax season.”

She added the company looks “forward to providing expertise and care to millions of taxpayers this tax season and into the future.”

An Intuit spokesman said the ProPublica reporting “made a litany of allegations that ignore public facts about free tax preparation with TurboTax.”

In a blog post Friday, Intuit noted 1.2 million people last year used the TurboTax IRS Free File offer last year. “Participating in the IRS Free File program is part of Intuit’s broader efforts to help more Americans file their taxes for free, with approximately 13 million absolutely free returns filed with Intuit software last year alone.”

/zigman2/quotes/203136605/composite
US : U.S.: Nasdaq
$ 286.43
-11.14 -3.74%
Volume: 2.00M
Feb. 24, 2020 4:00p
P/E Ratio
47.84
Dividend Yield
0.74%
Market Cap
$77.46 billion
Rev. per Employee
$722,584
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/zigman2/quotes/207406664/composite
US : U.S.: NYSE
$ 22.88
-0.59 -2.51%
Volume: 2.70M
Feb. 24, 2020 6:30p
P/E Ratio
11.52
Dividend Yield
4.55%
Market Cap
$4.58 billion
Rev. per Employee
$34,788
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Andrew Keshner is a personal finance reporter based in New York.

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