Many choose to file taxes electronically

IRS, partners introduce latest Free File program

About 564,500 Utahns filed their federal income taxes electronically last year, and more than 607,000 of the 1.02 million total Utah filers are expected to e-file this year.

This week, the Internal Revenue Service and its private sector partners rolled out their latest Free File program, which is now in its fifth year of providing free tax preparation software.

"It's a very safe, very convenient way for a taxpayer who meets the threshold — that $52,000 income mark — to be able to use a personal computer form home, go to the IRS Web site and choose among the participating software providers, and file their federal income tax return online from the convenience of their own home," said William Brunson, the IRS's Utah spokesman. "They don't have to purchase anything. It's ease and security and affordability for taxpayers who meet the criteria."

The Free File program is available to taxpayers with an adjusted gross income of $52,000 or less, said Bert DuMars, IRS director of Electronic Tax Administration. About 70 percent of all filers qualify to use the program, which amounts to about 95 million people in 2007, out of a total of 136 million filers.

Last year, about 3.9 million taxpayers used Free File, DuMars said, which was up from 2.8 million when the program launched in 2003 but down from 2005. In Utah, about 40,300 taxpayers used Free File to file their taxes in 2006, out of the estimated 564,500 who filed electronically and the 1,011,500 total filers.

This year, the Free File program won't try to sell taxpayers using the program refund anticipation loans or any ancillary products, DuMars said, noting that taxpayer and consumer advocacy groups had voiced concerns.

In addition, two participating companies will offer Free File in Spanish. And some companies are offering state tax preparation services for free.

In general, "e-filing is far better, far easier, and if you're getting a refund, you'll get it faster," DuMars said. "If you're getting a refund, likely you'll have it in two to three weeks."

It's also cheaper for the government. Whereas it costs about 65 cents to 70 cents to process electronically-filed returns, DuMars said paper returns are at least three times more expensive to process.

"And it's not just the cost," he said. When processing paper returns, "we're turning paper back into electronic, transcribing it back into our system."

Electronic filing also tends to be more accurate, DuMars said. E-filed returns average a 1 percent failure rate, whereas there's a 20 percent failure rate for paper returns, he said.

There are some caveats about e-filing. The Free File Alliance, the group of tax preparation software providers participating with the IRS to provide the program, selects its own membership. All members must meet IRS standards for security and privacy, but the IRS notes that it does not endorse any one Free File Alliance company. Nor, DuMars adds, does the IRS validate the accuracy of providers' tax preparation processes

And while it manages the content of the Free File pages accessible on IRS.gov, the IRS said it does not retain any taxpayer information entered on the Free File site.

And a warning: Free File is available only through the IRS Web site, www.irs.gov. The irs.com Web site is not affiliated with the Internal Revenue Service, and DuMars said taxpayers should not go there looking for tax information or software.

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E-mail: jnii@desnews.com

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