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Today, the IRS announced meaningful reforms that strengthen the IRS Free File program through an addendum to the Memorandum of Understanding (MOU) between the IRS and the Free File Alliance (FFA), which is an organization made up of 10 private companies. The Free File program is a public-private partnership that provides free tax preparation and filing services for eligible lower-to moderate-income taxpayers at no cost to the taxpayer or the government. The reforms in the addendum address the Free File program and member companies’ Free File offerings.

Intuit strongly supports these changes to the Free File program and associated Free File offerings because they increase the focus on the taxpayer experience. We applaud the IRS and FFA, who worked together to bring about these important reforms. 

We believe a strong Free File program benefits taxpayers, empowering eligible individuals and families to manage their own finances through the preparation and filing of their taxes at no cost to them or the government. Be it through IRS Free File, state Free File, Volunteer Income Tax Assistance Program (VITA), Tax Counseling for the Elderly (TCE), military assistance or commercial free tax preparation, Intuit has for decades supported free tax preparation options and has filed more absolutely free tax returns than all other tax prep software companies combined.  

The addendum to the Memorandum of Understanding can be found HERE, with select Free File program reforms applicable to Free File offerings highlighted below:

Eliminates language that bounds the federal government not to enter the tax return software and e-file services marketplace. An original objective of the Free File program was to encourage private industry investment in technology and services to deliver on IRS goals of increasing e-filing. With approximately 90% of taxpayers e-filing today, the language is no longer relevant and is not a prerequisite for Intuit’s continued participation in the Free File program. Critics of the program came to believe that this language was the only thing stopping the IRS from offering tax preparation software and assistance, and that companies participated in Free File only in exchange for this promise. That is wrong, and we support removing the language that fostered this confusion. We are confident in our exceptional product, and we participate in the Free File program to help give eligible taxpayers another option to file their taxes for free. 
Requires companies to include a link to take taxpayers back to IRS.gov for those that begin tax preparation in a company’s Free File offer but are found not to be eligible for that offering so they can explore other Free File options for which they may be eligible. This is a practice Intuit has had in place for the last 2 tax seasons. 
Establishes clear rules for online search. The MOU establishes clearly defined rules for online search practices. For the first time, FFA members are prohibited from engaging in any practice that would cause a Free File offer landing page to be excluded from an organic internet search. Intuit’s search and marketing practices already conform with the new addendum requirement. 
Requires surveys of customers who file through the IRS Free File program to measure their satisfaction. This is a practice Intuit strongly supports. Customer satisfaction research is part of our ongoing business practices for our tax offerings. 
Provides the IRS the total count of all free federal tax returns filed with commercial products (non-Free File). Last tax year, approximately 13 million completely free tax returns were filed with Intuit software, of which 1.2 million filed with Free File and more than 11 million filed with TurboTax Free Edition, our commercial offering. This more comprehensive accounting for free tax preparation will help ensure visibility to the large number of taxpayers who file online for free, outside of the Free File program. 

Along with the other FFA members, Intuit will work with the IRS to lead implementation of these measures as quickly as possible.

The addendum also reaffirms the longstanding agreement between the IRS and FFA concerning participating companies’ obligations under the Free File program and their freedom to operate with commercial free and paid offerings outside of it. This includes affirming the IRS’ responsibility to market and promote Free File to taxpayers. Much of the recent criticism of the program has been premised on a misunderstanding of the agreement underpinning this successful public-private partnership. 

Intuit is – and for two decades has been – deeply committed to providing free tax preparation and filing for those who need it the most, despite attempts by some recent media coverage to suggest otherwise. Our tax preparation products were used completely free by approximately 13 million filers last tax season and 55 million taxpayers over the last 5 years.

We will continue to look for ways to empower all American taxpayers so they can privately and securely prepare their own taxes and receive every dollar they earn and deserve. Today’s reforms to the Free File program are a meaningful step forward.

The post Strengthening the Free File Program appeared first on Intuit®: Official Blog.

At Intuit, we have long supported the empowerment of individual taxpayers to manage their own finances, including preparing their own tax returns, so they receive every dollar they’ve earned and deserve. We take pride in our role empowering taxpayers and advocating on their behalf. We openly advocate for tax simplification because we believe the more simple the tax code, the more confidence taxpayers will have in preparing their own taxes and in managing their financial lives. Over 35 years of playing this role, we’ve earned our customers’ trust – trust in our ability to help them through the most important financial moments in their life, trust that we’re on their side.

Yet, a small but vocal group is increasingly set on diminishing that trust so they can impose a system that removes taxpayers from the center of their finances. They envision a tax regime in which the government – already the tax collector, investigator, auditor and enforcer – takes on the last remaining role of preparing the individual income tax return for every American. They believe a completely government-run tax regime will make it easier for American taxpayers to comply with their obligations.

We think this idea is counter to a uniquely American system and fraught with potential conflict. The goal of most taxpayers is to claim all of the deductions and credits to which they are entitled, so that they receive the maximum refund allowed by law. At the most basic level, a tax preparation system run by the tax collector represents a fundamental conflict of interest.

Under a government-run system, the IRS could fill in your tax return based on partial information from documents like a W-2 and a 1099. But the IRS would have no way of knowing if you gave money to a charity, got married, paid for education, bought a house or had a child and paid for their care. Each of those major life changes could significantly lower tax liability. And some of the most complicated tax returns are for lower-income working people who claim the Earned Income Tax Credit, a credit that relies on information the government does not collect today and one that dramatically impacts the lives of over 30 million low-income Americans. Under a government-run system, tens of millions of low-income Americans could miss out on the EITC alone, with countless more missing out on other tax deductions to which they are entitled. Billions in tax refunds could go unclaimed, especially within disadvantaged communities. Simply said, the government doesn’t have the information needed to accurately prepare taxes and get taxpayers every dollar they deserve.

Apart from whether the government should become the nation’s tax preparer, building, operating and maintaining a new tax preparation service could cost billions of dollars —a cost that would ultimately be borne by U.S. taxpayers themselves. One former IRS commissioner publicly stated that the IRS would never receive sufficient funding to create such a system.

But perhaps the strongest argument against the idea of a government pre-filled return is that the American public doesn’t want it. Public opinion polling conducted over the course of nearly two decades has consistently shown that taxpayers oppose the concept by a margin of more than 2-1.

For years, Intuit has publicly called for simplifying the nation’s tax code. And for more than a decade, we have also said that we oppose a government-run tax preparation system because it would not be in the best interest of individual taxpayers. We are proud to exercise our right to advocate on behalf of taxpayers. In tax year 2018, we helped return more than $80 billion in tax refunds to individual tax filers. We celebrate that outcome for our customers, and we don’t believe a government-run pre-filled tax preparation system would have the same customer focus, nor do we believe it will achieve nearly the same result for taxpayers.

We work every day to create innovative products that make it easier for taxpayers to determine and understand what they owe to the government and to get refunds for every dollar they’ve earned and deserve.  Our tax preparation products have been used completely free by 55 million taxpayers over the last 5 years. In tax year 2018, we helped our customers file approximately 13 million completely free tax returns. That’s more completely free tax returns than all other tax prep software companies combined.

We do this through our commercial free products and through voluntary philanthropic participation in government sponsored programs, including the IRS Free File program, which supports low and moderate income taxpayers, and the Volunteer Income Tax Assistance (VITA) program, where we help millions more taxpayers in need file for free.  Whether filing taxes through Intuit, an accountant or a tax store, in every scenario, taxpayers actively participate in the process so they are financially empowered and can keep as much hard earned money as they are lawfully allowed.

Our mission is to power prosperity around the world – and that means being on the side of taxpayers, and giving them tools to take charge of their finances, enhancing financial literacy and advocating for every taxpayer so they can make informed decisions about their own money. We believe taxpayers, not the government, should be at the center of their finances.

The post Standing With the American Taxpayer appeared first on Intuit®: Official Blog.

In June 2019, the Internal Revenue Service engaged a respected firm called MITRE Corp. to conduct a thorough and independent assessment of the IRS Free File Program. The MITRE assessment was made public on October 8, 2019, and presented the following key findings:

The MITRE assessment concluded that, overall, all Free File members were compliant with the MOU. Further, the assessment stated that the IRS’s current compliance processes were adequate and effective to support the integrity of the program
The MITRE assessment confirmed that the Free File Program is a beneficial public-private partnership, and has allowed lower- and middle-income taxpayers to file 53 million returns at no cost to the filing individual. This has resulted in an estimated savings to taxpayers of $1.6 billion.
MITRE’s analysis shows the free tax preparation services provided by industry through both IRS Free File and commercial free products serve a majority of the actual pool of candidates for the Free File Program.
The assessment notes that the IRS Free File Program is a unique entity that was created to provide a service to taxpayers that neither the government nor private industry could address alone.
The assessment found that recent criticisms of the IRS Free File Program don’t tell the full story and the issues are much more nuanced.
The assessment found that some actions of Free File member companies that critics have called deceptive are indeed common, legal business practices.
Intuit is reviewing the MITRE recommendations and looks forward to working with the IRS to improve the Free File Program and help it continue to grow.

A link to the complete MITRE assessment on the IRS Free File Program can be found at IRS.gov here.

The appendices are available at the following links:

Appendix A: The Economics of IRS Free File
Appendix B: External Program Review Crosswalk
Appendix F1: Free File Member Sites Heuristic Evaluation
Appendix F2: IRS Free File Heuristic Evaluation
Appendix G: Taxpayer Experience Testing Report

 

 

The post MITRE Independent Assessment of the IRS Free File Program appeared first on Intuit®: Official Blog.