Originally created 01/23/04

Consumer protections added to free income tax-filing program



WASHINGTON -- Millions of taxpayers who use free online tax preparation services and electronic filing for their 2003 returns will see new consumer protections against unsolicited ads and other promotions that can end up costing them money, the Internal Revenue Service announced Thursday.

For the second year, the IRS' Free File program will link taxpayers to Web sites of private companies that produce tax preparation software. Last year, 2.8 million taxpayers took advantage of the free program.

Based on questions and complaints raised last year, the IRS asked companies to more clearly state the services they offer, the tax forms available through each program and fees associated with optional services. Companies were not permitted to use promotional codes or rebates as a way of providing free services.

The IRS also worked with companies to reduce the amount of unsolicited advertising. Taxpayers who use the free programs are not obligated to purchase any additional services, such as refund anticipation loans, offered by companies participating in the program.

"We believe our program is even better and easier to use this year," said IRS Commissioner Mark Everson.

Other changes allow taxpayers to print a copy of the return on a home computer without charge, and require companies to guarantee the accuracy of their software and pay penalties and interest imposed on the taxpayer due to miscalculations.

Most of the 16 companies participating in this year's program target their free services to lower-income taxpayers, or specifically to those eligible for the earned income tax credit.

Some companies make the free programs available only to taxpayers in certain states. Others make the program available based on age or military duty. The IRS encourages all taxpayers to check the requirements for all 16 participating programs and see whether they qualify. Those who qualify to use more than one program are encouraged to review them all before choosing one.

The IRS does not endorse any participating company or product, but taxpayers can go to the IRS Web site to begin their search for companies offering free online filing.

Electronic filing can produce refunds for taxpayers in half the time of traditional paper filing. The IRS and participating companies have tried to target taxpayers who might not otherwise use computer software to file electronically.

"Make no mistake, no one likes paying taxes. It's too confusing and too time consuming," said Treasury Secretary John Snow. "But Free File makes this onerous task a good bit easier and less burdensome."

Consumer groups, some of which had raised questions about advertising and privacy protections its first year, applauded the changes.

"The Free File Alliance provides secure software that has good privacy standards," said Linda Golodner, president of the National Consumers League, adding that computer software often alerts taxpayers about their eligibility for tax benefits like the earned income tax credit.

Taxpayers who experience problems with the program should contact the software company. If taxpayers encounter systemic problems that cannot be resolved, they can e-mail the IRS at helpdesk(at)speedymail.com.

On the Net:

Internal Revenue Service: www.irs.gov