Free E-Tax Filing Could Emerge

WASHINGTON, D.C. -- The U.S. Department of Justice has given its blessing to the creation of a consortium that will work with the Internal Revenue Service to provide free electronic tax preparation and filing services.

The consortium, which still awaits the approval of the U.S. Treasury Department and the Office of Management and Budget, could be in place for the 2002 tax season, say officials who are working with the government on the public-private project.

The program would help the IRS achieve its goal of receiving 80 percent of all U.S. tax returns electronically by 2007. It is also crafted to assure companies providing electronic tax preparation and filing services that the government will not get into the business of offering those services for free.

The Justice Department did not list the companies that will comprise the consortium. However, Scott Gulbransen, a spokesperson for tax software specialist Intuit, confirms that Intuit will be a member.

"We are excited to be a part of it, because we feel the IRS and the OMB have done a good job of looking at options for taxpayers and not duplicating services that the private sector is providing," Gulbransen says.

An estimated 1 million taxpayers took advantage of Intuit's Tax Freedom project when filing their 2001 returns, Gulbransen says. The five-year-old program, which provides free tax preparation and filing services to people with adjusted gross incomes of $25,000 or less, is an example of how free services will be provided through the IRS Web site, Gulbransen says.

Spread the Option

The Justice Department believes the partnership between companies that provide electronic tax filing services and the IRS will make free electronic tax preparation and filing services more readily available, says Charles A. James, assistant attorney general for antitrust. James says the Justice Department found no anticompetitive reason that the consortium shouldn't be formed.

The consortium will encourage taxpayers to take advantage of simple and speedy options for electronic filing of their tax returns, James says. Consortium membership will be open to all companies and people meeting certain standards set forth by the IRS and the consortium, James says.

Intuit and a number of other technology companies--including Computer Sciences, EDS, IBM, Microsoft, and Unisys--are members of the Alexandria, Virginia-based Council for Electronic Revenue Communication Advancement. The organization has been working to promote the electronic filing of tax returns.

Steps to establish the consortium can be made very quickly once the remaining government approvals are granted, says Mike Cavanagh, CERCA executive director.

"We in the industry have been talking to Treasury and the IRS to deal with this, and so while the pieces are being finalized, they are not final yet," Cavanagh says.

A letter from James to the consortium's lawyer provides some detail about how consortium members will provide their services. The consortium participants' free electronic tax preparation and filing services will be made available at a Web site controlled and hosted by the IRS, he says. Each participant will get one listing on the IRS Web page.

The IRS will have the authority to determine the final content that appears on the page and will market the free services together with the consortium, James says. The IRS will not endorse specific offerings or products, and will continue to accept electronic filing services from organizations not in the consortium, he adds.