IRS e-file Now Available;
Free File Opens Third Year
The Internal Revenue Service marked the opening of IRS
e-file with an appeal to taxpayers and tax professionals alike: Hit the ‘send’
button.
Fast, accurate and secure, IRS e-file marks a major milestone this year as
half of the nation’s taxpayers are expected to file their tax returns
electronically. The popular program favored by millions of taxpayers is now
available for use.
Also, Free File — the free tax-service partnership and an important
component of IRS e-file — opens its third year with free service offerings to
more taxpayers than ever who have access to a computer and the Internet.
“IRS e-file has proven itself to taxpayers year after year. It is fast,
accurate and secure. It’s easy to use. Taxpayers can receive their refunds in
half the time,” said IRS Commissioner Mark W. Everson. “I also would urge all
tax preparers to consider electronically filing their clients’ returns. IRS
e-file is good for business, whether you are a taxpayer or a tax
professional.”
The IRS expects half of the 133 million taxpayers will file their returns
electronically. Last year, nearly 62 million tax returns were filed
electronically. IRS e-file began as a pilot project in three cities (Phoenix;
Cincinnati, Ohio and Raleigh/Durham, N.C.) in 1986 and 25,000 returns were
electronically filed. The program opened nationwide in 1990 and 4.1 million
returns were electronically filed.
Taxpayers can file their returns electronically either by using an
e-file-approved tax professional, purchasing over-the-counter computer
software or downloading Internet-based software.
Since 2003, taxpayers also have been able to access free tax software and
free e-filing through the IRS Web site thanks to a public-private partnership.
The IRS and a consortium of tax software manufacturers offer free services
through Free File. Last year, more than 3.5 million taxpayers used Free File.
At the start of this year, the Free File program includes 15 companies, with
more possible in coming weeks.
For 2005, any taxpayer with access to a computer and the Internet will
qualify for Free File. Each company sets its own criteria for free usage. The
criteria varies but often is based on income, state residency and age. Some
have no restrictions for participation. Companies are allowed to alter their
offers during the filing season.
“We’ve once again expanded the population of those who can participate in
e-file,” Everson said.
The vast majority of electronically prepared returns are filed by tax
professionals. However, the fastest growth rate is among taxpayers using
software to prepare their own returns. The number of self-prepared computer
filed returns has nearly tripled recently to 14.5 million returns in 2004 from 5
million returns in 2000.
In addition, the IRS estimates that more than 35 million tax returns each
year are prepared on a computer. However, instead of using the e-file option and
hitting the ‘send’ button, taxpayers and tax preparers hit the “print” button
and mail in the return. The IRS encourages these taxpayers to consider the
benefits of filing electronically.
“It’s the fastest, easiest way to do your tax return,” Everson said. “There
are fewer errors so there are fewer refund delays. And, if you e-file and use
direct deposit, you can receive your refund in approximately two weeks.”
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