You might not think the Internal Revenue Service is issuing much in the way of good news these days, but it did just that.
In January, the IRS along with the
and the Office of Management and Budget launched a new
Web site that will allow a substantial majority of taxpayers to prepare and file their taxes online -- for free.
Some 78 million taxpayers will be eligible for the free electronic filing.
The part-public, part-private, nonprofit "Free File Alliance" is made up of a consortium of tax-software companies. Each Free File Alliance member company can set its own requirements as to which taxpayers are eligible for free electronic filing through its own program. Generally, eligibility will be based on factors such as age, adjusted gross income, state residency, military status or eligibility to file a Form 1040EZ or for the Earned Income Tax Credit.
The agreement requires the alliance to provide free services for at least 60% of taxpayers, which amounts to 78 million taxpayers.
For years, the IRS has been struggling to increase the number of taxpayers who file electronically. In 1998, Congress passed the "IRS Restructuring and Reform Act," which strongly encouraged the IRS to set a goal of having 80% of Federal tax and information returns filed electronically by 2007. Last year, 47 million taxpayers, some 36%, filed electronically.
The Free File program is clearly aimed at paring the nearly 85 million paper returns the IRS received last filing season.
Not only is e-filing more efficient on the IRS' end, but it also allows the Service to issue refunds faster -- particularly if the refunds are directly deposited into a bank account. Taxpayers who file their returns electronically get their refunds twice as fast, according to the IRS.