Treasury, OMB propose plan to expand electronic tax filing

Federal officials hope to dramatically boost the number of tax returns filed electronically through a new e-filing partnership with industry that would provide free online tax filing to a majority of Americans.

The free online tax filing would be provided through a consortium of private-sector companies that would provide free services to low income and other taxpayers, the Department of Treasury and the Office of Management and Budget announced July 31.

The proposed plan could benefit nearly 60 percent of the taxpaying public and result in 78 million Americans filing their taxes online, the government said.

As part of the agreement, private-sector companies that participate in the consortium would agree to provide free services to a number of individual taxpayers that equals or exceeds 10 percent of individual income tax returns filed in calendar year 2001.

In return, the government would agree to notify the consortium immediately if it decided to offer free services to taxpayers. Until such a time, the government would agree to allow the private-sector companies to provide online tax filing through the consortium.

The agreement, as proposed, has an initial term of three years from its effective date, with automatic options to renew for successive two-year periods.

The new agreement would bring the IRS closer to its goal of having 80 percent of federal tax and information returns filed electronically by 2007, according to the government. Of the 126.5 million returns filed during the 2002 tax season, 46.5 million were filed electronically, the IRS said.

The terms of the agreement will be published shortly for public comment, the government said. After a 30-day comment period, all suggestions will be reviewed.

The new e-filing partnership leverages technology to reduce the cost and hassle of filing for millions of American taxpayers, said Paul O'Neill, the secretary of the Department of Treasury.

Currently, taxpayers who choose to file online can pay an average of $12.50 in filing fees in addition to the cost of purchasing tax preparation software, the government said.

Taxpayers will find links to the online tax filing services through a single, centrally located Web portal at www.irs.gov and www.firstgov.gov. The Web page is scheduled to be online by Dec. 31, which would be in time for the 2003 tax filing season.

The agreement fulfills the EZ Tax Filing project, one of 24 e-government initiatives established by President Bush last year to make it easier for citizens and businesses to interact with the government, save taxpayer dollars and streamline citizen-to-government transactions.