Justice OKs IRS plan for online tax filing system

The Justice Department has approved a plan for a group of private-sector companies to form a consortium under the direction of the Internal Revenue Service to offer free, online tax preparation and filing services to qualified citizens, department officials announced Oct. 7.

The department reviewed the plan as a preliminary step toward formally establishing the consortium early next year. The approval means that the department's Antitrust Division will not challenge the action under the law, department officials said.

The department's position was stated in a business review letter from Charles James, assistant attorney general for the Antitrust Division, to counsel for the consortium. James said the consortium, as proposed, should pose no threat to competition in the market for providing tax services to individuals.

Each of the participating companies will continue to offer its own electronic tax preparation and filing services outside the consortium, James said.

The consortium will be open to all providers of electronic tax services that meet IRS-approved requirements that agree to offer free preparation and filing. The consortium will agree that at least 60 percent of taxpayers overall will be eligible for free services through the consortium.

Under the terms of the agreement, the consortium will design a Web site with links to each member's free service and submit the proposed Web site page to the IRS for final approval.