IRS makes tax e-filing free for many

The IRS yesterday launched Free File at IRS.gov, making it possible for 60 percent of taxpayers?an estimated 78 million Americans?to file their returns online at no extra cost.

Under the E-Filing e-government project, the free online tax preparation and filing operates through an industry coalition called the Free File Alliance LLC.

Top officials from the Office of Management and Budget, Treasury Department and IRS touted Free File as the latest milestone in OMB's Quicksilver e-government projects.

"No single process touches more Americans than the duty to support our free government through the payment of taxes," OMB director Mitchell E. Daniels Jr. said. "We are taking 18 cents or more of every dollar in federal taxation, and that is pain enough without making the process more complicated and more costly to comply than it needs to be."

Accenture did the IRS work under a five-year contract issued in August 2001, valued at $33.6 million. The company teamed with Qwest Communications International Inc.

Each of the alliance's17 member companies can set its own taxpayer eligibility requirements for online service, such as age, adjusted gross income, state residency, military status, or eligibility to file Form 1040EZ or earned income tax credits. Users answer a set of questions to determine eligibility and then view a list of companies through which they can file.

The IRS' agreement with the alliance requires member companies to meet a 60 percent goal of free services. Last filing season, the IRS received nearly 85 million paper returns and 47 million electronic ones. Officials have said they expect at least 54 million e-returns this year.

"Free File will allow the IRS to be more efficient, processing returns faster and at a lower cost," said Ken Dam, the acting Treasury secretary. "It will speed refunds and reduce errors on both the processing and filing sides."

Washington Technology Staff Writer Joab Jackson contributed to this story.