IRS says it’s reviewing concerns about ‘free file’ program

The IRS said it’s reviewing concerns about its “free file” program after Democratic lawmakers have pressed the agency about the program following reports that tax preparation companies have taken steps to hide their free options.

“We take these issues seriously, and a senior leadership team was assembled to review the current Free File program,” the agency said in a statement late Friday.

{mosads}”As part of this process, the IRS reached out to the software companies and others. The IRS continues to believe it’s critical to provide wide access to free electronic filing of tax returns, particularly for lower-income households,” the agency added. “The IRS team will take fast action to ensure the integrity of the program.” 

The Free File program is a partnership between IRS and tax-prep companies in which the companies offer free services to low- and middle-income taxpayers. Only a small percentage of taxpayers eligible for the program have participated in it in recent years.

The investigative news outlet ProPublica in recent weeks has written a series of articles finding that the tax-prep companies that participate in the program have engaged in practices to make it harder for taxpayers to take advantage of the free services, such as by hiding the options from online search results.

The articles have gotten the attention of a number of lawmakers, including Democratic presidential candidates such as Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.) and Cory Booker (D-N.J.) and Rep. Tim Ryan (D-Ohio). Those lawmakers and others sent a letter to the IRS on Friday urging the agency to “take any available action” to remove tax-prep companies who hid their free options from the Free File Alliance.

The lawmakers also wrote a letter to the Federal Trade Commission, urging that agency to investigate whether the tax-prep companies have engaged in unfair and deceptive practices.

New York Gov. Andrew Cuomo (D) has also urged departments of his state’s government to investigate the tax-prep companies.

In addition to the IRS saying it’s reviewing concerns about the Free File program, ProPublica reported that the Treasury Inspector General for Tax Administration, a federal government watchdog for tax administration matters, is looking into the program.

H&R Block has said it’s in compliance with the Free File agreement, and Intuit, the maker of TurboTax, has said that characterizations around its practices relating to Free File are not true.