The IRS launches a free online tax filing tool in 12 states

[Shawn Knight]

In brief: The Internal Revenue Service has launched a new online tool that allows taxpayers in select states to file federal income tax returns directly with the agency. Dubbed Direct File, the tool will be available to residents in Arizona, California, Florida, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and Massachusetts from March 12 at 1 p.m. Eastern.

The service is free to use although for now, you'll need to meet certain criteria to be eligible.

According to the Treasury Department, nearly a third of all federal income tax returns could eventually be prepared using Direct File. For this tax season, an estimated 19 million folks could use the tool. Taxpayers needing to file state tax returns will have to find another solution as Direct File only works for federal taxes.

The Federal Trade Commission recently cracked down on "free" tax prep service providers including Intuit for engaging in what it called false advertising tactics. Intuit said the FTC's decision was "deeply flawed" and was the result of a "biased and broken system" in which it acts as accuser, judge, and jury. Intuit has appealed the FTC's decision.

Direct File could offer millions of taxpayers a free alternative to third-party software like TurboTax. The tool affords a step by step checklist to guide filers through the progress, and presents a clear summary of the information entered to minimize the chance of errors. The IRS recently uploaded an overview video on YouTube demonstrating how to use Direct File.

With additional restrictions and now, a free option directly from the government, it's no wonder companies like Intuit are concerned.

Launching Direct File now may seem like an odd move consider there's just over one month left before individual tax returns are due, but it was likely a strategic move to minimize usage should something go wrong. After all, the US government doesn't exactly have the best track record when it comes to launching consumer-facing services on the web.

Individual income tax returns are due on April 15.

Image credit: Nataliya Vaitekvich

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https://www.techspot.com/news/102233-irs-launches-free-online-tax-filing-tool-12.html

 

[Cal Jeffrey]

Riiight. And I guess I should also start paying for my groceries by handing the clerk my wallet.

 

[redgarl]

In Canada, you need to pay a 3rd party software license each year to file your tax online... yeah...

It is about time that the government do something about it if they want us to fill our taxes electronically.

 

[brucek]

Of course the IRS should offer this service. Unlike anyone else, they already have all the information that other parties have sent them about you - your W-2 for your wages/salary, your 1099s for your investment income, how much you pre-paid, etc etc. For many taxpayers in routine circumstances, you should be able to log in, review the draft the IRS already prepared for you, click OK and be done in five minutes.

The funny thing is that in a way the IRS does already offer this service - if you procrastinate long enough, they will eventually send you a letter saying they have prepared a return for you and if you don't object it will become your return. Of course I don't recommend this as by this time penalties & interest have attached, but the point is they already have the capability and the workflow.

 

[netman]

IRS should have collaborated with the states this tool being offered to integrate state preparation and filing of both federal and state income tax returns simultaneously...!

 

[Superconductor]

Intuit is out of control. e.g. Quickbooks
So I hope they suffer.

 

[Uncle Al]

I participated in the beta rollout and I must say it worked exceedingly well. I had regular income, social security income, a few investments so it got a good workout. Hope they make it permanent. Not to say I like paying taxes, but this beats being swindled by the commercial guys ....