More than 14 million taxpayers paid money to businesses to file their taxes even though they qualified for a government program that would help them file for free, according to a report released Wednesday from the Treasury Inspector General for Tax Administration.
In contrast, only 2.5 million taxpayers actually used the program to obtain a free return filing through the program.
It is known as the ‘Free File Program,’ a private-public partnership between the IRS and Free File Inc. that provides online federal tax preparation and electronic filing to economically disadvantaged and underserved populations without any cost to the individual or the government itself.
“The IRS has done a poor job promoting the program, which is why few eligible taxpayers even know it exists,” said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee.
“Working folks end up shelling out money to for-profit companies for services that should cost nothing. It’s unacceptable,” Wyden said.
The Treasury Department audit showed that many taxpayers did not know that to participate in the program, they had to access the IRS.gov Free File webpage and click a link directing them to a Free File Inc. member’s website.
Instead, millions of taxpayers turned to tax return preparation services that are not free, such as TurboTax and H&R Block.
The Treasury Department made a number of recommendations to the IRS to fix the issue. It suggested the federal government’s tax collection agency do a better job advertising the program, ensure quality reviews of relevant websites, and better allow taxpayers to provide feedback on their experience with the program.
Of the nine recommendations made by the Treasury Department, the IRS management agreed with six of them and partially agreed with the other three.
