Fact-checked by Grok 2 weeks ago

Free File Alliance

The Free File Alliance is a nonprofit of tax preparation software companies that operates a public-private partnership with the to provide free electronic federal income preparation and filing services to eligible taxpayers, primarily those with adjusted gross incomes below specified thresholds such as $79,000 in recent years. Formed in the early as a to avert IRS of its own tax filing software, the Alliance commits member firms—including providers like and 1040NOW—to offer these no-cost services in exchange for the agency's pledge not to compete in the tax preparation . This arrangement has enabled over 70 million filings since inception, promoting e-filing adoption among lower-income households while preserving private sector dominance in tax software. However, the program has drawn substantial criticism for persistently low utilization rates—often capturing only a fraction of eligible users—attributed to aggressive tactics by member companies that allegedly steer customers toward paid products through obscured disclosures and "dark patterns" in user interfaces. Congressional inquiries and independent reviews have highlighted the Alliance's efforts and the IRS's as barriers to broader free filing access, fueling debates over whether the partnership truly serves or entrenches industry influence.

History

Formation and Early Years (2000-2003)

In the early 2000s, the (IRS) sought to increase electronic filing rates, which stood at approximately one-third of individual returns by 2002, through exploration of free e-filing options for taxpayers. This initiative raised concerns among tax preparation companies that a government-provided free filing system could displace private-sector services, prompting industry efforts to propose an alternative public-private partnership. Tax software firms, facing potential competition, lobbied against IRS development of its own free e-file tool, arguing that private innovation could better serve voluntary compliance goals without undermining commercial viability. The Free File Alliance formed in 2002 as a nonprofit consortium of 17 tax software companies, including and , to voluntarily provide free online tax preparation and e-filing services. This coalition aimed to cover at least 60% of U.S. taxpayers—approximately 78 million individuals—through company-specific eligibility criteria, primarily targeting those with adjusted gross incomes () under $50,000, thereby preempting the need for direct IRS intervention. The structure emphasized aggregate coverage rather than uniform thresholds, allowing members to tailor offerings while collectively meeting the IRS benchmark for broad accessibility. On October 30, 2002, the IRS signed a three-year with the Free File Alliance, formalizing the and committing the agency to refrain from developing a competing free e-file system for eligible taxpayers during the program's term. This arrangement was positioned as mutually beneficial: it leveraged private-sector technology to boost e-filing adoption and enhance compliance, while safeguarding industry participation by limiting government expansion into commercial tax preparation markets. The program launched for the 2003 filing season, marking the debut of structured free online filing through private providers under IRS oversight.

Expansion and Peak Participation (2004-2019)

Following the program's launch in 2003 with 2.7 million returns filed, participation expanded significantly in 2004, reaching 5.1 million returns—a 46% increase—driven by broader efforts and the entry of additional software providers offering unrestricted free filing options to all eligible users, regardless of income thresholds in some cases. This peak usage in fiscal year 2005, at 5.1 million returns representing 6.4% of eligible taxpayers, highlighted the scalability of private-sector partnerships in delivering e-filing services without direct subsidies for . The Free File Alliance adapted to evolving tax code complexities, such as the introduction of refundable credits and deductions post-2001 economic stimulus measures, by updating software annually through member innovations. Adjusted gross income (AGI) eligibility thresholds for Free File were raised periodically to account for inflation and wage growth, starting from lower limits in early years and reaching $66,000 for tax year 2018 filings in 2019, thereby expanding access to approximately 70% of U.S. taxpayers. Several Alliance members introduced free or low-cost state return filing options during this period, complementing federal services and addressing gaps in state-level e-filing availability, which enhanced overall program utility without relying on taxpayer-funded public alternatives. By 2019, major firms including TaxAct, H&R Block, and others maintained peak involvement, processing 2.8 million returns amid steady participation rates averaging 2.8% of eligibles from 2003 to 2019, demonstrating sustained private investment in compliance with IRS agreements. A 2013 analysis funded by the Free File Alliance documented spillover effects, wherein the program's existence encouraged non-participating companies to develop their own free filing products outside the IRS portal, fostering broader market competition and increasing total free e-filing options available to consumers. This evidence supported the efficacy of voluntary private initiatives in expanding access, as opposed to mandated systems, with cumulative savings to filers estimated at over $1.6 billion by 2019 through avoided preparation fees. The period underscored the Alliance's role in innovating user interfaces and integration with IRS systems, enabling efficient handling of diverse return types without proportional increases in federal administrative costs.

Membership Declines and Program Adjustments (2020-Present)

In October 2020, announced its withdrawal from the Free File Alliance, citing strategic shifts amid increased regulatory scrutiny over tax preparation practices. followed suit in July 2021, stating it would exit at the end of the tax season to focus on broader accessibility initiatives, following exposés on deceptive marketing of free filing options. These departures reduced the number of major commercial participants, but smaller providers such as 1040NOW Corp. and others continued to offer services, maintaining program availability for eligible users. The IRS responded to evolving needs by raising the adjusted gross income (AGI) eligibility threshold for Free File to $84,000 for tax year 2024 returns filed in 2025, expanding access beyond prior limits of around $73,000. In May 2024, the IRS extended the Free File program for five years through October 2029 via agreement with Free File Inc., ensuring continuity despite the loss of prominent members. Despite reduced big-name involvement, the program adapted to heightened post-pandemic demand for electronic filing, processing 2.9 million returns through May 11, 2024—a 7.3% year-over-year increase—demonstrating operational resilience through remaining partners. This uptick occurred amid broader e-filing growth, with the focusing on guided software for qualifying taxpayers while preserving the public-private framework.

Program Structure and Operations

Eligibility Criteria and Service Offerings

The Free File Alliance facilitates free guided tax software for eligible taxpayers to prepare and electronically file federal returns, targeting those with an () of $84,000 or less for tax year 2024 during the 2025 filing season. This income threshold applies uniformly across all filing statuses, including single, married filing jointly, and , with active-duty military personnel, reservists, and members qualifying under the same limit regardless of age. Taxpayers exceeding this AGI may instead access Fillable Forms, a basic electronic equivalent of IRS paper forms available without income restrictions, though it lacks guided assistance, error checks, or support for certain schedules. Participating Alliance members provide brand-name tax preparation software featuring interview-style guidance, built-in error detection, and e-filing capabilities, often extending to complex scenarios such as itemized deductions, income, rental properties, and tax credits including the (EITC). Unlike the IRS's Direct File pilot, which restricts users to simple wage and limited interest/dividend income without itemization or business deductions, software supports a broader array of situations suitable for AGI-eligible filers with multifaceted returns. Many offerings include audit assistance flags and refund maximization tools, enhancing accuracy and compliance beyond rudimentary form entry. Access occurs exclusively through the IRS.gov Free File portal, which directs users to member websites for secure, no-cost preparation and transmission; return e-filing is available as an optional add-on, sometimes free depending on the provider and , but not mandated by the program. Eligibility relies on prior-year or other IRS data, ensuring only qualified individuals proceed without fees for core services.

Participating Member Companies

The Free File Alliance comprises eight participating member companies for the 2025 tax filing season, each offering free federal tax preparation and e-filing services to eligible taxpayers through guided software on IRS.gov. These providers include 1040.com (operated by Software), 1040NOW, ezTaxReturn.com, FileYourTaxes.com, FreeTaxUSA, OnLine Taxes, , and , focusing on independent and mid-sized firms following the withdrawal of larger corporations like () and in prior years. Eligibility criteria vary by provider but generally target taxpayers with (AGI) up to $48,000, with extensions to $84,000 for active-duty in 2024; some offer broader access for specific demographics like seniors or those with disabilities. For instance, FreeTaxUSA supports free filing for AGI of $48,000 or less (or $84,000 for qualifying military), including comprehensive handling of tax credits such as the and without upselling. and provide similar thresholds, emphasizing user-friendly interfaces for standard deductions, itemized returns, and state filings where applicable, while OnLine Taxes and 1040NOW cater to simpler forms with options for extensions. Alliance commitments require members to maintain competitive offerings that collectively cover a wide range of situations, from W-2 earners to those with or , ensuring no systemic gaps in free service availability for qualifying users. This structure promotes diversity in software features, such as ezTaxReturn.com's focus on quick processing for basic returns and FileYourTaxes.com's support for multi-state filers, fostering innovation among smaller providers to meet IRS standards without charge to participants.

Technical and Partnership Mechanics with IRS

The partnership between the Free File Alliance and the IRS operates under successive Memoranda of Understanding (MOUs), with the initial framework established via an IRS announcement on November 4, 2002, that included a non-compete clause prohibiting the IRS from developing or providing free online tax preparation and filing software during the agreement period. These MOUs are renewed at intervals, such as the ninth MOU executed on December 18, 2023, which specifies service standards, dispute resolution via the Civilian Board of Contract Appeals, and objectives like expanding e-filing among underserved groups. Free File, Inc., a nonprofit entity representing the alliance members, handles program coordination, compliance monitoring, and liaison duties with the IRS. The IRS maintains the Free File portal on its website, serving as the entry point where users select and access tax preparation software hosted by member companies. Member software performs guided and initial validation, after which completed returns transmit directly to the IRS through electronic filing standards, including the Modernized e-File (MeF) system for processing and acceptance, thereby streamlining government workload without IRS retention of user-entered data. Security measures mandate compliance with IRS e-file privacy and business standards, encompassing encrypted transmissions, U.S.-based servers (or explicit user consent for non-U.S. hosting), secure sessions for handling Social Security numbers, and annual penetration testing by IRS-approved vendors. IRS oversight includes pre-season website reviews, mid-season aggregate audit reports from independent auditors, and unannounced compliance inspections, enabling delisting of non-compliant members and supporting e-file's empirically low error rates of about 1 percent versus 20 percent for paper submissions.

Usage and Empirical Impact

Historical and Annual Return Volumes

The Free File program commenced operations during the 2003 tax filing season, with early adoption evidenced by approximately 1.3 million returns filed within the first five weeks. Annual volumes expanded rapidly thereafter, attaining a peak of 5.1 million returns in tax year 2004. By tax year 2008, filings stood at nearly 4.8 million. Post-peak, annual return volumes stabilized in the 2.5 to 3.3 million range through the 2010s. Specific figures include over 3 million in 2014, 3.3 million in 2015, 2.6 million in 2016, and 2.5 million in 2017. This represented less than 2 percent of total electronically filed individual returns in 2017. More recent data indicate continued volumes in the low millions: 3.3 million returns for tax year 2021 and 2.7 million for tax year 2022. Cumulatively, the program has facilitated over 77 million returns since 2003. Against a backdrop of 150 million or more annual individual e-filed returns in recent years, volumes have consistently supported several million taxpayers per year in absolute terms.

Factors Contributing to Adoption Rates

Despite eligibility encompassing roughly 70% of taxpayers with adjusted gross incomes up to approximately $73,000 in recent years, Free File usage has hovered below 3% of all filers and around 4% of eligibles, as seen in tax year 2020 when 4.2 million returns were processed out of over 100 million eligible individuals. Limited awareness represents a key barrier, with many eligible taxpayers unaware of the program due to its subdued presence on IRS.gov and the absence of a dedicated IRS budget, which restricts promotion to sporadic press releases and partnerships with software providers. This visibility gap is compounded by taxpayer confusion, as is often conflated with commercial paid products, and historical practices by some member companies—such as suppressing free options in results—have further obscured access points on provider sites. Program design and perceived complexity also hinder uptake, as eligible filers must proactively navigate to the IRS portal, select from varying provider software, and self-manage returns that may involve deductions or credits lacking robust guidance in some free versions, leading users with even moderate tax situations to favor paid alternatives for perceived superior navigation and error prevention. Inconsistent features across providers, such as age-based exclusions or limited support for non-English speakers, exacerbate this, particularly for low-income users who comprise the bulk of participants yet represent a small fraction of their eligible cohort. Taxpayer preferences for established paid software further drive low adoption, with empirical patterns showing that among eligibles, about 90% opt for commercial websites or preparers, often citing familiarity with brands like and a desire for branded assurances of accuracy over lesser-known free pathways. Low retention underscores this behavioral inertia, as only 44% of 2014 users returned the following year, with many switching to fee-based options amid perceptions of inadequate support in free tools. While the Free File Alliance maintains that IRS partnerships facilitate promotion, usage data indicate these efforts have not substantially offset the combined effects of discovery challenges and user habits favoring paid familiarity.

Broader Effects on Tax Filing Ecosystem

The Free File Alliance's program has been associated with stimulating broader free tax preparation options within the ecosystem, rather than displacing them. A 2013 study funded by the Alliance analyzed program data and market trends, concluding that Free File contributed to the expansion of a "free " by encouraging non-participating providers to offer additional free services, thereby increasing overall availability of no-cost filing beyond the Alliance's direct returns. This stimulation effect aligns with observed growth in voluntary e-filing adoption, where private incentives prompted competitive responses, such as TaxACT's 2004 unrestricted free offer that spurred other firms to broaden access, peaking at millions of users the following year. Participation in Free File has indirectly lowered IRS administrative burdens through high-accuracy e-filing, with electronic returns demonstrating error rates under 1 percent compared to roughly 20 percent for paper submissions, enabling quicker refunds and reduced manual corrections. This voluntary model harnesses private software efficiencies to promote compliance without the coercive overhead of mandates, which empirical analyses of similar systems indicate can inflate costs due to lower adoption and enforcement needs. The Alliance's structure, comprising diverse tax software providers—up to 12 members in recent years, including competitors like Intuit and H&R Block—mitigates monopoly concerns by distributing market influence and driving innovation through internal rivalry, as evidenced by iterative product improvements absent in singular government-run alternatives. This competitive framework generates positive externalities, such as advanced user interfaces and security features, enhancing ecosystem-wide compliance and efficiency over potential state monopolies that lack profit-driven refinement.

Achievements and Defenses

Cost Efficiencies and Private Sector Innovation

The Free File Alliance delivers free federal tax preparation and e-filing to millions of eligible taxpayers, resulting in estimated savings of $1.7 billion in preparation and filing fees during recent years, per a 2024 Congressional Research Service report. This taxpayer-funded model—supported entirely by participating private companies—relieves the IRS of direct development and maintenance costs, sparing the agency hundreds of millions in expenses that would otherwise arise from building and scaling a comparable government system. In contrast, IRS estimates for its Direct File pilot project alone projected annual operating costs ranging from $64 million to $249 million depending on usage scale, highlighting the fiscal advantages of outsourcing to established private infrastructure. Private sector members of the drive innovations such as mobile-optimized software, enabling users to prepare returns via smartphones or tablets, which broadens access beyond limitations. These companies iteratively enhance their platforms with user-friendly guided interfaces and swift integrations of code amendments, allowing faster responsiveness to legislative changes than the protracted timelines inherent in procurement and bureaucratic oversight. Such adaptability stems from competitive incentives absent in operations, fostering efficiencies like streamlined and error reduction without taxpayer subsidies for . Empirical data reinforces these efficiencies: the program processed 2.9 million returns in the 2024 filing season, dwarfing the IRS Direct File pilot's 140,803 accepted returns in 12 states. Defenders including the National Taxpayers Union emphasize that this scale demonstrates reduced IRS administrative burdens, as private providers absorb upfront investments and operational risks, yielding a proven low-cost alternative to public alternatives.

Coverage for Complex Tax Situations

The Free File Alliance enables eligible taxpayers to prepare returns encompassing non-simple scenarios through partner-provided software that incorporates key IRS schedules for deductions, , and investments. Supported forms include Schedule A for itemized deductions, Schedule C for profit or loss from business activities, Schedule SE for self-employment tax, Schedule D for capital gains and losses, and Schedule E for supplemental income from rentals or royalties. These capabilities allow users to report earnings, deduct business expenses per IRS guidelines, and claim credits such as the , Child and Dependent Care Credit, and education credits. In contrast to the IRS Direct File pilot, which confines users to basic W-2 wages, limited 1099 income like unemployment compensation, standard deductions, and select credits without accommodations for itemized deductions, self-employment, or rental income, Free File partners deliver fuller-featured guidance. Direct File's scope excludes C filers and those with investment sales requiring Form 8949, directing such taxpayers toward or other options for comprehensive handling. Alliance members maintain a to progressively align with IRS form availability, fostering options tailored to varied needs like or non-wage sources, thereby extending utility beyond rudimentary tools. The IRS affirms that accommodates numerous complicated returns within its threshold of $79,000 for tax year 2023, emphasizing its role in supporting deductions and credits integral to lower-income filers' circumstances. While individual partner variations exist, this structure ensures broader access to features absent in pilots focused solely on wage-centric filings.

Empirical Evidence Against Overstated Criticisms

Critics have portrayed the Free File Alliance's low utilization rates—typically 1-2% of eligible taxpayers annually—as evidence of , yet empirical data reveal substantial absolute benefits, with over 77 million returns processed since the program's 2002 inception, equating to billions in avoided preparation fees for participating households. In 2022, for instance, approximately 3.3 million taxpayers utilized the service, delivering direct cost savings amid a broader where 70% qualify but many opt for alternatives due to habitual reliance on paid preparers or paper filing. This absolute volume underscores causal factors rooted in behavioral inertia—such as and low proactive engagement—rather than inherent program defects, as voluntary opt-in initiatives across domains routinely exhibit similar uptake gaps without rendering them ineffective. Government Accountability Office (GAO) analyses, including a 2022 report on Free File demographics and oversight, document barriers like marketing limitations and software restrictions but frequently omit comparative baselines that contextualize progress. Prior to Free File's launch, U.S. individual e-filing rates lagged below 30% in the early 2000s, with paper returns dominating and incurring higher processing costs for the IRS; the program's rollout contributed to e-filing surpassing 80% by 2012, a threshold unmet earlier despite congressional mandates. Such oversight in critiques exaggerates stagnation, ignoring how Free File filled a gap in digital accessibility for low-income filers when commercial options were nascent or fee-based. The Alliance's framework has demonstrably spurred private-sector expansion of free filing tiers outside the program, enhancing overall market availability and pressuring competitors like and to broaden no-cost offerings for simple returns, as evidenced by uptake trends post-2003. An independent evaluation affirmed this public-private , noting that while utilization remains partial, the initiative cultivated a "free marketplace" for services, mitigating risks and driving innovation without supplanting . These outcomes refute narratives of outright inadequacy by highlighting sustained, verifiable contributions to and equity in .

Criticisms and Controversies

Low Overall Utilization Among Eligibles

Despite eligibility encompassing approximately 70% of U.S. taxpayers—those with adjusted gross income (AGI) of $84,000 or less for tax year 2024—utilization of the Free File Alliance program has consistently remained below 3% among qualifying individuals. For fiscal year 2023, fewer than 1.9% of eligible taxpayers filed using Free File, according to analysis of IRS data, with historical averages from 2003 to 2019 at 2.8% and a temporary spike to 4% in fiscal year 2020 amid pandemic-related shifts. This low penetration persisted into the 2024 filing season, where early returns showed a modest 10% year-over-year increase to about 943,000 filings by late February, but overall rates did not materially exceed prior lows when accounting for the full eligible population of over 100 million. Several empirical factors contribute to this underutilization, rooted in taxpayer behavior and program structure rather than verified systemic barriers. Many eligibles exhibit toward familiar paid preparers or software, driven by perceptions of greater accuracy, , or convenience in handling complexities, even when unwarranted for simple returns. Limited awareness plays a role, as the program requires initiation via IRS.gov to avoid commercial redirects, leading an estimated 9 million otherwise eligible users to forgo it annually due to unawareness of this access protocol. Preferences for professional guidance, stemming from self-reported concerns over errors or refund delays, further deter adoption, though no rigorous studies substantiate higher error rates in versus paid alternatives for basic filers. Anecdotal claims of deliberate suppression by providers lack empirical corroboration beyond isolated reports. Critics interpret these metrics as evidence of the program's inadequacy, arguing that sustained low uptake—despite broad eligibility—signals failures in , , or coverage for real-world tax scenarios. Proponents counter that analogous underutilization characterizes other no-cost options, such as Volunteer Income Tax Assistance () programs serving low-income filers, where participation hovers far below potential despite targeted outreach, pointing to entrenched habits over inherent defects. This disparity underscores broader causal dynamics in tax compliance, where free alternatives compete against subsidized paid ecosystems without displacing habitual reliance on commercial services.

Challenges in Accessibility and Marketing

A 2019 investigation by ProPublica revealed that some Free File Alliance members, notably Intuit's TurboTax, employed "dark patterns"—manipulative user interface designs intended to steer eligible users away from free filing options toward paid upgrades or services—such as burying free file links deep in navigation flows or using confusing eligibility quizzes that disqualified users prematurely. These tactics contributed to visibility hurdles, despite the program's centralized access via IRS.gov, where users must navigate a lookup tool to select a provider; however, click-through rates remain low, with overall utilization hovering below 5% among the roughly 70% of taxpayers qualifying by adjusted gross income thresholds (e.g., $79,000 or less for 2025). Alliance members operate with relative under IRS guidelines, leading to variations in site design and prominence of options, which can exacerbate accessibility inconsistencies across providers. In response to such criticisms, the IRS reformed rules post-2019 to prohibit deceptive practices, including optimizations that hid options and mandatory disclosures of eligibility, though enforcement relies on self-reporting and periodic audits. Not all participants exhibit these issues; for instance, FreeTaxUSA provides direct, unencumbered access to filing for qualifiers via the IRS without reported steering mechanisms, supporting simpler returns with forms like Schedule C for . Empirical data suggests these challenges do not universally explain underutilization, as eligible users often self-select into the based on perceived needs—many low-income filers have straightforward returns amenable to —while broader marketing limitations stem from IRS restrictions on endorsing specific providers, confining promotion to the official gateway. This non-universal application of flaws underscores that while barriers persist for some interfaces, program-wide low adoption (e.g., millions of returns processed annually but far short of potential) reflects multifaceted factors beyond isolated dark patterns.

Upselling and Ancillary Paid Services

Participating companies in the Free File Alliance deliver federal return preparation and e-filing for qualifying individuals with up to $84,000 in tax year 2024, but they monetize through optional ancillary services post-federal filing, including state return preparation and protection plans. State filing fees, when charged, generally range from $10 to $30 per return depending on the provider and state requirements, with some members offering state e-filing for certain eligibles while others mandate payment; these costs are required to be disclosed on company-specific websites accessed via the IRS portal. protection, marketed as defense against IRS examinations, constitutes another common upsell, often priced as an add-on guarantee covering representation costs if audited. After users complete federal forms, software interfaces frequently prompt for these paid extras, such as expedited refund advances or premium support, creating pathways to revenue beyond the free federal core. Critics, including U.S. senators and consumer protection analyses, describe this as deceptive bundling, where federal free access funnels users into paid state or protection services under the program's umbrella, potentially misleading those unaware of the federal-only mandate. For example, internal company records from former participants revealed user complaints about unexpected charges, with tactics like interface designs guiding toward upgrades. Empirical reviews indicate variation among members: some prioritize upfront fee transparency on landing pages, while others integrate aggressive prompts during filing workflows, as noted in assessments that found no inherent flaws in such but highlighted potential user confusion. IRS agreements mandate clear disclosures for non-free elements to mitigate surprises, yet oversight evaluations from government watchdogs have deemed enforcement lax, allowing persistent without full elimination. Proponents of expanded free filing, such as groups and congressional investigators, frame these practices as that undermines program intent by prioritizing commercial gains over seamless access. participants counter that ancillary offerings provide tangible benefits—like state-specific guidance and safeguards—not covered in basic federal filing, with revenues enabling sustained private investment in the free service absent direct government subsidies.

Lobbying and Policy Influence

Efforts to Prevent Government-Run Alternatives

The Free File Alliance and its member companies, including and , have engaged in sustained to oppose the development of government-run filing alternatives, framing such efforts as unnecessary duplication that would displace private-sector innovations already providing free options to millions. Since the program's inception in 2003, leading tax preparation firms have expended over $90 million on federal related to the program and associated issues, according to data tracked by the Center for Responsive Politics. This spending intensified following investigative reporting, such as ProPublica's 2019 series detailing 's long-term strategies to block IRS-led free filing initiatives through advocacy and policy influence. A pivotal event occurred in 2019 amid debates over the Taxpayer First Act, where industry representatives lobbied successfully to incorporate provisions codifying restrictions on the IRS creating its own electronic filing system, effectively barring competition with private offerings. Proponents of these measures, including Alliance members, argued that government alternatives would stifle incentives for private investment in user-friendly software and broader accessibility, potentially leading to higher taxpayer-funded costs without improving outcomes beyond existing coverage. Critics, including Democratic lawmakers like Senators and , characterized the as prioritizing corporate profits over consumer access to simpler, no-cost government options, accusing firms of undermining public interest through aggressive advocacy. Lobbying efforts escalated against the IRS Direct File pilot programs launched in 2024 across 12 states, with alone reporting expenditures of nearly $1 million in the first quarter of that year on related issues, amid broader annual outlays exceeding $3 million by some accounts. Industry coalitions contended that Direct File represented redundant expenditure, with IRS estimates projecting annual costs between $64 million and $249 million depending on scale and adoption, diverting resources from core enforcement without supplanting the established private ecosystem's innovations. Supporters of the private model emphasized that such tools could exceed $200 million yearly in operational expenses while failing to address complex returns handled effectively by commercial providers, positioning the opposition as a defense against inefficient overreach rather than opposition to free filing per se.

IRS Agreements and Non-Compete Clauses

The Free File Alliance formalized its partnership with the (IRS) through a 2003 memorandum of understanding (MOU), stemming from an initial agreement announced in 2002, whereby Alliance members committed to offering free online tax preparation and electronic filing to at least 60% of taxpayers, equivalent to approximately 78 million individuals based on thresholds. In return, the IRS agreed to prominently promote the program on IRS.gov, directing eligible users to Alliance-provided services, while Alliance members handled all development, operation, and support costs without direct IRS funding. This structure aimed to leverage private-sector expertise to expand e-filing adoption, achieving over 77 million returns processed since inception by providing guided software to low- and moderate-income filers who might otherwise face barriers. A defining element of early MOUs was a , under which the IRS pledged not to develop or deploy its own commercial tax preparation software that would directly rival Alliance offerings, thereby shielding the private initiative from competition and enabling sustained investment in free services for two decades. Proponents argued this provision preempted a potential public on basic filing tools, fostering and reliability through market-driven improvements, as evidenced by iterative expansions in supported forms and eligibility criteria. Critics, however, viewed it as anti-competitive, asserting that it prioritized interests over by contractually barring a no-cost option, potentially inflating barriers for ineligible users and undermining IRS authority to serve all citizens efficiently. Enforceability debates intensified as fiscal pressures and technological feasibility grew, culminating in the clause's excision during program reforms, which shifted focus to enhanced consumer protections and broader eligibility without binding IRS restraint. Subsequent MOUs, renewed periodically, have preserved the foundational of free-file for IRS endorsement and non-interference in operations, with the latest five-year extension announced on May 22, 2024, running through October 2029 and accommodating 2.9 million returns in the prior season amid rising e-filing rates. These pacts continue to emphasize mutual gains—Alliance scalability without taxpayer-funded , and IRS benefits from higher via trusted partners—while navigating post-non-compete tensions, including challenges to the partnership's exclusivity as IRS explores independent pilots. The absence of the clause has not dissolved the agreements' stability but has fueled arguments over whether residual promotional commitments unduly favor entities, with empirical uptake data suggesting the model sustains access for targeted demographics despite broader eligibility debates.

Responses to Direct File Initiatives

The Free File Alliance opposed the expansion of the IRS Direct File pilot program launched in 2024, arguing that it represented redundant government expenditure duplicating the established program's capabilities. The Direct File pilot was restricted to taxpayers with simple returns in 12 states, resulting in approximately 140,000 completed filings, a fraction of the millions served annually by . Alliance members, including major tax software providers, lobbied and the IRS to prioritize enhancements to over scaling Direct File, citing the latter's limited scope and high development costs—estimated at over $100 million—as inefficient use of funds without addressing broader filing needs. In 2025, following the change in presidential administration, the Alliance intensified advocacy for refocusing resources on , aligning with reports from the National Taxpayers Union that criticized Direct File for diverting attention from the private-sector program's proven scale and cost efficiencies. The NTU's 2024 analysis highlighted that had facilitated over 70 million free returns since inception with minimal IRS overhead, contrasting Direct File's pilot-stage limitations and lack of superior outcomes in user volume or complexity handling. Alliance representatives testified before congressional committees, emphasizing that expanding Direct File would undermine public-private partnerships without empirical evidence of net benefits, as already covered eligible filers effectively through voluntary industry participation. Proponents of Direct File, including some Democratic lawmakers, framed it as an advancement for underserved populations wary of commercial providers. In response, the countered that 's broader accessibility—serving low-income filers nationwide via trusted software interfaces—outperformed Direct File's state-limited rollout, with data showing higher completion rates and integration with state returns, avoiding the need for duplicative . This position was reinforced by expenditures from Alliance-affiliated firms, totaling millions annually to promote as the fiscally responsible alternative grounded in two decades of operational success.

Comparison with IRS Direct File

Operational and Scope Differences

The Free File program utilizes commercial preparation software developed and hosted by member companies of the Free File Alliance, accessible to eligible taxpayers nationwide through a centralized IRS that directs users to guided, brand-specific interfaces for federal return preparation and e-filing. This setup enables handling of a wider array of scenarios, including multiple forms, schedules, deductions, and credits beyond basic wage income, with alliance members providing integrated features like live or helplines during filing. In operational mechanics, taxpayer data is entered into private-sector platforms, which validate inputs against IRS specifications before electronic submission, allowing for iterative edits and previews of returns. By contrast, IRS Direct File functions as a standalone, IRS-operated that conducts a streamlined process for data entry, transmitting information directly to IRS systems without involvement of external software providers or data intermediaries. Launched as a pilot in 12 states for the 2024 filing season (covering 2023 returns), it expanded to 25 states for the 2025 season (2024 returns), remaining unavailable in non-participating jurisdictions despite federal eligibility criteria such as under $200,000 for single filers. Its scope is constrained to simpler situations, primarily W-2 wages, compensation, interest/dividends, Social Security benefits, and select credits like the , explicitly excluding income, itemized deductions, and business-related forms in initial implementations, though 2025 updates added support for certain distributions (e.g., 1099-R). Empirical usage data underscores the programs' divergent scales: approximately 2.9 million returns were filed via in 2024, reflecting its broader reach and flexibility for diverse filers, compared to under 200,000 via Direct File's pilot, which logged 140,803 accepted returns amid geographic and situational limits. This gap highlights Free File's capacity for nationwide, software-driven volume processing versus Direct File's targeted, agency-direct model suited to constrained pilots.

Cost and Efficiency Evaluations

The Free File Alliance incurs negligible direct costs to the IRS for software development and maintenance, as member companies privately fund and operate the platforms, with federal oversight expenditures remaining below $5 million annually. This model leverages existing private infrastructure to deliver free e-filing services to eligible taxpayers, avoiding taxpayer-funded build-out expenses. In comparison, the IRS Direct File pilot program expended $24.6 million in fiscal year 2024, encompassing development, vendor contracts, and operational support, with independent estimates placing total costs at approximately $129 million when accounting for broader implementation factors. Such figures equate to roughly $902 per completed return in the pilot phase, highlighting elevated per-user resource demands relative to the Alliance's subsidized approach. Efficiency metrics further underscore divergences in resource utilization. The program has processed millions of returns annually since its 2003 inception without necessitating IRS hiring for ongoing or scalability, relying on commercial-grade software that achieves high e-file acceptance rates through standardized IRS validation protocols. Direct File pilots, by contrast, managed 140,803 federal returns in 2024 across 12 states but experienced notable user drop-off, with abandonment often tied to unsupported tax scenarios despite pre-eligibility screening. Operational costs for the pilot totaled $2.4 million, yet low completion volumes relative to outreach efforts indicate challenges in converting awareness to filings without expanded . Empirical longevity provides additional context for assessments. Over two decades, has sustained service delivery to a broad eligibility pool—covering up to 70% of taxpayers by —through iterative private enhancements, contrasting with Direct File's experimental confines and unproven national expansion potential amid projections of multibillion-dollar scaling requirements. This established private efficiency mitigates risks of bureaucratic overhead, as evidenced by the Alliance's handling of peak-season volumes via distributed member capacities rather than centralized federal operations.

Policy and Ideological Debates

Advocates for the Free File Alliance maintain that private-sector competition in tax preparation incentivizes innovation, cost efficiencies, and user-friendly services, rendering government-run alternatives like Direct File superfluous and prone to bureaucratic inefficiencies. They argue that expanding IRS involvement risks -funded bloat, as government programs historically exhibit higher administrative costs and reduced adaptability compared to market-driven options, potentially crowding out private advancements in software and compliance tools. This perspective critiques Direct File as an ideologically motivated overreach, duplicating a functional private framework without addressing core incentives for underutilization, such as taxpayer preferences for established commercial interfaces. Supporters of Direct File counter that private alliances like perpetuate corporate barriers to entry, including restrictive eligibility and marketing limitations, thereby justifying a public option to ensure equitable access untainted by profit motives. They posit that provision levels the playing field against industry dominance, aligning with principles of over commercial , though skeptics note that such equity narratives often overlook of private sector's broader reach and adaptability. Ideological fault lines center on concerns versus suppression: proponents of models decry Direct File as enabling encroachment that stifles competitive dynamism, while right-leaning analyses prioritize market mechanisms backed by data on efficiency over unsubstantiated calls for government intervention. Conservative viewpoints, drawing from first-principles of centralized , warn of causal pathways to fiscal , where initial pilots evolve into entrenched bureaucracies diverting resources from core IRS functions like . In contrast, left-leaning institutions, often exhibiting systemic biases toward solutions, frame opposition as capture, yet this overlooks how has sustained options for decades without comparable risks of politicized or scalability failures inherent in public .

Recent Developments

2024-2025 Program Updates and Extensions

The IRS program, administered by the Free File Alliance, opened on January 7, 2025, for filing 2024 tax returns, extending eligibility to individuals and families with an () of $84,000 or less. Alliance member companies provide guided tax software tailored primarily to simple and moderate complexity returns, such as those involving standard deductions, common credits like the , and basic itemization, while excluding highly complex scenarios requiring specialized handling. In June 2024, the IRS extended the program's agreement with the for five additional years, securing its operation through 2029 to maintain private-sector delivery of free filing options. The 2025 filing season concluded in October 2025 following the standard extension deadline of October 15, with the program scheduled to reopen in January 2026 for 2025 tax returns. Technological enhancements for the season included improved compatibility across participating software platforms, enabling taxpayers to prepare and submit returns via smartphones or tablets in addition to desktop access.

Interactions with Expanding Options

In 2025, the IRS expanded its Direct File program to 25 states for taxpayers filing 2024 returns, covering states such as , , , , and , among others, while limiting eligibility to those with straightforward income sources like W-2 wages and certain credits. This rollout intensified tensions with the Alliance, which argued that Direct File duplicates existing free filing services available nationwide through private-sector partnerships, potentially wasting resources on redundant infrastructure. The Alliance advocated for integrating Direct File capabilities into the established program or defunding the former to avoid overlap, emphasizing that already serves eligible taxpayers across all states without geographic restrictions. The IRS's taxpayer options webpage prominently lists both programs as free alternatives, directing users to Direct File in participating states while promoting for broader access, including state returns in non-participating areas via software partners. However, providers handle federal and state filings comprehensively for qualifying individuals regardless of location, positioning the program as a stable, nationwide complement that mitigates gaps in Direct File's state-limited scope. Following the 2024 U.S. and transition to a new administration, policy reviews scrutinized Direct File's long-term viability, with Republican lawmakers and aligned groups questioning its necessity given 's proven scalability and lower operational costs to taxpayers. Critics highlighted Direct File's reliance on funding—initially authorized for pilots rather than permanent expansion—and argued for prioritizing enhancements to public-private models like to serve up to 70% of filers efficiently. By mid-2025, IRS leadership signaled intentions to phase out Direct File after the current season, favoring established alliances amid ongoing evaluations of program redundancy.

Future Outlook and Potential Reforms

The Free File Alliance's program received a five-year extension from the IRS in June , signaling institutional commitment to the public-private model amid ongoing low utilization rates, with only 2.9 million taxpayers using it in the 2024 filing season despite broader eligibility. Potential growth in membership or participation could arise from IRS adjustments enhancing program visibility, such as improved promotional efforts, particularly if the competing IRS Direct File initiative faces curtailment under the administration, which has signaled intentions to eliminate it post-2025 season to prioritize private-sector alternatives. However, risks persist from any permanence of Direct File, which could divert users and resources, as evidenced by its pilot expansion to 25 states serving up to 30 million potential filers in 2025. Reform proposals emphasize empirical enhancements to the Alliance's model, including incentives for better to address gaps—where less than 1.9% of eligible taxpayers (those with AGI under $84,000 for 2025) utilized in recent years—over wholesale replacement by government-run systems. Indexing thresholds to and streamlining non-compete agreements could further adapt the program to rising costs and evolving tax complexities, preserving flexibility against legislative efforts to codify Direct File, which critics argue would entrench inefficiencies seen in prior public pilots. The private-sector approach of the Free File Alliance is likely to endure if utilization data demonstrates superior efficacy in serving low- to moderate-income filers without taxpayer-funded overhead, contrasting with ideological advocacy for dominance that overlooks of underperformance in both programs' penetration rates. Ongoing and IRS solicitations for public input on free filing options, due to inform a congressional by October 2025, may catalyze data-driven tweaks favoring hybrid models over expansion of Direct File.

References

  1. [1]
    About the Free File Alliance | Internal Revenue Service
    Aug 26, 2025 · The Free File Alliance is a nonprofit coalition of industry-leading tax software companies partnered with the IRS to provide free electronic tax preparation ...
  2. [2]
    IRS Free File: Do your taxes for free | Internal Revenue Service
    ... Free File Alliance. This public-private nonprofit organization is dedicated to helping millions of people prepare and e-file their federal taxes for free.
  3. [3]
    The Internal Revenue Service's Free File Program (FFP)
    May 30, 2024 · The resulting private-public partnership was initially called the Free File Alliance (FFA), which is now known as Free File, Inc. (FFI) ...
  4. [4]
    [PDF] millions eligible for free online preparation and e-filing - Treasury
    The agreement requires the Alliance, as a whole, to provide free services to at least. 60 percent or 78 million of the nation's taxpayers through April 15.<|separator|>
  5. [5]
    Free File Alliance
    The Free File Alliance is a nonprofit coalition of industry-leading tax software companies partnered with the IRS to help millions of Americans prepare and e- ...Free File Alliance MembersABOUTContact UsFAQsIn The News
  6. [6]
    [PDF] Free File Tool Kit - IRS
    For the sixth straight year, eligible taxpayers can use Free File to prepare and file their federal income tax returns electronically without charges.
  7. [7]
    Inside TurboTax's 20-Year Fight to Stop Americans From Filing Their ...
    Oct 17, 2019 · Using lobbying, the revolving door and “dark pattern” customer tricks, Intuit fended off the government's attempts to make tax filing free and easy.
  8. [8]
    Senators: IRS Allowing Taxpayers to Be Scammed Out of Free Filing
    Nov 13, 2019 · This report confirmed many of the key criticisms of the Free File program: its low utilization rate, the fact that companies are deliberately ...Missing: controversies | Show results with:controversies
  9. [9]
    The IRS Tried to Hide Emails That Show Tax Industry Influence Over ...
    Oct 29, 2019 · The newly released records also show the Free File Alliance aggressively attacking a prominent critic of the program, University of California, ...
  10. [10]
    The Fix Was In: Mitre's 'Independent' Review of Free File - Tax Notes
    Feb 10, 2020 · Dennis J. Ventry Jr. analyzes Mitre Corp.'s review of the IRS Free File program and of actions by Free File Alliance members.<|control11|><|separator|>
  11. [11]
    [PDF] Return-Free Tax Systems: Tax Simplification Is a Prerequisite
    By 2002, IRS e-file programs had evolved so that more than one-third of individual taxpayers now files electronically. To facilitate this growth, numerous ...Missing: history | Show results with:history
  12. [12]
    IRS, private firms try to avoid competing with each other
    May 2, 2002 · The Internal Revenue Service and private tax firms are working up a plan to offer free electronic tax filing to low-income Americans-and to ...Missing: lobbying 2000-2002
  13. [13]
    (Podcast) One big corporation keeps us from having a free, simple ...
    Aug 11, 2022 · Under a lobbying blitz by Intuit, the Bush administration gave up on having the IRS create a free tax filing service. Instead, the ...Missing: 2000-2002 | Show results with:2000-2002
  14. [14]
    IRS' Intent To Enter Into an Agreement With Free File Alliance, LLC ...
    Nov 4, 2002 · This agreement will require companies of Free File Alliance to offer free on-line tax preparation and filing services to at least 60% of taxpayers.Background · IRS Response to Comments... · Free On-Line Electronic Tax...
  15. [15]
    [PDF] Free Online Electronic Tax Filing Agreement October 2002 - IRS
    Oct 30, 2002 · Such offerings, when taken in the aggregate, are intended to provide for Free Services to be available to 60% or more of taxpayers. If at any ...Missing: coverage | Show results with:coverage
  16. [16]
    [PDF] IRS E-File: A History
    2003: Free File debuts; IRS partners with Free File Alliance, a consortium of tax software companies, to make free tax preparation software and free e-file ...Missing: 2000-2003 | Show results with:2000-2003
  17. [17]
    [PDF] The IRS's Free File Offerings Are Underutilized, and the IRS Has ...
    5 In fiscal year (FY) 2002, the IRS received 130,905,000 individual income tax returns, and received 150,690,787 in. FY 2017. In FY 2002, the IRS received ...Missing: 2000-2003 | Show results with:2000-2003
  18. [18]
    [PDF] Digital Government, Public-Private Partnerships, and Administrative ...
    In October 2005, the IRS and the Free File Alliance extended the Free File program under a new. MOU. Under the new agreement, Free File services would be ...<|separator|>
  19. [19]
    [PDF] The Internal Revenue Service's Free File Program (FFP)
    May 30, 2024 · To date, use of the program reached a peak in FY2005, when 5.1 million individuals (6.4% of eligible taxpayers) filed through the FFP. Between ...
  20. [20]
    IRS Free File opens today in advance of tax season
    The free online software program, accessible only through IRS.gov, is available for taxpayers to use in advance of the start of the filing season on Jan. 28.Irs Free File Opens Today In... · Who Can Use Free File · How To Use Free File
  21. [21]
    Grassley, Wyden Press IRS for Accountability Regarding the Free ...
    May 7, 2019 · Generally, those with adjusted gross incomes of $66,000 or less may qualify to use this service. That makes 70 percent of U.S. taxpayers ...Missing: peak | Show results with:peak
  22. [22]
    FAQs - Free File Alliance
    Free File is a free federal income tax preparation and electronic filing program for eligible taxpayers, developed through a partnership between the Internal ...
  23. [23]
    [PDF] Internal Revenue Service Data Book, 2019 - IRS
    Number of Individual Returns Filed, by Filing Type, Fiscal Year 2019. SOURCE: 2019 IRS Data Book Table 3 and 4. Free File. 2.8M. Other online filed. 54.5M.
  24. [24]
    Independent Review Calls Benefits of Public-Private Free Tax-Filing ...
    Oct 8, 2019 · The report noted that “the program has resulted in more than 53 million free returns e-filed and an estimated $1.6 billion in savings to ...Missing: 2013 spillover
  25. [25]
    How to File Your State and Federal Taxes for Free in 2021
    Mar 17, 2021 · (H&R Block has left the Free File program since last year.) Each site has its own eligibility requirements, so be sure to find one that will be ...
  26. [26]
    How to file your tax return for free after TurboTax exits IRS program
    Jan 6, 2022 · TurboTax is the second big name to stop participating. H&R Block exited Free File in October 2020. Stole something?: IRS says stolen property ...
  27. [27]
    TurboTax-Maker Intuit Will Leave Free Tax Filing Partnership With IRS
    Jul 16, 2021 · TurboTax maker Intuit, the largest company in the tax-preparation software industry, announced Thursday that it will leave the Free File program.Missing: 2020 | Show results with:2020
  28. [28]
    Intuit will no longer participate in an IRS free tax filing program - CNBC
    Jul 16, 2021 · Intuit, the company behind popular tax filing software TurboTax, announced that it will no longer participate in the IRS Free File program.
  29. [29]
    Free File Alliance Members
    The following companies are members of the Free File Alliance and offer free tax services in partnership with the IRS: 1040NOW Corp.
  30. [30]
    File for free with IRS Free File | Internal Revenue Service
    The IRS Free File adjusted gross income limit for tax year 2024 is $84,000 for families and individuals. A taxpayer's AGI includes wages, tips, business ...Missing: history | Show results with:history
  31. [31]
    IRS Extends Free File Program Through 2029, While Direct ... - Forbes
    May 23, 2024 · According to the IRS, in 2024, Free File saw an increase of about 200,000 tax returns, reaching 2.9 million as of May 11. That's an increase ...
  32. [32]
    IRS extends Free File tax program through 2029 - CNBC
    May 22, 2024 · This season, Free File processed 2.9 million returns through May 11, a 7.3% increase compared to the same period last year, according to the IRS ...Missing: Alliance | Show results with:Alliance
  33. [33]
    [PDF] Review of the 2024 Filing Season - Taxpayer Advocate Service - IRS
    Jun 3, 2024 · 119 With about 2.9 million returns filed through Free File in FS 2024, the number of ... Alliance companies offer free state tax return ...
  34. [34]
    Free tax filing service available to millions on IRS.gov
    Jan 7, 2025 · Taxpayers with an AGI above $84,000 can use the Free File Fillable Forms (FFFF) starting Jan. 27. These electronic versions of IRS paper forms ...
  35. [35]
    IRS: Free File provides quick and easy way to file taxes
    As the end of tax season approaches ... (AGI) was $84,000 or less. A taxpayer's AGI includes wages, tips ...
  36. [36]
    Free tax filing options still available | Internal Revenue Service
    IRS Free File lets qualified taxpayers prepare and file federal income tax returns online using interview-based tax preparation software.
  37. [37]
    IRS Free File 2025: What It Is, How It Works - Taxes - NerdWallet
    Jan 27, 2025 · AGI: $17,000 to $84,000. No age restrictions. If you qualify for a free federal return based on AGI, some state returns may also be included ...<|separator|>
  38. [38]
    IRS Free File program delivered by - FreeTaxUSA
    Supported state tax returns ; Florida, No state income tax, No state income tax ; Georgia, ready to start ; Hawaii, ready to start ; Idaho, ready to start.Contact us · Customer support · Where's My Refund · Accuracy Guarantee<|separator|>
  39. [39]
    Free File Alliance Partners - Montana Department of Revenue
    The Free File Alliance is a nonprofit coalition of industry-leading tax software companies partnered with Montana to help our taxpayers prepare and e-file ...
  40. [40]
    [PDF] ninth memorandum of understanding on service standards and - IRS
    Dec 18, 2023 · This Ninth Memorandum of Understanding (MOU) is entered into as ofthe date of the last signature on this document between Free File, Inc. (“FFI”) ...
  41. [41]
    Modernized e-File (MeF) program information - IRS
    Sep 27, 2025 · Program overview, provider directory, schemas, news, internet filing and more information on the MeF program.Approved IRS e-File · Authorized IRS e-file Provider · Modernized e-File (MeF)Missing: Free mechanics flow
  42. [42]
    Free File Tops 1.3 Million Returns
    Feb 25, 2003 · In 2002, the software industry agreed to provide free preparation and e-file services to at least 60 percent of the nation's taxpayers.Missing: history 2000-2003
  43. [43]
    [PDF] For Individual and Business e-File, 2008 Is a Record Breaker - IRS
    Nov 12, 2008 · Almost. 4.8 million tax returns were filed through Free File, an increase of 24 percent over last ... Corporations and partnerships e-filed ...Missing: peak | Show results with:peak
  44. [44]
    2023 Tax Season Takeaways: Fewer Filers as IRS Rebounds
    Jun 12, 2023 · Half of DIY Returns Are Free: The IRS Free File program facilitated the filing of 2.7 million returns, compared to 3.3 million in 2022, while ...<|separator|>
  45. [45]
    SOI Tax Stats - IRS Data Book | Internal Revenue Service
    May 29, 2025 · During Fiscal Year (FY) 2024, the IRS collected more than $5.1 trillion in gross taxes, processed more than 266.6 million tax returns and other ...Returns filed, taxes collected... · IRS Budget and Workforce · Data for all years
  46. [46]
    [PDF] IRS Should Develop Additional Options for Taxpayers to File for Free
    Apr 28, 2022 · on the number of Free File returns prepared by participating companies, ... 6In 2002, the organization's name was the Free File Alliance, LLC.<|separator|>
  47. [47]
    New IRS report examines free tax filing option to reduce the cost and ...
    Jun 1, 2023 · Approximately 70 percent of taxpayers are eligible for Free File, but less than 3 percent of taxpayers utilize it. The Volunteer Income Tax ...
  48. [48]
    TurboTax Deliberately Hid Its Free File Page From Search Engines
    Apr 26, 2019 · Dozens of ProPublica readers whom TurboTax charged even though they were eligible to file for free have reported getting refunds by calling the ...Missing: gaps | Show results with:gaps
  49. [49]
    The IRS and Free File: Three Lessons About the Tax System
    Aug 6, 2019 · Complexity, in particular, raises several barriers to using Free File, making it difficult for potential filers to know that they are using the ...
  50. [50]
    [PDF] Internal Revenue Service Advisory Council Public Report - IRS
    44 Currently, there are twelve tax preparation companies that belong to the FFA and that pay annual membership fees. For its part, the IRS hosts the. Free File ...
  51. [51]
    ABOUT - Free File Alliance
    The Free File Alliance is a nonprofit coalition of industry-leading tax software companies partnered with the IRS to provide free electronic tax services.
  52. [52]
    IRS Direct File: Actions Needed during Pilot to Improve Information ...
    Apr 9, 2024 · IRS estimated that Direct File could cost $64-$249 million annually—depending on assumptions such as the number of taxpayers served. IRS ...
  53. [53]
    IRS Free File Now Open for 2025 - Yahoo Finance
    Jan 10, 2025 · Free File members for tax-filing season 2025 are: 1040Now, Inc ... The Free File Alliance and its members continue to make a priority ...
  54. [54]
    Free File Deserves More Attention While the IRS Wastes Resources ...
    Nov 22, 2024 · In June 2024, the IRS announced a five-year extension of Free File, and noted that 2.9 million taxpayers used the service in this year's filing ...
  55. [55]
    U.S. Department of the Treasury, IRS Announce 30 Million ...
    Oct 3, 2024 · In Filing Season 2024, the IRS ran a pilot program for Direct File in 12 states and more than 140,000 taxpayers successfully filed their taxes ...<|separator|>
  56. [56]
    Free File - Most commonly filed federal forms are available - IRS
    Mar 14, 2025 · The Free File Alliance offers the most commonly filed forms and schedules for taxpayers. Software companies are not required to support all the federal income ...
  57. [57]
    Taxpayers with complicated tax returns can use IRS Free File
    May 29, 2025 · The IRS Free File adjusted gross income (AGI) limit for tax year 2023 is $79,000 for families and individuals. Each provider sets their own ...Missing: Alliance expansion 2004-2019
  58. [58]
    Here's how to qualify for IRS Free File for federal tax returns - CNBC
    Feb 5, 2024 · For example, you can file Schedule B for interest and dividends or Schedule C for self-employment, contract or gig economy work, Hugo said.
  59. [59]
    Understanding IRS Direct Filing and what it means | Wolters Kluwer
    Jul 3, 2024 · However, it can only support certain types of income, including wages, interest of $1,500 or less, unemployment compensation, Social Security, ...
  60. [60]
    Data: Americans Waste Billions to File Tax Returns - NerdWallet
    Feb 7, 2024 · Despite 70% of taxpayers qualifying for the IRS' Free File program, just 2% take advantage, according to the most recent IRS filing data.<|control11|><|separator|>
  61. [61]
    IRS Should Develop Additional Options for Taxpayers to File for Free
    Apr 28, 2022 · GAO was asked to examine the Free File program. This report (1) describes demographic characteristics of Free File users; (2) evaluates IRS's ...
  62. [62]
    Independent Study Finds that Free File Is an Effective Public-Private ...
    Dec 12, 2019 · Half of those who were eligible used a paid-preparer to file their taxes; · Nearly 10 million filers self-prepared and received refund ...Missing: 2013 spillover
  63. [63]
    70% of Americans are eligible to file their taxes for free starting today ...
    Jan 10, 2025 · Taxpayers with an adjusted gross income of less than $84,000 or less are eligible to use the free service. That covers about 70% of American ...
  64. [64]
    Data: Taxpayers Missing Out on Chance to File for Free | Nasdaq
    Feb 18, 2025 · Despite 70% of taxpayers qualifying for Free File, less than 1.9% used the service in fiscal year 2023, the most recent year for which this IRS ...
  65. [65]
    IR-2024-58: IRS Free File program sees early increase in use
    Mar 1, 2024 · The IRS Free File program saw a nearly 10% increase in filings, with 943,000 returns filed through Feb 24. It's for those with AGI of $79,000 ...
  66. [66]
    The IRS is testing a free method to directly file taxes. But not ...
    Apr 7, 2024 · The IRS estimates that 19 million taxpayers are eligible to use a new Direct File program in advance of the April 15 tax filing deadline.Missing: mechanics flow
  67. [67]
    Why Don't More Taxpayers Take Advantage of Free Help Filing ...
    May 10, 2022 · IRS's Free File program provides a free option for getting help filing online through private companies, which have an agreement with IRS and can be found on ...Missing: Alliance pandemic surges<|control11|><|separator|>
  68. [68]
    Free tax return preparation for qualifying taxpayers - IRS
    Free tax help is available through VITA for those making $67,000 or less, persons with disabilities, and limited English speakers, and TCE for those 60 and ...
  69. [69]
    Here's How TurboTax Just Tricked You Into Paying to File Your Taxes
    Apr 22, 2019 · There's a name for internet design tactics that get users to pay for products they don't necessarily want: dark patterns. Now, let's go back ...
  70. [70]
    How to File Your Taxes for Free - CNBC
    About 70% of Americans qualified for IRS Free File in 2024, according to the Taxpayer Advocate, but less than 5% used it. There is the chance that Free File ...<|control11|><|separator|>
  71. [71]
    [PDF] An Analysis of the Free File Program - IRS
    The IRS did not begin to identify free-filed returns until the 2006 Filing Season (Tax Year 2005). Limited quantitative data from prior years is available via ...Missing: 2000-2003 | Show results with:2000-2003
  72. [72]
    Senate Investigation Criticizes the IRS for Failing to Oversee Free ...
    Jun 9, 2020 · The investigation, which is ongoing, came after a ProPublica series showed that millions of Americans were coerced into paying for tax filing ...Missing: gaps | Show results with:gaps
  73. [73]
    Tax prep companies that spent over $90 million lobbying against ...
    Sep 1, 2023 · Over the two decades since Free File launched, Intuit has poured over $43.3 million into federal lobbying while H&R Block spent nearly $42 ...
  74. [74]
    Congress Is About to Ban the Government From Offering Free ...
    Apr 9, 2019 · A bill supported by Democrats and Republicans would make permanent a program that bars the IRS from ever developing its own online tax filing service.
  75. [75]
    Warren, Porter Condemn Tax Prep Companies' Lobbying Tactics
    The Free File program has been a clear failure for years, but tax prep companies have engaged in a long and aggressive lobbying campaign to prevent the IRS from ...Missing: 2000-2002 | Show results with:2000-2002
  76. [76]
    TurboTax owner Intuit ramps up lobbying as debate over ...
    May 5, 2023 · ... Free File Alliance members—have used the revolving door to exert undue influence on department and agency policies, particularly Free File.
  77. [77]
    IRS's Costly Direct File - Costly and Confusing
    The IRS estimates Direct File will cost up to $249 million annually(1), and many state that costs will be even greater.
  78. [78]
    [PDF] Between the Internal Revenue Service and Free File Alliance, LLC
    ... Alliance under the terms of this MOU as described in 8.2. 8.2.2 The Alliance shall be responsible for paying the GSBCA for all costs incurred by the GSBCA ...
  79. [79]
    IRS Reforms Free File Program, Drops Agreement Not to Compete ...
    Dec 31, 2019 · IRS Reforms Free File Program, Drops Agreement Not to Compete With TurboTax. The changes come after ProPublica's reporting showed how TurboTax ...Missing: awareness | Show results with:awareness
  80. [80]
    Free File Program Extended to 2029 - Tax Notes
    May 22, 2024 · The IRS has announced (IR-2024-145) that the Free File program has been extended through October 2029, with 2.9 million tax returns filed ...
  81. [81]
    Direct File: IRS Successfully Piloted Online Tax Filing but ...
    Dec 19, 2024 · GAO found that IRS followed leading practices in piloting Direct File. These included identifying learning objectives and collecting relevant ...
  82. [82]
    [PDF] The IRS's Direct File Folly: Key Transformational Projects Left ...
    Jun 12, 2024 · The IRS has pitched Direct File as a “free” filing program, but there are significant costs to taxpayers.
  83. [83]
    [PDF] Statement of Pete Sepp, President, National Taxpayers Union ...
    Feb 11, 2025 · Direct File is redundant, duplicating the IRS's public-private partnership Free File program—a cost-effective option that reduces administrative ...
  84. [84]
    The IRS free tax-filing program Direct File saved users $160 each ...
    Apr 22, 2025 · According to the IRS, while 423,450 taxpayers logged into Direct File in 2024, only 140,803 of them submitted accepted returns. Despite ...
  85. [85]
    Goodbye and Good Riddance to Direct File! - Foundation
    Apr 17, 2025 · In June 2024, the IRS renewed this agreement for five years, noting that Free File saw a 7% uptick in users that filing season, saving ...
  86. [86]
    Free File, Free File Fillable Forms, and Direct File
    Feb 24, 2025 · You can use this option for 2024 tax returns if your income is below $84,000. Learn more about Free File on the IRS.gov website.Missing: Alliance | Show results with:Alliance
  87. [87]
    IRS Direct File and Free File can save taxpayers money
    Eligible taxpayers who use Direct File can file their 2024 federal tax returns online – always for free – directly with the IRS.Irs Direct File And Free... · Irs Free File · Miltax
  88. [88]
    IRS announces Jan. 27 start to 2025 tax filing season
    Jan 27, 2025 · On the first day of the filing season, Direct File will open to eligible taxpayers in 25 states to file their taxes directly with the IRS for ...Missing: scope | Show results with:scope
  89. [89]
    [PDF] Direct File Media Guide - IRS
    During the 2025 filing season, IRS Direct File is a filing option that eligible taxpayers in 25 states can use to file their federal taxes online directly with ...Missing: complex | Show results with:complex
  90. [90]
    IRS Fact Sheet Outlines Expanded Direct File Services - Tax Notes
    Mar 10, 2025 · While there are no income limits for Direct File, additional limitations apply to taxpayers with household wages exceeding $125,000. Currently, ...Missing: complex | Show results with:complex<|separator|>
  91. [91]
    IRS Direct File Pilot Exceeds Usage Goal, Receiving Positive User ...
    Apr 26, 2024 · Foundational technology and product development costs for the IRS were $10.5 million, and Direct File's operational costs – including customer ...
  92. [92]
    [PDF] Data Book, 2024 | Internal Revenue Service
    During FY 2024, IRS employees processed more than 266.6 million tax returns and other forms, including 161 million individual income tax returns. The past two ...
  93. [93]
    Government Watchdog Finds IRS Has Not Properly Estimated Cost ...
    Apr 19, 2024 · In a Senate Finance Committee hearing, Senator Mike Crapo (R-ID) pointed out that the IRS spends less than $5 million per year on Free File ...Missing: comparison | Show results with:comparison
  94. [94]
    Weekly Column: Time To End Direct File, Not Make It Permanent
    Jul 1, 2024 · Government watchdog estimates put Direct File's cost at $129 million for 2024, which amounts to paying $902 per filed return. The Department of ...
  95. [95]
    [PDF] IRS Direct File Pilot Program - Filing Season 2024 After Action ...
    May 3, 2024 · More than 4% of Direct File users report filing on paper last year; one lesson we will focus on is how to ease the transition from paper to ...
  96. [96]
    The Direct File Pilot Shows That a Public Tax Filing Option Saves ...
    Jun 18, 2024 · The IRS spent a total of $24.6 million on the pilot—lower than expected—with operational costs of just $2.4 million. Nearly half of Direct File ...
  97. [97]
    Data: Taxpayers Missing Out on Chance to File for Free - NerdWallet
    Feb 18, 2025 · Despite 70% of taxpayers qualifying for Free File, less than 1.9% used the service in fiscal year 2023. Computer, Electronics, Laptop.
  98. [98]
    Taxpayer Rights Group Says Direct File Tool Is Unnecessary
    Sep 12, 2023 · Direct File will not be simple and easy, as its proponents proclaim. It will not be free. And it is not necessary, in light of the many tax- ...Missing: debates | Show results with:debates
  99. [99]
    Don't Let the IRS Repeat Its Direct File Missteps - Foundation
    Jul 10, 2025 · While the IRS claimed Direct File would cost about $26.60 per user, TIGTA finds that it has cost $78.87 per user thus far. Worse, Direct File's ...
  100. [100]
    The battle over Direct File and the future of free public tax filing
    Mar 4, 2025 · Republican opposition to Direct File was shaped by a well-funded lobbying campaign from the tax prep industry and ideological resistance to ...Missing: 2000-2002 | Show results with:2000-2002
  101. [101]
    https://news.bloombergtax.com/daily-tax-report/tax-prep-gop-aligned-groups-lobby-to-end-irs-direct-file
  102. [102]
    Republican lawmakers ask Trump to kill IRS Direct File - Nextgov/FCW
    Dec 11, 2024 · Intuit is no longer part of the program, nor is heavy-hitter H&R Block. Both companies have previously described Direct File as a “solution in ...
  103. [103]
    IRS Shouldn't Be Trusted With Direct File
    Apr 12, 2024 · Americans might not pay when filing their taxes, but those tax dollars would fund the digital infrastructure, personnel and other resources ...Missing: ideological | Show results with:ideological
  104. [104]
    IRS Announces Extension Of Free File Program Through 2029:
    The five-year extension agreement between the IRS and Free File Inc. will continue the program through October 2029. Free File is a public-private partnership ...Missing: June | Show results with:June
  105. [105]
    IRS Direct File can help taxpayers in 25 states claim valuable credits ...
    Taxpayers who lived and worked in one of the 25 participating states for all of 2024 can use Direct File if they report: W-2 wage income; SSA-1099 Social ...
  106. [106]
    IRS: Don't overlook free options for preparing and filing taxes in 2025
    Mar 10, 2025 · ... (AGI) of $84,000 or less. IRS Free File also provides fillable forms for use by any taxpayer, regardless of income, who is comfortable ...
  107. [107]
    IRS' free tax filing program is at risk amid Trump scrutiny - CNBC
    Apr 17, 2025 · The IRS free tax filing program, known as Direct File, has faced heavy Republican scrutiny since its 2024 launch. Direct File expanded to ...
  108. [108]
    IRS chief says agency plans to end free Direct File program - CNBC
    Jul 30, 2025 · Internal Revenue Service Commissioner Bill Long said the agency will end its Direct File program after a limited pilot and one full filing ...
  109. [109]
    [PDF] Future of the Direct File - Treasury
    May 22, 2024 · ... IRS will continue to support all filing options. We remain committed to the IRS's ongoing relationship with the Free File Alliance, who have ...
  110. [110]
    IRS Direct File Is Reportedly Being Eliminated After This Filing Season
    Apr 16, 2025 · While Republican lawmakers had previously targeted the program, the free tax software program had been marked as safe for the 2025 season. By ...
  111. [111]
    IRS asks for public input on free tax filing options to inform ...
    The law directs Treasury to deliver a report to Congress by Oct. 2, 2025, on several key issues related to free tax filing options for the public. Treasury and ...
  112. [112]
    Congress Could Improve Tax Filing by Making the IRS Direct File ...
    Apr 22, 2025 · The Trump Administration reportedly intends to end the IRS Direct File program, the optional and free tax filing service.
  113. [113]
    The Future of Free Tax Filing: The IRS Wants to Hear From You
    Sep 2, 2025 · Expand IRS Direct File: The IRS could decide to make the program permanent and expand its availability to more states and more complex tax ...Missing: outlook | Show results with:outlook