TAP 03-003

FreeFile Alliance Partnership

Statement of Issue:

TAP members would like to support the IRS in reaching the goal of 80 percent of returns filed electronically. One part of this initiative is the Free File Alliance. With the 2002 filing season, the IRS instituted "FreeFile," a new electronic system for filing taxes geared to individual taxpayers. With the help of 17 FreeFile partners, the IRS has increased the number of e-filers substantially. However, there remain many issues with the alliance process that need review and correction.

Proposal:

1. Limit the number of FreeFile Alliance members.

2. Standardize the software across providers.

3. Limit commercialization/marketing of firm's other services to users.

4. Allow taxpayers to download returns and store them on their personal computers.

5. A point-of-service survey should be available for every return attempted.

6. Have the IRS convert FreeFile Alliance members to independent contractor status with the agency, and pay a nominal fee per e-filed return.

7. Allow taxpayers to file returns directly with the IRS and bypass the middleman.

8. Involve TAP members as partners on the review team.

Terry Lutes held telephone conference with Area 5. Recommendations were taken into consideration while negotiating the Free File Alliance for 2004 Filing Season. Further recommendations need to be forwarded prior to June 2004 and will be considered for the negotiations for 2005 Filing Season. Mr. Lutes also answered panel members specific questions.