IRS marketing lapse likely leaves low-income taxpayers unaware of free filing options, lawmakers say
Only fraction of eligible taxpayers use Free File program
A group of senators called on the IRS to increase oversight of its program that allows eligible taxpayers to file for free – and to increase funding for marketing because many people may not even be aware the cost-free option exists.
Individuals with incomes of $69,000 or less are eligible to use the Free File program — a partnership with third-party preparers. About 70 percent of taxpayers qualify, according to the IRS.
However, a report released Tuesday found that a lack of marketing is likely to have contributed to a general lack of awareness about the free filing option – which may explain why some taxpayers have been paying for services that they could receive for free. There is no maintained budget for advertising the Free File option.
As previously reported by FOX Business, the IRS is already contending with declining budget and staff levels.
IRS UPDATES RULES TO PROTECT FREE FILING OPTIONS FOR LOW-INCOME TAXPAYERS
Lawmakers also say that, up until recently, the IRS conducted “little oversight” of the tax program – and despite three separate, independent reviews, it does not serve eligible taxpayers as efficiently as it could.
“To support Free File, the IRS should increase its oversight of [Free File Alliance] members and dedicate funding—including increased funding from Congress, if necessary—to market the Free File program,” lawmakers wrote.
A spokesperson for the IRS did not immediately return FOX Business' request for comment.
The Senate Committee on Homeland Security and Governmental Affairs began a review of the program in June 2019.
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The Free File program was called into question after ProPublica reported that some companies were engaging in deceptive practices and obscuring their free products from organic searches online.
A follow-up report showed that five of the 12 members of the program used a coding device to keep their Free File landing pages out of organic searches.
Lawmakers pointed out Tuesday that the most common way taxpayers find preparation options is through Google search, and 85 percent of people click on advertisement links that promote commercial products on Free File Alliance members’ websites. “Only a fraction” of total visits were routed from Google directly through to a company’s Free File product.
According to the IRS, about 57 million taxpayers have used the program since its debut in 2003. In 2018 alone, however, more than 100 million taxpayers met the criteria for the free filing option.
There has been speculation that the IRS may soon create a free tax filing program of its own. It recently eliminated a clause from its memorandum of understanding with its third-party partners that prevented it from competing in the market. Some lawmakers – including Massachusetts Democrat Sen. Elizabeth Warren – have advocated for the agency to do so.
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