IRS: Free e-filing from fees

Nothing is free — even the Internal Revenue Service knows that. Nevertheless, the tax agency wants to make electronic filing a reality for every taxpayer but wonders who will pick up the tab.

Terry Lutes, the new director of the IRS Electronic Tax Administration, said Wednesday the government is committed to increasing the number of taxpayers filing online next year to 43 million — up from 34 million who e-filed in 2000.

Lutes, who replaced Robert Barr at the agency this week, said that e-filing is available but not always accessible to everyone. Currently, a taxpayer has to buy software to file online or visit a tax preparer certified to file e-taxes for a fee.

"How do we make sure the option is available for every American? The price is still a big issue," Lutes told a session of the Council for Electronic Revenue Communication Advancement meeting in Alexandria, Va.

Although e-filing has been promoted as a faster, more accurate way of filing, Lutes said some taxpayers won't or can't pay for it.

"The game is not the same for us as it is for the private sector," Lutes said. Many taxpayers ask, "Why should I have to pay to file my tax return?"

Although he did not have any specific suggestions, he said a number of companies are providing free filing services for low-income taxpayers. Most taxpayers pay $20 or more for a software package.

Earlier this year, the Clinton administration proposed a $10 tax credit for taxpayers filing online, but the proposal is not expected to go anywhere in the last few days of the 106th Congress, which is expected to adjourn within a week.

"We still believe that if we get folks to file electronically once, they won't go back," Lutes said.

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