More people can file taxes for FREE this year!

It’s been way too long a fight, with powerful lobbyists who were backed for years by Congressional patrons, but the end of the corporate tax prep monopoly is near. (Technically, it’s an “oligopoly” since several companies are involved)!

This tax season, almost any taxpayer in some dozen states can choose the government itself to help with their personal taxes! Who is providing this competition?  It’s the IRS! It has a new government competitor to the tax prep program provided by tax prep companies called “Free File;” the new, actually “FREE,” IRS program is called called  “Direct File”

As the Washington Post notes, the IRS is taking baby steps as it rolls out the new program:

“Direct File can handle only certain tax situations. If you have self-employment income, or if you want to claim a tax credit for child-care expenses, for instance, you can’t use the new program.”

For many years, the tax prep industry locked in its monopoly — for years the companies even got free space on the IRS website — by providing a so-called “Free File” program ONLY to lower income Americans– but there was a catch. The firms charge fees for add-on services. Many are used by low-income consumers who qualify for the refundable tax credit known as the Earned Income Tax Credit (EITC) as well as by more affluent consumers.

Don’t expect the private companies to go down without a fight. The New York Times included this barb in its story on the roll-out:

“A spokeswoman for Intuit, Tania Mercado, criticized the direct file project as a “half-baked solution” and a waste of taxpayer money. “The direct file scheme is a solution in search of a problem,” she said. Intuit makes the TurboTax tax preparation software.”