The Internal Revenue Service and the Free File Alliance, have signed a one-year extension of their partnership to makes free tax software available to taxpayers.

Free File is the free federal tax preparation and e-file service offered through third-party software developers and online fillable forms. The software is available for taxpayers who earn $58,000 or less, which is 70 percent of taxpayers. Free File Fillable Forms is available to taxpayers who earn more than $58,000 and who are comfortable preparing their own federal return.

More than 3 million taxpayers have used Free File so far this year, a nearly 10 percent increase over last year and the first double-digit increase in program usage in several years. Much of the increase is attributable to a new look and feel for the IRS Free File web site, which has been redesigned to make it easier for taxpayers to find the information they need and route to the software they want.

"Free File has helped millions of taxpayers prepare their taxes, and we look forward to continuing this important program," said IRS Commissioner John Koskinen in a statement. "The Free File program saw increased use this year, a reflection of the value of this innovative effort."

The extension agreement includes language specifying that a full renegotiation of the five-year agreement and memorandum of understanding will begin in June. The IRS and the Free File Alliance intend to enter into a multi-year agreement prior to the expiration of the latest extension.

The current five-year agreement expires in October.  The one-year extension provides the IRS and the FFI with time to shape a longer-term agreement to include innovations in the 12-year-old Free File program in order to grow e-file, improve quality and reduce taxpayer burden.   

Free File has played a role in the IRS’s strategy for growing electronic filing. Nearly 43 million taxpayers have used Free File since it debuted in 2003. Based on a relatively low $30 tax prep fee, this means Free File users have saved taxpayers nearly $1.3 billion.

“For more than a decade, Free File has advanced the IRS’ e-filing initiative by making industry-leading tax software available to a majority of Americans at no cost,” said Free File Alliance executive director Tim Hugo. “Free File is the epitome of a successful public-private partnership. We have saved taxpayers an estimated $1.3 billion in preparation and filing costs, while introducing millions of Americans – many of whom could not otherwise afford tax software – to the efficiency and ease of e-filing. The Free File Alliance looks forward to continuing to serve taxpayers next year and beyond.”

Free File is still available through October 15 for extension filers at www.irs.gov/freefile.