The Internal Revenue Service and the Free File Alliance have extended their partnership, a pact that provides free tax services and electronic filing to an eligible pool of 93 million taxpayers, and providing important new consumer protections.
Free File debuted during the 2003 filing season as a strategy of providing free services to moderate-and low-income taxpayers.

The Free File Alliance is a consortium of tax software vendors that set their own criteria for taxpayer eligibility for free use of their software. The agreement calls for services to be provided to 70 percent of the nation's taxpayers.

The extended agreement includes the following consumer protections:

* Alliance members that offer refund anticipation loans will provide the highest standards of consumer protection, upholding greater disclosure and consent requirements related to ancillary financial products -- fees and interest rates, information on other options for refunds, and full disclosure of RALs as loans rather than refunds.

* Alliance members will provide additional tax forms such as Form 4868, which allows for extensions to file.

* Alliance members' Web sites will display whether state online tax preparation and filing services are available and the associated fees, if any.

"We think this is a constructive step forward. It allows Free File to continue to grow, but it also contains important new consumer protections," said IRS Commissioner Mark W. Everson in a statement.

Taxpayers can access Free File through Alliance members and their services will be available beginning in January 2006 on the IRS Web site.

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