Responding to criticism from Congress and taxpayer advocates, the Internal Revenue Service announced that for the upcoming tax-filing season, private sector partners in its Free File program will remove ancillary offerings -- such as refund anticipation loans -- made to taxpayers in the course of participating in the program.“We heard many legitimate concerns about the marketing of ancillary products during the last filing season,” said IRS Commissioner Mark Everson, in a statement. “This is a constructive step.”

Now in its fifth year, Free File is a partnership between the IRS and the Free File Alliance, a coalition of tax preparation software manufacturers who provide their products and free federal e-filing to eligible taxpayers.

For 2007, taxpayers who earn $52,000 or less will be able to find a Free File offer for which they are eligible. The IRS said approximately 70 percent of all taxpayers -- 93 million people -- will be eligible for Free File next year.

The IRS said outside research revealed that about 6 percent of users purchased an ancillary product from a software provider, while approximately half of those said that their purchase was not intended. Since debuting during the 2003 season, more than 15 million tax returns have been prepared and submitted through Free File. Also, according to the IRS’ own data, about 0.5 percent of the Free File users request a refund anticipation loan.

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