Intuit to Offer Free 1040 E-Filing Next Year

Intuit plans to provide free electronic filing for its TurboTax desktop software products for individuals for tax year 2008, in response to a request from Congress and the Internal Revenue Service.

Sen. Charles Schumer, D-N.Y., chairman of the Joint Economic Committee, wrote to Intuit and other tax software vendors asking them to expand the availability of free e-filing. Currently Intuit and other members of the Free File Alliance provide free e-filing to taxpayers whose adjusted gross income was $54,000 or less in 2007. The IRS wants to expand the number of electronically filed returns to reduce processing costs, but 40 percent of tax returns are still filed on paper.

Schumer's office released a letter from Intuit to The Wall Street Journal showing that the IRS is pressuring companies to open up free e-filing to a wider range of taxpayers to encourage more of them to use the option. The IRS also wants the Free File Alliance to offer an online application where taxpayers can easily fill out their tax returns and file them. Intuit declined to release the letter, but a representative from Schumer's office and an Intuit spokesperson confirmed the letter.

"Intuit fully supports the elimination of separate federal e-file fees to taxpayers for individual tax returns," said Intuit spokesperson Julie Miller in an e-mailed statement. "We believe it's the right thing for American taxpayers and will encourage more e-filed returns, which will help the IRS achieve its e-file goals. For TY08, Intuit has eliminated separate federal e-filing fees on all TurboTax desktop software products for individuals.

"We also support IRS' proposal for the Free File Alliance to provide a simple online forms-based utility that could be used by any taxpayer to fill out, calculate and electronically file their individual tax forms online at no cost," she added.

However, Intuit is unlikely to offer free electronic filing to professional tax practitioners. Another Intuit spokesman, Rich Walker, said the company does sell unlimited e-filing packages for individual and business returns, but that the high volume of returns sent by most tax preparers precluded providing the service for free.

"As you would expect, there is a vast volume difference between professionals and individual taxpayers," he said. "Consequently, there are additional hardware and software requirements to meet the capacity and processing turnaround that tax professionals require. We have kept the unlimited and per-return e-filing charges at a reasonable fee, while still meeting the increasing demands for e-filing each year, notably at peak periods."