After the release of a stinging report criticizing the Internal Revenue Service for shutting down the TeleFile program, leading members of the Senate Finance Committee lashed out at the IRS's decision.

The Treasury Inspector General for Tax Administration said in the report that the shutdown of the TeleFile program may have saved the IRS some money in the short term, but it increased the cost and burden of filing a tax return for many taxpayers. The report noted that before the IRS ended the program in August 2005, about 4.4 million taxpayers were able to file simple tax returns for free annually by using their telephone keypads. The program had achieved satisfaction rates of 90 percent among its users, the majority of them earning less than $25,000 annually. But the IRS claimed that usage of the program was declining while the costs were rising.

Now most former TeleFile users are forced to resort to paying professional tax preparers or buying tax prep software, or they've gone back to using paper, which undercuts the IRS's goal of increasing electronic filing. The TIGTA report estimates that of the 2 million taxpayers who still would have been eligible to file their taxes under the program, more than 541,000 of them paid a total of $23.6 million to file their taxes in 2006, while nearly 966,000 taxpayers reverted to using paper.

"The IRS did not have the best interests of taxpayers in mind when it chose to get rid of TeleFile," said Senate Finance Committee Chairman Max Baucus, D-Mont., in a statement. "Instead, it chose to shift costs on to the American people and increase the burden to taxpayers." Ranking Republican Member Charles Grassley echoed Baucus's sentiments and called on the IRS to reinstate a method of free, direct electronic filing.

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