The Treasury Department's Inspector General for Tax Administration conducted an audit of Free File program. IRS management did not, but could comment on the audit and did. Here is the audit report. Following is a summary.
To participate in the Free File program, taxpayers must access the IRS.gov Free File web page and choose a software application there, which directs them to a provider's (member's) website, e.g. TurboTax. Many taxpayers are unaware of this requirement (They believe wrongly they can go directly to the provider's website.) Once on the provider's website, taxpayers are not guaranteed a free return filing. On the Free File site, the taxpayer faces a myriad of criteria for being able to utilize the various software applications. Even if the taxpayer decides that he or she meets the criteria initially, upon entering his or her return information, the taxpayer could then be informed that the return no longer qualifies for free filing.
The modified agreement between members and the IRS requires the member to direct the taxpayer back to the IRS.gov Free File web page, where the taxpayer must restart the process to select a Free File offer. However, at this point the taxpayer has spent significant time on attempting to file, and thus may prefer to pay a fee rather than restart the time-consuming process. The auditor suspects this is why providers do not disclose all of their criteria on the IRS.gov Free File web page.
The auditor made 8 recommendations. The first 3 follow.
1. Better advertising of the Free File program and how to use it.
2. Require providers to fully disclose all criteria on the IRS.gov Free File web page.
3. Establish goals and performance metrics for the Free File program.
Regarding #2, IRS management said it had seen no evidence of any additional criteria being used to charge taxpayers!
How did ProPublica respond here?
1. They used the "scathing" audit as a chance to repeat their attacks on providers such as TurboTax and H&R Block.
2. They described the recommendations of the auditors.
3. They excused the IRS due to budget cuts
What's missing from their response? They said nothing at all about the scenario described above where the taxpayer attempts to use one of the Free File software application but fails. Like I wrote here, ProPublica invokes a double standard -- one for providers and a different one for the IRS! In ProPublica's view, all blame for the incomplete criteria on the Free File web site goes to the providers and none to the IRS, despite the site being owned by the IRS. I don't agree with the auditor's suspicion stated above. Hypothetically, if the criteria were complete, it would be more complicated, and even more taxpayers would be thwarted from using it. And who would ProPublica then blame for that? The providers 100% and the IRS 0%, of course.
Yahoo News, CBS News, and Daily Beast parroted and spread ProPublica's story.
In my personal experience as a volunteer, most taxpayers who come to us want help. Many want somebody else to do the work for them. Dealing with the software themselves alone is unpleasant. VITA and similar sites offer the most help in person. Software vendors' paid products offer far more help than IRS.gov Free File.
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