Free File participant Free File Alliance
History
In November 2001, the U.S. Office of Management and Budget's (OMB) Quicksilver Task Force established 24 e-government initiatives that were a part of the President's Management Agenda. These initiatives were designed to improve Government to Government, Government to Business, and Government to Citizen electronic capabilities.One initiative, IRS Free File, instructed the IRS to provide free and secure online tax return preparation and filing services to taxpayers. In accordance with this OMB directive, the IRS began working in partnership with the tax software industry to develop a solution. The result was the formation of the Free File Alliance, LLC, a group of tax software companies who provide free commercial online tax preparation and electronic filing services.According to investigations by the news organization ProPublica, TurboTax maker Intuit allegedly engaged in practices that hid the Free File Program from eligible taxpayers, and attempted to trick eligible taxpayers into paying for services they might be eligible to receive for free.
In 2020, H&R Block ended its participation in the Free File Program. In July 2021, Intuit announced that its TurboTax product would no longer participate in the Free File Program effective as of the 2021 tax season. For tax-filing season 2023, seven tax software companies are participating in the Free File Program.Free File Alliance
The Free File Alliance is a consortium of commercial tax preparation software providers that offer their brand-name tax software products for free to lower and middle-income tax filers. Each member is allowed to set eligibility requirements for their software products. However, the cumulative offers must allow 70 percent of U.S. taxpayers - approximately 100 million people - to be eligible for at least one product. Each year, the income limit for eligibility is adjusted to reach 70 percent of the taxpayers. The income limit for 2022 (tax year 2021) is set at $73,000, though some Free File software providers choose to set the income threshold lower. Agreements between the IRS and the Free File Alliance are publicly available. The latest memorandum of understanding was signed in 2021 and runs through 2023.