Most Americans Could File Their Taxes for Free, But Don’t

WASHINGTON (AP) — A new government monitoring report finds that while most Americans are eligible to file their taxes for free, only a fraction use government-provided services.

Instead, many taxpayers used other methods, “which they may have paid to use,” according to new research from the US Government Accountability Office on the 2020 tax filing season.

The GAO report, released Thursday, found that while 70% of taxpayers were eligible for the Internal Revenue Service’s free filing program, only 3% of taxpayers actually use the service.

The IRS Free Files program is a public-private partnership of tax software companies that provides free services to taxpayers outside of the IRS website.

Taxpayers with incomes below a certain threshold can use the Free File Program – which this season represents any individual or family with an adjusted gross income of $73,000 or less in 2021.

A suggested recommendation on how to improve taxpayers’ use of free tax services – that the IRS consider developing a new public option, was rejected by the agency due to IRS funding issues.

“If new legislation and funding were approved, the IRS would expect to evaluate the feasibility and utility of offering additional tax preparation and filing options,” wrote Douglas W. O’Donnell, deputy commissioner for services and enforcement in an April 11 letter to the GAO.

The agency is struggling with a backlog of millions of tax returns and struggling to modernize its IT systems.

And although the agency’s workforce is the same size as in 1970, the IRS this year faces its biggest backlog in history. At the end of the 2021 filing season, the agency had 35.3 million returns awaiting processing.

The GAO report finds that “the IRS may be underestimating its potential to improve certain aspects of the taxpayer experience” and that it would “not necessarily need to develop new options on its own deposit”.

Although the agency announced plans in March to hire at least 10,000 more workers to help process returns, administration officials say the IRS desperately needs more funding because its budget has grown. dropped over the past decade.