Participation in IRS Free File program up this year: early data

Participation in the IRS’s Free File program has been up “significantly” so far this year, according to a report by a Treasury Department watchdog, after the program garnered increased attention and scrutiny.

The IRS has received about 1.53 million tax returns through the program as of Feb 28. That’s a 22.4 percent increase from the roughly 1.25 million Free File returns received last year as of March 1, 2019, according to interim data in a report released Monday by the Treasury Inspector General for Tax Administration (TIGTA).

Under the Free File program, the IRS partners with tax-preparation companies to have those companies offer free tax filing services to low- and middle-income taxpayers.

The program drew increased scrutiny from policymakers in the past year, following a series of ProPublica articles reporting that tax-prep companies had taken steps to hide their free options under the program from their web search results. Policymakers have been concerned that the program isn’t being widely used.

A TIGTA report released earlier this year found that more than 14 million taxpayers who were eligible for the Free File program may have paid a fee to electronically file their federal tax returns last year.

The IRS in December signed an updated agreement with the tax-prep companies in December, which bars the companies from excluding their Free File landing pages from web search results.

Another free-filing option, called Free File Fillable Forms, which is a digital parallel to the 1040 tax form, has seen its usage decline so far this year, though that program is not as widely used as Free File.

Updated at 2:45 p.m.