Taxpayer Watchdog Applauds Federal Free File Alliance | Citizens Against Government Waste

Taxpayer Watchdog Applauds Federal Free File Alliance

Press Release

For Immediate ReleaseContact: Mark Carpenter/Tom Finnigan
January 22, 2004(202) 467-5300


Washington, D.C.Citizens Against Government Waste (CAGW) today commended the Treasury Department and the Internal Revenue Service (IRS) for renewing and improving the partnership between the agency and private tax software industry to provide free tax preparation and e-filing to many taxpayers.  The Free File Alliance, entering its second year, delivers valuable services to those taxpayers who need them most without incurring excessive costs.

CAGW President Thomas A. Schatz said, “As a voluntary public-private partnership focused on assisting lower income, disadvantaged and underserved taxpayers, the Free File Alliance demonstrated significant success in its first year of operation, with almost 3 million electronic federal returns filed nationwide.”

Schatz added, “The Free File Alliance saves taxpayers as much as $300 million as the government avoids wasting valuable taxpayer dollars duplicating sophisticated tax preparation services already available from the private sector.  Adding to that the value of the software being donated to taxpayers by the participating companies – estimated at $100 million – it is easy to see why this is a much more efficient alternative to earlier proposals to have the federal government build these kinds of services from scratch.”

Already, 15 states have followed this model by creating their own similar public-private partnerships at the state level.  Other states, such as California, are considering creating their own costly and inefficient state-run filing system.  That’s the wrong choice for a state with the nation’s largest budget deficit.

Schatz added, “The Free File Alliance has been successful because it provides well-known private sector products.  Taxpayers have more confidence in the security and privacy standards, as well as the independence and innovation of these companies.  In fact, the partnership helps avoid a clear conflict of interest – the government trying to serve as both the tax preparer and tax collector.  In addition, a system built and operated solely by the federal government would be much less responsive than private sector companies to the needs of customers and slower to incorporate new, best-practices features.  Most importantly, limited government resources at the state and federal level can be devoted to critical priorities, rather than wasting those resources on duplicative and questionable efforts in the field of tax preparation software.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government.

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