IRS announces contractor reviewing ‘Free File’ program

The IRS announced on Friday that it has entered into a contract with a third party that will review the agency’s “Free File” partnership with tax-preparation companies.

“The IRS has contracted with the Mitre Corporation to conduct an independent third-party review of the Free File program,” the IRS said in a statement. “Mitre will provide an assessment of the current program and develop recommendations for improvements. The project plan is in process and we expect Mitre’s findings to be delivered in the fall.”

{mosads}Under Free File, the IRS partners with tax-prep companies to have those companies offer free tax-filing software to low- and middle-income taxpayers.

The program has drawn concerns from lawmakers in recent months, following a series of articles from the investigative news outlet ProPublica that reported that tax-prep firms have taken steps to hide their Free File options.

The IRS announced in early May that it was reviewing concerns about the program. Soon after the announcement, IRS Commissioner Charles Rettig said that the agency was planning to utilize an outside contractor in reviewing the program.

The IRS has worked with Mitre on numerous occasions in the past. The company has a federally funded research and development center that is sponsored by the IRS and Treasury Department.

“An independent review of the Free File program is critical,” Sen. Ron Wyden (D-Ore.), the ranking Democrat on the Senate Finance Committee, said in a statement. “While I believe in moving toward a public filing program administered by the IRS, the Free File program needs to be improved in the interim to ensure companies like Turbo Tax and H&R Block are adhering to the letter and spirit of the agreement. These companies need to better serve taxpayers who are eligible to file their taxes for free.”

The House passed an IRS modernization bill in April that would have codified the Free File program. But a number of Democratic lawmakers had an issue with the provision, and in June, Congress passed a new version of the bill that didn’t include the program. Trump signed the version of the bill that lacked the Free File provision earlier this month. 

– updated at 6:21 p.m.