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MSP #5: FREE FILE

Substantial Free File Program Changes Are Necessary to Meet the Needs of Eligible Taxpayers

TAS Recommendations and IRS Responses

1
1.

TAS RECOMMENDATION #5-1

Explicitly prohibit the use of special coding by FFI members to exclude Free File program software from organic searches on search engines.

IRS RESPONSE TO RECOMMENDATION: The IRS recognized there were inconsistencies in approaches by the member companies regarding web searches. As with other changes to the program, this specific change was made in an addendum to the Memorandum of Understanding (MOU) signed on December 26, 2019 stating “FFI Members are prohibited from engaging in any practice that would cause the Member’s Free File Landing Page to be excluded from an organic internet search. Each FFI Member shall standardize the naming of its Free File offer listed on the IRS Free File Website and the Member Free File Landing Page so taxpayers can link to the Member’s Free File Landing Page from organic searches.”

CORRECTIVE ACTION: N/A

TAS RESPONSE: The IRS recognized there were inconsistencies in approaches by the member companies regarding  web searches. As with other changes to the program, this specific change was made in an addendum to the Memorandum of Understanding (MOU) signed on December 26, 2019 stating  “FFI Members are prohibited from engaging in any practice that would cause the Member’s Free File Landing Page to be excluded from an organic internet search. Each FFI Member  shall  standardize the naming of its  Free File offer listed on the IRS Free File Website and the Member Free File Landing Page so taxpayers can link to the Member’s Free File Landing Page from organic searches.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

2
2.

TAS RECOMMENDATION #5-2

Collaborate with the National Taxpayer Advocate and the FFI member companies to determine the best way to eliminate confusion between Free File program products and other non-program free software offered by FFI members.

IRS RESPONSE TO RECOMMENDATION: The IRS, in conjunction with FFI, implemented a revised naming convention to bring more clarity to the Free File software products. The recently signed MOU addendum requires all Free File members to name their Free File products “IRS Free File Program delivered by (company name or product name)”. The same naming convention is in place on each member’s Free File landing page, as well as the IRS.gov/FreeFile website. Taxpayers will readily see when they are using a Free File product because it uses this new naming convention.

The IRS will collaborate with stakeholders, including the NTA, to better understand the taxpayer experience differentiating between the IRS and member websites and find a means to measure and track customer satisfaction within the limited IRS budget.

CORRECTIVE ACTION: N/A

TAS RESPONSE: We agree that the new required  naming  convention  will  benefit  taxpayers  and  prevent  unnecessary confusion. We look forward to collaborating with the IRS to better understand the taxpayer experience and address any remaining taxpayer confusion.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

3
3.

TAS RECOMMENDATION #5-3

Collaborate with the National Taxpayer Advocate as it responds to the recommendations made in the MITRE 2019 Free File Report.

IRS RESPONSE TO RECOMMENDATION: We continue to review recommendations from the MITRE 2019 Free File report. We will collaborate with stakeholders, including the NTA, to collect input for our consideration when implementing MITRE’s recommendations.

CORRECTIVE ACTION: We will collaborate  with stakeholders, including the NTA, to collect input for our consideration when implementing MITRE’s recommendations.

Update: The IRS provided NTA the opportunity to review the Free File Report to Congress on MITRE Recommendations in May 2021. In June 2021, based on NTA comments, we made verbiage changes for clarity to some of the MITRE Recommendations and changed our position to re-open one of the MITRE recommendations dealing with taxpayer behavior that was originally closed. For that recommendation, we took the NTA’s input and determined it was best to wait for the results from MITRE’s Taxpayer’s Behavior study (due in October 2021) before further action. As this collaboration with NTA was held on all MITRE recommendations, we are closing this specific recommendation from NTA.

TAS RESPONSE: We look forward to collaborating with the IRS on the implementation of MITRE’s recommendations.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open):

4
4.

TAS RECOMMENDATION #5-4

Conduct research to determine why taxpayers eligible to use the Free File program, particularly economically disadvantaged and underserved populations, chose their method of return preparation, including fee-based methods.

IRS RESPONSE TO RECOMMENDATION: The IRS recognizes there is a need to better understand why taxpayers make the choices they do. A behavioral and awareness study will be undertaken to further explore decisions needed for the program.

CORRECTIVE ACTION: A behavioral and awareness study will be undertaken to further explore decisions needed for the program.

TAS RESPONSE: The IRS has committed to conduct the recommended research on taxpayers, including the economically disadvantaged and underserved populations, on why they choose different methods of preparation.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

5
5.

TAS RECOMMENDATION #5-5

Develop actionable goals for the Free File program before entering into a new agreement that, among other things, provide targeted use percentages aimed to substantially increase taxpayer usage and increase the percentage of taxpayers who continue to use the program from year to year.

IRS RESPONSE TO RECOMMENDATION: We agree to study the issue and use data gathered this year, in addition to customer and stakeholder input, to determine the appropriate goals prior to negotiating a new agreement.

CORRECTIVE ACTION: We agree to study the issue and use data gathered this year, in addition to customer and stakeholder input, to determine the appropriate goals prior to negotiating a new agreement.
The IRS established new goals for the Free File program that were shared with FFI Leadership in July 2020.  They did not have any issues with the new goals. At that time, we indicated we will also discuss the new goals at the MOU negotiations prior to the expiration of the current MOU in October 2022.  The IRS is also developing  a structured approach for creating program metrics to evaluate the FF Program. We will determine if targeted-use percentages are appropriate measures for this program.

TAS RESPONSE: The IRS has committed to develop appropriate goals before renegotiating a new agreement with FFI. We recommend the IRS develop goals that include targeted use percentages aimed at substantially increasing both taxpayer usage and the percentage of taxpayers who continue to use the program from year to year.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 11/30/2022

6
6.

TAS RECOMMENDATION #5-6

Work with the National Taxpayer Advocate to create measures evaluating taxpayer satisfaction with the Free File program and test each return preparation software’s ability to complete various forms, schedules, and deductions.

IRS RESPONSE TO RECOMMENDATION: The IRS agrees to evaluate taxpayer satisfaction with the Free File program and use those results to improve Free File. To that end, in the MOU addendum from December 2019, FFI agreed to begin a survey process for successful Free File users. This is the first step of an iterative process to survey taxpayers regarding their customer experience and satisfaction.

All commercial versions of software that electronically file returns go through the Assurance Testing System (ATS) for Modernized e-File (MeF) Individual Tax Returns to make sure the basic computations are correct. Free File products are identical to the basic product software partners offer in the commercial marketplace. The IRS disagrees with testing software products using taxpayer scenarios. The IRS does not perform, and has no authority to perform, testing on private-sector products, of which Free File is a subset.

We established an online email address and are responding to taxpayer inquiries, as well as identifying common issues to consider as improvement opportunities for the Free File program.

CORRECTIVE ACTION: We established an online email address and are responding to taxpayer inquiries, as well as identifying common issues to consider as improvement opportunities for the Free File program.

TAS RESPONSE: The IRS has the authority to test the Free File program products beyond the Assurance Testing System    (ATS) for Modernized e-File (MeF) Individual Tax Returns that it currently performs on all private sector products. The Free File program is a contractual arrangement between the IRS and FFI, and the terms are periodically updated. In addition, taxpayers can access the Free File program products through the IRS website, and the products now use the naming convention “IRS Free File Program delivered by (company name or product name).” Therefore, it is reasonable for taxpayers to assume that the IRS endorses the program products and performs testing of the products’ content (in addition to technological compatibility).

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

7
7.

TAS RECOMMENDATION #5-7

Conduct customer satisfaction surveys and routine quality testing of each Free File program software product to determine clarity of prompts, accuracy of preparation, ease of navigation, and coverage of forms and schedules.

IRS RESPONSE TO RECOMMENDATION: The recent MOU addendum states: “…FFI members shall use a statistically valid methodology to randomly select and uniformly survey taxpayers who successfully e-filed a tax return through the Free File program. This is the first step of an iterative process to survey taxpayers regarding their customer experience and satisfaction.” The IRS will receive quarterly and annual findings from this process to help inform future decisions.

While the IRS and FFI currently require a minimum listing of core Forms 1040 and schedules, most participating companies go beyond this requirement and offer nearly all available Forms 1040 and schedules. Participating companies guarantee the calculations performed by the federal Free File offering.

CORRECTIVE ACTION: The recent MOU addendum states: “…FFI members shall use a statistically valid methodology to randomly select and uniformly survey taxpayers who successfully e-filed a tax return through the Free File program. This is the first step of an iterative process to survey taxpayers regarding their customer experience and satisfaction.” The IRS will receive quarterly and annual findings from this process to help inform future decisions.

TAS RESPONSE: The December 2019 addendum provides that FFI will conduct random surveys of successful Free File  users. However, the IRS should take a more proactive role in the development and methodology of such surveys.   Allowing the industry to develop and conduct the surveys and merely report the findings to the   IRS on a quarterly and annual basis does not go far enough. The IRS should have the authority to approve the language of the survey questions as well as the survey methodology.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

8
8.

TAS RECOMMENDATION #5-8

Redesign the Free File Software Lookup Tool to better direct taxpayers to software providers that best meet their circumstances.

IRS RESPONSE TO RECOMMENDATION: The current Free File Software Lookup Tool allows taxpayers to enter criteria such as age, adjusted gross income, state of residence, and Earned Income Tax Credit or military pay received. The combinations of these criteria identify the specific companies that provide products to best fit the taxpayer’s needs. We are in the process of improving this tool to better direct taxpayers to software providers. We expect these improvements to be made available in early summer 2020.

CORRECTIVE ACTION: The current Free File Software Lookup Tool allows taxpayers to enter criteria such as age, adjusted gross income, state of residence, and Earned Income Tax Credit or military pay received. The combinations of these criteria identify the specific companies that provide products to best fit the taxpayer’s needs.  We are in the process of improving this tool to better direct taxpayers to software providers. We expect these improvements to be made available in early summer 2020. The current Free File Software Lookup Tool allows taxpayers to enter criteria such as age, adjusted gross income, state of residence, and Earned Income Tax Credit or military pay received. The combinations of these criteria identify the specific companies that provide products to best fit the taxpayer’s needs.  OLS is in the process of updating the improved Look Up Tool with items uncovered during testing. OLS is targeting a release of the improved tool in early fall.

TAS RESPONSE: The IRS is taking the recommended  action  to  improve  the  Free  File  Software  Lookup  Tool.  Taxpayers have a right to quality service and the IRS’s provision of a useful tool to assist taxpayers in choosing the appropriate program product will improve the overall taxpayer experience.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

9
9.

TAS RECOMMENDATION #5-9

Provide more Free File program options for ESL taxpayers.

IRS RESPONSE TO RECOMMENDATION: For the 2020 filing season, two FFI members are offering Free File software in Spanish. We appreciate the NTA’s perspective that the program is helpful enough to expand the program to non-English speaking taxpayers.

CORRECTIVE ACTION: N/A

TAS RESPONSE: Two program software products offered in Spanish are a good start.  We encourage the IRS to work with  FFI to offer program products in other common languages. For example, IRS.gov provides tax information  in Spanish, Mandarin Chinese, Korean, Russian, and Vietnamese.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

10
10.

TAS RECOMMENDATION #5-10

Prepare an advertising and outreach plan to make taxpayers, particularly in underserved communities, aware of the Free File program.

IRS RESPONSE TO RECOMMENDATION: Prepare an advertising and outreach plan to make taxpayers, particularly in underserved communities, aware of the Free File program.

CORRECTIVE ACTION: The IRS does not have marketing funds to pursue an advertising campaign to increase Free  File program awareness. However, we are building onto our communications plan to increase program awareness. The IRS issues a multitude of traditional news releases and social media promotions that include key messages about Free File on IRS.gov, as well as references in the Form 1040 instructions.

TAS RESPONSE: We understand that the IRS has no funds to pursue an advertising campaign, and we welcome the opportunity to collaborate with the IRS on additional ways to increase taxpayer awareness of the Free File program.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

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