updated 1/19/2005 3:58:36 PM ET 2005-01-19T20:58:36

The IRS is taking some of the sting out of an annual tax chore and making free tax preparation programs available to virtually every taxpayer through a partnership with software companies.

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The arrangement lets taxpayers avoid the cost of buying sophisticated tax preparation software and fees charged for electronic tax filing.

This marks the last year, however, that taxpayers can use the telephone as a paperless filing method. The IRS plans to end the TeleFile program, available to taxpayers with simpler returns, because of shrinking demand and a tightening budget.

“The number of people using it continues to go down between 7 and 10 percent a year,” said Bert DuMars, IRS director of electronic tax administration. “It’s become the most expensive tax return process we have at this point.”

Taxpayers who opt to go online and use the free electronic filing program can browse 15 or more options, all tested for security and accuracy by the IRS. The IRS does not endorse any of the tax products or other services offered by participating companies.

At least three companies offer free tax preparation and electronic filing to everyone this year. Other participating companies require taxpayers to meet qualifications by age, income, military service or other factors.

“More people than ever are going to be able to use it,” DuMars said.

The nation’s tax collectors offered the free program to fulfill orders from Congress that the agency expand electronic services. Filing electronically also offers advantages to taxpayers by catching common errors and speeding refunds.

The IRS expects half of the returns filed this year to arrive electronically, including those sent through the free filing program.

An online IRS tool can help taxpayers sift through the free programs. Taxpayers must access the programs from the IRS Web site, which directs users to the participating programs.

The IRS expects 62 percent of taxpayers who file by telephone to turn to other electronic filing methods when the program ends at the end of the year. The remaining 37 percent are expected to complete their IRS forms by hand.

The National Taxpayer Advocate, an office dedicated to helping taxpayers navigate the tax bureaucracy, opposed the decision to cancel the TeleFile program. Taxpayer Advocate Nina Olson said more people filed by telephone (3.7 million) last year than used the free electronic filing program (3.5 million).

The IRS said it expects to see that trend reverse this year.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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