UNITED STATES OF AMERICA v. H&R BLOCK, INC. et al

Filing 40

MEMORANDUM re 35 MOTION for Preliminary Injunction filed by UNITED STATES OF AMERICA by UNITED STATES OF AMERICA. (Attachments: # 1 Exhibit Exhibit 1, # 2 Exhibit Exhibit 2, # 3 Exhibit Exhibit 12, # 4 Exhibit Exhibit 13, # 5 Exhibit Exhibit 30, # 6 Exhibit Exhibit 37, # 7 Exhibit Exhibit 40, # 8 Exhibit Exhibit 42, # 9 Exhibit Exhibit 43, # 10 Exhibit Exhibit 56, # 11 Exhibit Exhibit 112, # 12 Exhibit Exhibit 114, # 13 Exhibit Exhibit 115, # 14 Exhibit Exhibit 116, # 15 Exhibit Exhibit 123, # 16 Exhibit Exhibit 124, # 17 Exhibit Exhibit 139, # 18 Exhibit Exhibit 157)(Buterman, Lawrence)

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Online Tax Filing No Longer Free for All
Chris Kirkham, Medill News Service
PC World
Thursday, January 26, 2006; 12:10 AM

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WASHINGTON -- If you've been pointing and clicking
your way to free online tax software through the
Internal Revenue Service Web site in recent years, you
may want to recheck your eligibility this tax season

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Under a new agreement, the IRS and the Free File
Alliance , a consortium of tax software companies
formed in late 2002, are restricting free online income
tax returns to users with incomes of less than $50,000
In previous years, online software companies were
required to make their products available to 60 percent
of American taxpayers, regardless of income Though
the program targeted low- and middle-income people,
each company was free to set its own guidelines for
meeting the target percentage

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The compromise was aimed at protecting tax software
companies from having to compete with a free online
government tax preparation service The IRS was looking into offering a free service after
President Bush proposed free online tax preparation in 2002 as an e-government initiative
The earlier agreement led to differing
restrictions from each software company,
and some allowed free access to anyone who
linked to the site, says Tim Hugo, executive
director of the Free File Alliance
"Last year any billionaire was able to file their
taxes for free using the service," Hugo says

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The new four-year agreement will steer the
partnership between software companies and
the government back to its original purpose
of serving low- and middle-income
taxpayers, Hugo says

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The IRS's Free File Web page links to 20 software companies , each of which has different
restrictions for free users Some provide services only to residents of certain states Others
have set their maximum permitted income figure below the agreed-upon limit of $50,000,
have imposed age restrictions or have established special exemptions for members of the
military
All companies must make their tax software available to 70 percent of taxpayers, and no
individual company may cover more than 50 percent of the target group, which has
prompted the differing sets of restrictions among companies
Representatives from several tax software companies said that the new restrictions were
necessary because last year market competition turned into a free-for-all Hoping to attract
more customers, upstart smaller companies offered tax software free to anyone, regardless
of income Their policies forced the other companies to follow suit
"This program was never designed to be free advertising or a way to cheaply attract
customers," says Julie Miller, a spokesperson for Intuit, which produces TurboTax software
"The question for every company became, 'Is that kind of free-to-everyone approach a
sustainable model for the Free File Alliance?' The answer, I think, would be no "
One worry, Miller says, is that companies would continue to offer free software services for
federal tax returns but jack up prices for state tax preparation service or related products
Though companies are concerned about the bottom line, Miller says, only 2 percent of
Intuit's paying customers switched over to the free service last year Meanwhile, the number

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/25/AR2006012501786.html

Online Tax Filing No Longer Free for All

7/30/2011 9:52 PM

of paying Web customers grew by 13 percent, she says

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Convenience is part of the equation With several types of online software, including
TurboTax, free members can't transfer personal information filed from the previous year
Other companies provide online customer service to non-paying customers, but not
telephone support

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Bob Weinberger, vice president of government relations for H#00026R Block, which
provides its TaxCut online service through Free File, says consumers would lose out on the
best software if services permanently became free to all

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"There is a public interest in having good tax software out there that is renewed and
refreshed and innovative," Weinberger says "[The companies] were looking for a
partnership and not a suicide pact "

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But Lance Dunn, president of 2nd Story Software, producer of TaxAct online, sees things
differently

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"We were really interested in establishing a relationship with the taxpayer and wanted to get
as many people exposed to TaxAct as possible," Dunn says "I think the program was better
before, where anybody could get a free return It was also much simpler "

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Online Tax Filing No Longer Free for All

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