Some delay, few changes
While there will be some delay, both with general e-filing and within the Free File program, because the IRS has not yet cleared a handful of AMT-related forms for processing, there shouldn't be any surprises for taxpayers who've used electronic filing before.
The key to Free File, says the IRS, is to access the program through the IRS' official Web site. Otherwise, the e-file provider might charge a fee for electronically filing your return. Using the Free File IRS page also will ensure that taxpayers are using the real Internet site and not a possible scam site. Watch: "Refund anticipation loans"
Companies are still allowed to charge extra if taxpayers want to e-file state returns along with their federal forms. Last year some Free File participants did offer certain filers free combined state-federal e-filing service. If you must file a state return, be sure to double-check the various services to make sure you choose a provider that offers a similar cost-saving option again this year.
And this year, two software providers will offer Spanish-language Free File programs.
Still 'consumer safe'
"It should feel pretty much like it did last year," Intuit spokeswoman Julie Miller says of Free File 2008. "There have been some changes to reinforce the philanthropic nature of the program and to make it more of a consumer-safe zone."
The consumer protection component cited by Miller is the continued moratorium on the marketing of refund anticipation loans, or RALs, by Free File companies. Last year, Free File participators agreed not to market these often costly, short-term loans.
The continued Free File restriction is no surprise, especially in light of a recent IRS announcement that it is considering new rules on the marketing of RALs and "certain other products" in connection with all 1040 preparation, not just that done via the free filing site.
The IRS can't ban such high-fee/high-interest refund-related products, but it can toughen agency rules and increase penalties for violators. In that regard, the agency is considering prohibiting tax return preparers from "(obtaining) a taxpayer's consent to disclose or use tax return information for the purpose of soliciting taxpayers to purchase such products."
Freelance writer Kay Bell writes Bankrate's tax stories from her Austin, Texas, home. She also writes two tax blogs, Bankrate's Eye on the IRS, and Don't Mess With Taxes.