IRS’ Online Filing Service Taxes System, but Crash Expected to Be Fixed by Today

The IRS kicked off the second year of a free online income tax filing service Thursday, saying the kinks that brought so many complaints last year had been worked out.

Then the system crashed.

“The start of every filing season is like the release of new software,” said Terry Lutes, deputy associate chief of information technology services for the IRS. “There are always a few bugs, but once the bugs are worked out, it hums for the rest of the year.”

People who tried Thursday to access the Free File Alliance system on the IRS website -- www.irs.gov -- got a message saying the “back-end server” was not available. Lutes said the Free File Alliance system encountered a technical glitch while it was being updated.

The ill-fated update started about an hour before a Washington news conference, carried over the Internet, in which Lutes detailed the many improvements the service had made to address criticisms from last year. The agency expected the site to be up and running today.

The IRS started the Free File Alliance to boost electronic filing among lower- and middle-income people. An estimated 78 million of the nation’s 131 million taxpayers will be eligible to use the service this year, Treasury officials said at the news conference.

Under the program, 16 private tax preparation and software companies offer their Internet portals and online filing programs to taxpayers. Each company sets its own rules for participation, providing free filing services only to those making less than set amounts, for example, or to residents of certain states. As a group, the companies promise that free services will be available to at least 60% of taxpayers.

“No one likes paying taxes -- it’s too confusing and too time consuming,” said Treasury Secretary John W. Snow. “But Free File makes this onerous task a good bit easier and less burdensome.”

Some 2.8 million taxpayers used the system last year. Some people complained that they felt pressured to buy services, such as refund anticipation loans, and others said they were charged for services they thought were free.

At the IRS’ urging, the companies revamped their products to clarify their offers and cut back on the marketing of ancillary products.

Tax officials believe participation will grow substantially in coming years, as the agency promotes the service through assistance centers that cater to low-income and elderly taxpayers, the chief targets of the program.