I have received many concerns about Virginia’s new Free File program at the Virginia Department of Taxation. We did some digging into the history of Free File and here’s what we found:
The Virginia Free File program enables eligible Virginians to use online tax preparation programs to prepare both state and federal tax returns for free. The Free File program gives taxpayers several options for completing their state return by allowing a taxpayer to choose from a list of tax software preparation programs.
The Department of Taxation did have their own in-house system for filing state tax returns online. The “iFile” program was developed nine years ago, and the Department of Taxation was responsible for maintaining and upgrading the system. At a cost of $50,000 annually, this became too expensive. As you know, the state has had to cut costs where it can. Nothing has been spared, including this iFile system.
The Department of Taxation is now working with a member of the Virginia Free File program to develop a form which could be added to the Free File program as early as May 2011, but no later than December 31, 2011. This form would allow any taxpayer, regardless of their income level or other Free File eligibility criteria, to input their data into an online form and e-file it for free. This option would be similar to the recently-replaced iFile program.
Please let me know if you have other questions or concerns.