The Internal Revenue Service and private tax preparers have agreed that a free electronic filing program will be offered for 2006 tax returns without solicitations for refund loans that sometimes carry high interest charges and fees, the IRS said Tuesday.
The IRS said the Free File Alliance, a coalition of tax preparation software manufacturers that make their software products available for free, would no longer include side offerings such as Refund Anticipation Loans in their programs.
Such loans let customers immediately take home an expected refund. But consumer groups have complained that some loans come with high interest rates and fees.
"We heard many legitimate concerns about the marketing of ancillary products during the last filing season," IRS Commissioner Mark W. Everson said. "This is a constructive step."
The IRS said its data showed that only 0.5% of Free File users requested a refund anticipation loan this year in filing their 2005 tax returns.
The Free File program is available to taxpayers who earn $52,000 a year or less. Taxpayers must enter Free File through the IRS website, www.irs.gov.