Oregon nixes state-provided free tax filing option

Published 11:00 am Friday, March 25, 2022

SALEM — For taxpayers who don’t want to pay to file their taxes electronically, the Oregon Department of Revenue long provided free options. Last year, nearly 70,000 Oregonians used one.

But Oregon quietly discontinued its most-used versions this year, leaving previously eligible Oregonians with taxable incomes above $73,000 with no option to file for free online. That is nearly half of Oregon tax filers. The state cited a decision by Intuit, maker of market-dominating tax software TurboTax, to discontinue technical support for the free service.

That’s a particularly big deal this year, when taxpayers are expecting the largest kicker tax rebate in Oregon history. People and households who need that money quickly could feel extra pressure to pay a tax software company or tax accounting firm just to e-file their return, rather than wait for their refund to arrive after mailing it in with 58-cent stamp.

Other Oregon public agencies do not charge the public to submit documents, such as voter registration forms, library card applications, driver license replacement requests or school enrollment applications, online rather than in paper form. And the state revenue department and IRS encourage taxpayers to file electronically.

“E-filing is the fastest way to get your tax refund,” said Rich Hoover, a public information officer for the Oregon Department of Revenue, in an email. “On average, taxpayers who e-file their returns and request their refund via direct deposit receive their refund sooner than those who file paper returns and request paper refund checks.”

Robert Cleveland, a Southwest Portland resident who has prepared his own taxes throughout his 15 years living in Oregon, said he was dismayed when he went to file online this year to find the state had eliminated the option.

“I’ve always done my own taxes, and I didn’t see why I should have to pay to file online,” Cleveland said on Thursday, saying he would have to spend $100 or more to purchase software or hire a third party.

Cleveland said his taxes are “not real complicated but it’s not real simple, either. I just prefer to do it myself.” Now he will have to print out the forms and mail them in, something he predicted could increase the workload at the state revenue department if other people who file their own taxes do the same this year.

Cleveland questioned why Oregon stopped offering the free fillable forms, when the IRS has continued to offer its contractor-provided version. “It just seemed to me that somebody dropped the ball here.”

Free fillable forms are a digital version of paper tax forms that allowed people to file their Oregon online and still do so for federal tax returns.

TurboTax and its parent company Intuit had provided Oregon’s free fillable forms software since 2012. But when Intuit dropped out of a public-private partnership known as the Free File Alliance last summer, it yanked the software from Oregon.

Intuit had come under scrutiny in recent years for steering millions of Americans who qualified for free tax preparation and filing assistance to instead pay for the service, following extensive reporting by the investigative news organization ProPublica. For two decades, the IRS has agreed not to develop its own free tax filing software in exchange for tax preparation companies providing such services for free to low and moderate-income people. States including Oregon signed onto the public-private partnership.

After the IRS disallowed some of the deceptive practices ProPublica documented in 2019, tax preparation company H&R Block dropped out of the private-public partnership in 2020 and Intuit exited in 2021.

With many Oregonians expecting to get money back via the state’s unique “kicker” rebate this year, that refund can be offset by the bite of having to pay a tax preparer. For example, filing a basic Oregon tax return through Intuit’s TurboTax program can cost $39.

Four companies will still allow at least some Oregon taxpayers who earned up to $73,000 in adjusted gross income last year to file for free. One of the companies only offers free tax preparation services to residents who earned $32,000 or less. Others cater to military veterans or exclude Oregonians age 57 and older.

“Fewer companies are participating in the Free File Alliance each year,” Hoover said. “At one time there were seven to eight companies that offered Oregon free file, now there are four.”

With the options to file for free decreasing, it could mean more Oregonians of all income levels wind up paying to file their taxes. Just over three weeks before the April 18 tax filing deadline, only 7,167 taxpayers have filed through the four free tax preparation services partnering with the state, according to revenue department figures. Last year, 69,257 Oregon taxpayers filed returns using some type of free option offered through the state, including 48,173 who used TurboTax and 7,478 who used Intuit’s free fillable Oregon tax forms.

Revenue department employees said the state is still looking for ways to ensure there continue to be options in the future for these taxpayers to file electronically at no cost.

“The department is also looking into whether another company in the Free File Alliance would be willing to provide the free file option that was previously provided by Intuit that was available to Oregonians regardless of their income level,” administrator Megan Denison of the Personal Tax and Compliance Division said in an email.

The IRS still offers its privately developed free fillable option.

The single remaining program in Oregon that would cover taxpayers who make as much as $73,000 is called OnLine Taxes. Taxpayers must access OnLine Taxes through the department’s website in order to get the deal.

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