PSI Staff Memorandum
To:
From:
Date:
Re:

Senate Committee on Homeland Security and Governmental Affairs
Staff of the Permanent Subcommittee on Investigations
June 9, 2020
IRS Oversight of the Free File program
Introduction

Subcommittee staff initiated a review of the Free File program, which provides free
online tax preparation and filing services to U.S. taxpayers, in June 2019. The Subcommittee
sought to understand the history of the Free File program, the coordination between the Free File
Alliance and its membership of tax preparation software companies, oversight of the Free File
program by the Internal Revenue Service (“IRS”), and allegations in 2019 that certain Free File
Alliance members used coding to hide their Free File websites from online search engines. This
memorandum provides: (1) a brief overview of the history of the Free File program; (2) a
summary of IRS oversight of the Free File program during the last decade; (3) a discussion of the
importance of online search engine results in helping taxpayers choose a tax preparation
software; (4) a discussion of the IRS marketing strategy for the Free File program; and (5) an
analysis of recent changes made by the IRS to strengthen the Free File program.
Background
The Internal Revenue Service has worked for decades to encourage and incentivize
paperless filing of federal tax returns. The effort began in 1998 when Congress directed the IRS
to work with the tax preparation industry to ensure at least 80 percent of all federal tax returns
were filed electronically by 2007. 1 In 2002, the IRS entered into the Free Online Electronic Tax
Filing Agreement with several electronic tax preparation companies known collectively as the
Free File Alliance (“FFA”). 2 Under this agreement, FFA members committed to offering free
online tax preparation and filing services—generally known as Free File—to 60 percent of
taxpayers while retaining the ability to establish qualifications for their individual offerings. 3 In
exchange, the IRS agreed not to compete with the FFA in providing free, online tax preparation
and filing services to taxpayers. 4 The IRS and the FFA also agreed to coordinate with each other
for the marketing of these free offerings to “provide uniformity and maximize public
awareness.” 5
The IRS and the FFA have repeatedly extended the term of the original agreement. A
2005 extension, for example, expanded the scope of coverage for the Free File program to 70
1

The IRS Restructuring and Reform Act of 1998, Pub. L. No. 105-286, 112 Stat. 685 (1998) (codified at 26 U.S.C.
§ 6011 note. (2017)).
2
IRS’ Intent to Enter into an Agreement with Free File Alliance, 67 Fed. Reg. 67247 (Nov. 4, 2002). The FFA
received 501(c)(3) tax-exempt organization status as Free File, Inc. in 2012. IRS, U.S. DEP’T OF THE TREASURY,
FREE ONLINE ELECTRONIC TAX FILING AGREEMENT (2014-2015), available at https://www.irs.gov/pub/irs-utl/20142015-free-file-online-electronic-filing-agreement-amendment.pdf.
3
IRS’ Intent to Enter into an Agreement with Free File Alliance, 67 Fed. Reg. 67247 (Nov. 4, 2002).
4
Id.
5
Id.

1

 percent of taxpayers. 6 IRS and the FFA also developed a Memorandum of Understanding
(“MOU”) in 2005 to identify the service standards for Free File members and the procedures for
resolving disputes. 7 The MOU has been updated several times, with the most recent version
running through October 31, 2021. 8
The IRS performs an analysis each year to determine an income threshold for the Free
File program that will allow 70 percent of taxpayers to file their taxes using a Free File product. 9
A taxpayer currently qualifies to use Free File software if their income is $69,000 or less. 10 The
IRS provides a webpage that allows a user with an income in this range to select a Free File
product through its “Free File Online Lookup Tool.” 11 As the name implies, Free File products
may not impose any costs on qualified users. 12
Most taxpayers find their preferred tax preparation product through online searches using
an online search engine. 13 In May 2019, a series of news articles alleged that certain FFA
members actively steered customers from Free File offerings into paid products. 14 According to
these reports, the tax preparation companies H&R Block and Intuit deliberately hid their Free
File offerings from online search engine results. 15 These articles and others also noted the
similarity between the prior names of certain Free File products and the names FFA members
used at the time for certain commercial products that could charge fees for some users. 16 In
response, the IRS announced a review of the allegations surrounding the Free File program and

6

IRS, U.S. DEP’T OF THE TREASURY, FREE ONLINE ELECTRONIC TAX FILING AGREEMENT (2005), available at
https://www.irs.gov/pub/irs-utl/2005-free-online-electronic-tax-filing-agreement.pdf.
7
IRS, U.S. DEP’T OF THE TREASURY, FIRST MEMORANDUM OF UNDERSTANDING ON SERVICE STANDARDS AND
DISPUTES BETWEEN THE INTERNAL REVENUE SERVICE AND FREE FILE ALLIANCE, LLC (2006), available at
https://www.irs.gov/pub/irs-utl/2006-first-ff-mou.pdf.
8
IRS, U.S. DEP’T OF THE TREASURY EIGHTH MEMORANDUM OF UNDERSTANDING ON SERVICE STANDARDS AND
DISPUTES BETWEEN THE INTERNAL REVENUE SERVICE AND FREE FILE, INCORPORATED (2018), available at
https://www.irs.gov/pub/irs-utl/Eight%20Free%20File%20MOU.pdf.
9
Id.
10
IRS, U.S. DEP’T OF THE TREASURY, ABOUT THE IRS FREE FILE PROGRAM, available at https://www.irs.gov/e-fileproviders/about-the-irs-free-file-program.
11
IRS, U.S. DEP’T OF THE TREASURY, FREE FILE: DO YOUR FEDERAL TAXES FOR FREE, available at
https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free.
12
Id.
13
Free File Program Assessment Final Report 42–44, MITRE (Oct. 3, 2019), available at
https://www.irs.gov/pub/newsroom/01_free-file-program-assessment-100319.pdf.
14
Justin Elliott & Paul Kiel, TurboTax and H&R Block Saw Free Tax Filing as a Threat – and Gutted It,
PROPUBLICA (May 2, 2019), available at https://www.propublica.org/article/intuit-turbotax-h-r-block-gutted-freetax-filing-internal-memo; Justin Elliott, Senior IRS Leaders Launch Review of Agency’s Partnership with TurboTax
and H&R Block, ProPublica (May 6, 2019), available at https://www.propublica.org/article/senior-irs-leaderslaunch-review-of-partnership-with-turbotax-and-h-r-block.
15
Justin Elliott & Paul Kiel, TurboTax and H&R Block Saw Free Tax Filing as a Threat – and Gutted It,
PROPUBLICA (May 2, 2019), available at https://www.propublica.org/article/intuit-turbotax-h-r-block-gutted-freetax-filing-internal-memo
16
Id. See also Tik Root, Why are Millions Paying Online Tax Preparation Fees When they Don’t Need to?,
PROPUBLICA (June 18, 2018), available at https://www.propublica.org/article/free-file-online-tax-preparation-feesintuit-turbotax-h-r-block.

2

 pledged to ensure the integrity of the program. 17 The IRS tasked the MITRE Corporation
(“MITRE”) with conducting an independent and objective assessment of the Free File program,
and the IRS released MITRE’s report in October 2019. 18 The Treasury Inspector General for
Tax Administration (“TIGTA”) also conducted an audit of the Free File program and released its
report in February 2020. 19
In December 2019, the IRS and the FFA agreed to an addendum to the MOU that
prohibits any practice that would exclude Free File websites from organic search results and
standardizes the naming of Free File offerings to “IRS Free File program delivered by (Member
company name or product name).” 20
Findings
Subcommittee staff received briefings from the IRS, the Government Accountability
Office, TIGTA, MITRE, the FFA, and the tax preparation companies H&R Block, Intuit,
TaxHawk, Drake Software (“Drake”), and TaxSlayer. Based on these briefings and a review of
information provided to the Subcommittee, Subcommittee staff has made the following findings:
1) Until recently, the IRS conducted little oversight of the Free File program.
2) Three different independent entities have reviewed the Free File program since 2018
and provided recommendations for improvement, but the program continues to
struggle to serve eligible taxpayers.
3) For the first 15 years of the Free File program, the IRS declined to take a position on
whether FFA companies should index Free File websites to appear in online search
engines, nor did FFA companies seek guidance from the IRS on whether their
indexing practices complied with the MOU. As a result, participating FFA
companies took different approaches in deciding whether to code their Free File
program websites to appear in organic search engine results, or to have users access
the Free File program only through the IRS website. Five companies (H&R Block,
Intuit, TaxHawk, Drake, and TaxSlayer) coded their Free File websites in a way that
prevented a search engine from including the websites in organic search results (or
“non-indexed”). In doing so, all five companies believed they were complying with
the MOU that governs the Free File program. The IRS and FFA companies executed

17

Justin Elliott, Senior IRS Leaders Launch Review of Agency’s Partnership with TurboTax and H&R Block,
ProPublica (May 6, 2019), available at https://www.propublica.org/article/senior-irs-leaders-launch-review-ofpartnership-with-turbotax-and-h-r-block.
18
Free File Program Assessment Final Report iii, MITRE (Oct. 3, 2019), available at
https://www.irs.gov/pub/newsroom/01_free-file-program-assessment-100319.pdf.
19
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION, U.S. DEP’T OF THE TREASURY, 2020-40-009,
COMPLEXITY AND INSUFFICIENT OVERSIGHT OF THE FREE FILE PROGRAM RESULT IN LOW TAXPAYER PARTICIPATION
(2020).
20
IRS, U.S. DEP’T OF THE TREASURY, ADDENDUM TO THE EIGHTH MEMORANDUM OF UNDERSTANDING ON SERVICE
STANDARDS AND DISPUTES BETWEEN THE INTERNAL REVENUE SERVICE AND FREE FILE, INCORPORATED (2019),
available at https://www.irs.gov/pub/irs-utl/FFI%20Signed%20MOU%20Addendum%2012-26-19.pdf.

3

 an addendum to the MOU in December 2019 that clarified Free File websites should
be indexed.
4) Three companies (TaxHawk, Drake, and TaxSlayer) non-indexed their Free File
websites from the start of their participation in the Free File program. H&R Block
non-indexed its Free File website in 2018 in response to a technical issue after
determining the MOU did not require the website be indexed. In 2018, Intuit changed
the name of its Free File program in an attempt to avoid consumer confusion and nonindexed the landing page of its renamed Free File offering.
5) According to an analysis performed by MITRE, approximately 85 percent of the
visits made to FFA member web sites and IRS.gov from Google, the most popular
online search engine, were made through links included in advertisements placed by
FFA members to promote commercial products that may charge fees. Only a fraction
of total visits – approximately 56,000 out of 12 million – went directly from Google
to the website for an FFA member’s Free File product.
6) A lack of investment in marketing by the IRS likely led to a lack of consumer
awareness that hampered participation in the Free File program.
Despite these challenges, the Free File program continues to provide a valuable service
for millions of Americans. To support Free File, the IRS should increase its oversight of FFA
members and dedicate funding—including increased funding from Congress, if necessary—to
market the Free File program. The IRS should ensure FFA members comply with new guidance
that attempts to avoid similarities between Free File branding and branding for commercial tax
preparation products that could confuse taxpayers. The sections below provide a summary of
actions by Subcommittee staff to date, as well as disclosures from relevant government agencies
and FFA members.
I.

UNTIL RECENTLY, THE IRS CONDUCTED LITTLE OVERSIGHT OF THE
FREE FILE PROGRAM
A. The Internal Revenue Service

The IRS is the nation’s tax collection agency and administers the Internal Revenue
Code. 21 The IRS consists of several principle offices and four primary divisions: Wage and
Investment, Large Business and International, Small Business/Self-Employed, and Tax Exempt
and Government Entities. 22 The Wage and Investment Division processes electronic and paper
tax returns, reviews taxpayer withholdings, handles taxpayer inquiries, and oversees programs
such as the Free File program. 23 For the past four years, the Division has dedicated three full-

21

IRS, U.S. DEP’T OF THE TREASURY, ABOUT IRS, available at https://www.irs.gov/about-irs.
IRS, U.S. DEP’T OF THE TREASURY, AT-A-GLANCE: IRS DIVISIONS AND PRINCIPAL OFFICES, available at
https://www.irs.gov/about-irs/at-a-glance-irs-divisions-and-principal-offices.
23
Briefing with IRS (June 27, 2019).
22

4

 time employees to the Free File program. 24 In 2018, over 100 million taxpayers met the
eligibility criteria for the Free File program. 25
The IRS collaborates closely with the FFA to achieve the goals of the Free File
program. 26 For example, the IRS conducts formal tests in the beginning and the middle of the
tax season to ensure that FFA members are in compliance with the Free File operating agreement
and the MOU. 27 According to the IRS, violations are “usually a result of a programming glitch
where there was a misunderstanding of the agreement’s requirements.” 28 If the IRS concludes
that a member has willfully violated program requirements or has not adequately corrected an
issue, the IRS will consider removing the member from the Free File program. 29 As of the date
of this memorandum, the IRS has never removed a member of the Free File program. 30
FFA executives told Subcommittee staff that they “on occasion” receive an allegation
that a company is not in compliance with some aspect of the program. 31 If the FFA believes
some aspect of a member company’s program needs to be changed, the FFA will immediately
bring that issue to the company’s attention and require the company to address it. 32 The FFA
later clarified that most of these issues are minor and that member companies have addressed the
issues and corrected their websites. 33 Since the formation of the Free File program, the FFA has
engaged two former government officials to serve as an auditor to review the compliance of
member companies. 34 The auditor works directly with the IRS to ensure compliance with the
MOU and is in frequent contact with IRS staff during the annual review period. 35
FFA executives told Subcommittee staff they “discover more program violations than the
IRS and believe [the FFA] is tougher on their members than the IRS.” 36 They added that
members do “a lot of self-policing” and report violations by other members. 37
B. The IRS Advisory Council’s 2018 Annual Report’s Free File Findings
The IRS Advisory Council (“IRSAC”) serves as an advisory body to the IRS
Commissioner. 38 The IRSAC “include[s] representation from the taxpaying public, the tax

24

Id.
Free File Program Assessment Final Report ix, MITRE (Oct. 3, 2019), available at
https://www.irs.gov/pub/newsroom/01_free-file-program-assessment-100319.pdf.
26
Briefing with IRS (June 27, 2019).
27
Id.
28
Id.
29
Id.
30
Id.
31
Briefing with Free File Alliance (July 18, 2019).
32
Id.
33
Email from Free File Alliance to Subcommittee Staff (May 21, 2020).
34
Briefing with Free File Alliance (July 18, 2019); Email from Free File Alliance to Subcommittee Staff (May 21,
2020).
35
Briefing with Free File Alliance (July 18, 2019).
36
Id.
37
Id.
38
INTERNAL REVENUE SERVICE ADVISORY COUNCIL PUBLIC REPORT 5 PUBLICATION 5316 (REV. 11-2018).
25

5

 professional community, small and large businesses, academia, and the payroll community.” 39
Working with IRS leadership, the IRSAC reviews IRS practices and procedures and makes
recommendations on both existing and emerging tax administration issues. 40 The IRSAC
releases an annual report that summarizes its work for the calendar year and presents
recommendations to the Commissioner and other IRS leaders. 41
In 2018, the IRS asked the IRSAC to provide feedback on the Free File program. 42
Specifically, the IRS requested a determination as to whether the program had served its purpose
and completed its mission, and recommendations for improvements. 43 The IRSAC concluded
that:
[T]he IRS does not provide adequate oversight of the Free File program….The
IRS’s deficient oversight and performance standards for the Free File program put
vulnerable taxpayers at risk, and make it difficult to ensure that FFA members are
upholding their obligation to provide tax preparation and e-filing services ‘to
economically disadvantaged and underserved populations at no cost to the
individual or the government.’...In negotiating a new MOU with the FFA, the
IRSAC recommends that the IRS insist upon more robust protection and oversight
components to ensure a fair and transparent program that meets its objectives,
which we believe need to be clarified. 44
C. The Treasury Inspector General for Tax Administration’s Oversight of Free File
TIGTA conducts audits, investigations, and inspection and evaluation services that
promote integrity, economy, and efficiency in the administration of the U.S. tax system. 45 In
2007, TIGTA conducted a review of the effectiveness of the Free File program and released an
audit report. 46 The audit report found that the IRS could improve its efforts to evaluate, promote,
and administer the Free File program. 47 TIGTA made five recommendations, including that the
IRS develop a comprehensive plan to evaluate and promote the Free File program and expand
program marketing. 48
TIGTA’s next review of the Free File program began after the public reports discussed
above, and TIGTA released an audit report in February 2020. 49 Auditors found that complexity,
confusion, and a lack of taxpayer awareness about the Free File program led to reduced levels of
39

Id. at 6.
Id.
41
Id.
42
Id. at 14.
43
Id.
44
Id.
45
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION, U.S. DEP’T OF THE TREASURY, ABOUT TIGTA,
available at https://www.treasury.gov/tigta/about.shtml.
46
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION, U.S. DEP’T OF THE TREASURY, 2007-40-105,
ADDITIONAL ACTION IS NEEDED TO EXPAND THE USE AND IMPROVE THE ADMINISTRATION OF THE FREE FILE
PROGRAM (2007).
47
Id.
48
Id. at 3.
49
Briefing with TIGTA (June 11, 2019).
40

6

 eligible taxpayer participation in the program. 50 TIGTA estimated that more than 14 million
taxpayers who met the Free File program criteria and used FFA member software to e-file their
2018 federal tax return may have paid a fee to e-file their return. 51 TIGTA also made nine
recommendations in its report, including that the IRS develop a comprehensive outreach and
advertising plan to inform eligible taxpayers about the Free File program. 52 Additionally,
TIGTA recommended that IRS management update its testing review guide to ensure adherence
to the MOU by FFA members. 53
II.

FIVE COMPANIES TOOK STEPS TO PREVENT THEIR FREE FILE
WEBSITES FROM APPEARING IN ORGANIC SEARCH RESULTS

A year after tasking the IRSAC with an evaluation of the Free File program, the IRS
announced another review of the Free File program after reports of efforts by FFA members to
steer customers toward paid products. 54 The agency engaged MITRE to conduct an independent
and objective assessment of Free File and make recommendations for improvements to the
program and its governing MOU. 55 The IRS chose MITRE because the company operates the
IRS’s federally funded research and development center. 56
MITRE’s assessment of the Free File program consisted of four different analyses,
reviews, and tests. 57 For example, MITRE conducted interviews with representatives from each
FFA member organization, performed a web forensics analysis of FFA member websites,
conducted an expert review of the IRS Free File portal, and performed a legal analysis of the
MOU’s terms and conditions. 58 MITRE announced findings and conclusions in three areas,
including: 1) the objectives of the Free File program; 2) public awareness of the Free File
program; and 3) the use of search exclusion techniques among FFA members. 59
In its 2019 report, MITRE determined that there are three primary ways to arrive at the
IRS Free File website. 60 Individuals can conduct a search through an online search platform,
click on a link emailed to them by an FFA member whose Free File product they used before, or
type an FFA member company’s Free File website address directly into their browser. 61 Organic
searches conducted through search platforms—uninfluenced by ads placed by tax software
50

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION, U.S. DEP’T OF THE TREASURY, 2020-40-009,
COMPLEXITY AND INSUFFICIENT OVERSIGHT OF THE FREE FILE PROGRAM RESULT IN LOW TAXPAYER PARTICIPATION
4 (2020).
51
Id. at 5.
52
Id. at 10.
53
Id. at 15.
54
Justin Elliott, Senior IRS Leaders Launch Review of Agency’s Partnership with TurboTax and H&R Block,
ProPublica (May 6, 2019), available at https://www.propublica.org/article/senior-irs-leaders-launch-review-ofpartnership-with-turbotax-and-h-r-block.
55
Free File Program Assessment Final Report iii, MITRE (Oct. 3, 2019), available at
https://www.irs.gov/pub/newsroom/01_free-file-program-assessment-100319.pdf.
56
Id.
57
Id. at iii–v.
58
Id. at iv–v.
59
Id. at xvi–xxii.
60
Id. at 42.
61
Id.

7

 companies—accounted for 55 percent of traffic to the IRS Free File website. 62 The most
common keywords used in organic search results were “free tax filing.” 63
MITRE estimated that over 12 million visits were made to FFA member websites and
IRS.gov through search results found on Google. 64 Approximately 85 percent of these visits
came through paid advertising links placed on Google by FFA member companies to promote
their commercial products. 65 The other 15 percent, which amounted to approximately 1.9
million visits, came through links found in organic search results. 66 Of these 1.9 million visits
from Google, only 56,000 went to an FFA member’s Free File website. 67
MITRE also performed an analysis to determine if any FFA member websites used
coding to influence search engine routing. 68 For a search engine to include a website in its
search results, the website must be a part of the index of that search engine. 69 An index is a
collection of all content available on a search engine. For example, Google’s index contains
hundreds of billions of pages and “is like the index in the back of a book.” 70 Google uses a tool
to crawl the internet and identify sites to add to its index. Google does not require any
affirmative submission from a company for its website to appear in the Google index. 71
While website owners can send their websites to Google to index, according to Google,
the “vast majority of sites listed in our results aren’t manually submitted for inclusion, but found
and added automatically when we crawl the web.” 72 A website owner may choose to prevent
search engines from indexing their website, which has the effect of excluding the website from
appearing in organic search results from that engine. As discussed below, this process—referred
to as “non-indexing” or “de-indexing”—requires the website creator to include specific coding in
the website to signal to the search engine not to index the website as it crawls the internet for

62

Id.
Id. at 43.
64
Id. Google is widely recognized as the most popular search engine in the world, and the company maintained over
75 percent of the market share for search engines in Fiscal Year 2019. Desktop Search Engine Market Share United
States of America, Oct 2018 – Sept 2019, available at https://gs.statcounter.com/search-engine-marketshare/desktop/united-states-of-america/#monthly-201810-201909.
65
Free File Program Assessment Final Report 43, MITRE (Oct. 3, 2019), available at
https://www.irs.gov/pub/newsroom/01_free-file-program-assessment-100319.pdf.
66
Id.
67
Id at 44.
68
Id. at iv.
69
Search Engine Optimization (SEO) Starter Guide, GOOGLE, available at
https://support.google.com/webmasters/answer/7451184?hl=en; Search Engine Optimization, Webmaster Help &
How-To, BING, available at https://www.bing.com/webmaster/help/webmaster-guidelines-30fba23a.
70
How Search Organizes Information, GOOGLE, available at
https://www.google.com/search/howsearchworks/crawling-indexing.
71
Search Engine Optimization (SEO) Starter Guide, GOOGLE, available at
https://support.google.com/webmasters/answer/7451184?hl=en; Search Engine Optimization, Webmaster Help &
How-To.
72
Id.
63

8

 websites to include in its organic search results. 73 A website creator may choose to non-index a
webpage for a number of reasons, including to influence how an individual arrives at a website. 74
MITRE found that five of the twelve FFA members non-indexed their Free File websites,
which prevented the websites from appearing in organic search results. 75 MITRE questioned all
five companies about their efforts to influence search engine results. 76 Most FFA members
stated that they believed this practice complied with the terms of the MOU and the understanding
that Free File users should arrive at the individual FFA Free File websites from the IRS Free File
page. 77 Following public reporting on this issue, two companies reversed their indexing
practices to avoid creating the “perception that they were doing something wrong.” 78 MITRE
declined to take a position on the practice. 79 As noted below, the IRS also declined to take an
official, public position on the practice of indexing until the release of the addendum in
December 2019.
In a briefing with Subcommittee staff, IRS Wage and Investment Division officials stated
that they were not aware of which companies engaged in this practice. 80 MITRE executives
were also present for the briefing and stated that this question was now “moot.” 81 MITRE added
that the companies believed they were acting in compliance with the MOU when they engaged in
this practice. 82 The Subcommittee later obtained the names of the companies from TIGTA. 83
TIGTA also reviewed the coding in the twelve Free File websites operated by FFA
members and linked from IRS.gov to determine if members had taken measures to non-index the
Free File websites to exclude them from search engine results in 2019. 84 TIGTA obtained
historic copies of websites for five of the twelve FFA members and found coding in each page
that non-indexed the websites and prevented search engines from displaying them in search
results. 85 TIGTA informed Subcommittee staff that the five companies were H&R Block, Intuit
(TurboTax), TaxHawk (FreeTaxUSA), Drake (1040.com), and TaxSlayer. 86 TIGTA
subsequently shared its findings with the IRS and the IRS stated that it did not believe that
coding to non-index the Free File websites violated any provisions in the MOU. 87 TIGTA

73

Free File Program Assessment Final Report D-1–D-2, MITRE (Oct. 3, 2019), available at
https://www.irs.gov/pub/newsroom/01_free-file-program-assessment-100319.pdf.
74
Id.
75
Id. at 45.
76
Id. at 46.
77
Id.
78
Id.
79
Id. at vi.
80
Briefing with IRS (Jan. 16, 2020).
81
Id.
82
Id.
83
Email from TIGTA to Subcommittee staff (Feb. 12, 2020).
84
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION, U.S. DEP’T OF THE TREASURY, 2020-40-009,
COMPLEXITY AND INSUFFICIENT OVERSIGHT OF THE FREE FILE PROGRAM RESULT IN LOW TAXPAYER PARTICIPATION
9–10 (2020).
85
Id. at 10.
86
Email from TIGTA to Subcommittee staff (Feb. 12, 2020).
87
Briefing with TIGTA (Feb. 4, 2020).

9

 agreed that there was no explicit prohibition on this practice in the MOU, but stated it was
against the spirit of the Free File program. 88
Representatives from the FFA and each of the five companies briefed Subcommittee staff
about these coding practices. Findings from those briefings are summarized below.
A. The Free File Alliance
FFA executives told Subcommittee staff that there is no provision in the Free File
operating agreement that controls the commercial advertising of program members and, in fact,
discussions with FFA members regarding commercial advertising would not be productive. 89
The FFA also later pointed to language in the December 2019 MOU addendum that expressly
grants FFA members the right to continue marketing their commercial products in the same way
as businesses not participating in the Free File program. 90 FFA executives also told
Subcommittee staff that they met with IRS officials as part of MITRE’s review of the Free File
program. 91 According to these executives, the IRS stated that FFA members had not breached
the MOU by non-indexing their Free File websites from online search engines. 92 As described
below, FFA members also believed that Free File users should arrive at their Free File websites
through the main IRS Free File website or by clicking links in emails FFA members send to
previous Free File users. 93
B. H&R Block
H&R Block offers in-person and online tax preparation services. 94 In 2019, the company
prepared 23 million tax returns worldwide, including 1 in 7 U.S. tax returns and more than 8
million returns through digital products. 95 As an FFA member, the company generally offers
H&R Block Free File to individuals who have an adjusted gross income under $69,000 and meet
certain additional requirements. 96 H&R Block also offers its own free commercial product
named H&R Block Free Online. 97 While this product is also free, it differs from Free File
because a user can choose to upgrade and pay fees for certain services.
88

Id.
Briefing with Free File Alliance (July 18, 2019).
90
Email from Free File Alliance to Subcommittee Staff (May 21, 2020); See IRS, U.S. DEP’T OF THE TREASURY,
ADDENDUM TO THE EIGHTH MEMORANDUM OF UNDERSTANDING ON SERVICE STANDARDS AND DISPUTES BETWEEN
THE INTERNAL REVENUE SERVICE AND FREE FILE, INCORPORATED (2019), available at https://www.irs.gov/pub/irsutl/FFI%20Signed%20MOU%20Addendum%2012-26-19.pdf (stating that this right is “[c]onsistent with the
obligations set forth in all prior Free File memorandums of understanding and the IRS Agreement”).
91
Briefing with Free File Alliance (July 18, 2019).
92
Id.
93
In explaining this belief, the FFA noted that IRS had stated publicly that Free File was “accessible only through
IRS.gov.” Email from Free File Alliance to Subcommittee Staff (May 21, 2020); See IRS, U.S. DEP’T OF THE
TREASURY, IRS FREE FILE OPENS TODAY IN ADVANCE OF TAX SEASON, available at
https://www.irs.gov/newsroom/irs-free-file-opens-today-in-advance-of-tax-season.
94
H&R Block Company Information, available at https://www.hrblock.com/corporate/our-company.
95
H&R Block Fact Sheet, available at https://www.hrblock.com/corporate/pdfs/hrb-factsheet.pdf.
96
IRS Free File Program Delivered by H&R Block, available at
https://www.hrblock.com/ffa/?otpPartnerID=180&campaignID=pw_mcm_180_0001.
97
Available at https://www.hrblock.com.
89

10

 According to H&R Block executives, the company’s Free File product website was
indexed and appeared in organic search results for “some period of time” during its participation
in the Free File program. 98 The company also stated that the existing MOU was silent as to
whether its Free File website should be indexed and that the IRS had indicated that users should
enter the Free File program through the IRS Free File site. 99
The company non-indexed its Free File product website from search engine indexes in
2018 because of a technical issue with the site. 100 The decision stemmed from a third-party
vendor informing H&R Block that individuals clicking on the page that previously appeared in
search indexes had a poor user experience. 101 Specifically, users who arrived at H&R Block’s
Free File landing page when clicking a search engine result could not exit the page because it
would continuously reload and keep them on the Free File page, even if the user sought to view
the company’s commercial offerings. 102 An H&R Block employee contacted a supervisor and
the supervisor determined that the Free File page did not need to be indexed. 103 H&R Block
non-indexed the page a few days later. 104 H&R Block executives stated that senior management
of H&R Block had no involvement in or awareness of this decision. 105 Subcommittee staff
asked H&R Block executives to provide a basis for the decision that the Free File page did not
need to be indexed. 106 H&R Block executives responded that it is not unusual to have websites
that are not indexed, and that there was nothing nefarious about the company’s decision to nonindex H&R Block’s Free File product website. 107
H&R Block decided to reverse course and index its Free File website after the public
reaction to media reports on the indexing issues. 108 One H&R Block executive, however,
expressed to Subcommittee staff that based upon IRS instructions, customers should enter the
Free File program through the IRS Free File website link, state tax return websites, and the
reminder email that H&R Block sends to previous Free File users. 109 In August 2019, prior to
the release of an addendum to the MOU in December 2019, executives from the company told
Subcommittee staff that the language of the MOU did not expressly require or prohibit the
indexing of Free File program websites. 110

98

Briefing with H&R Block (Aug. 14, 2019); Email from H&R Block to Subcommittee Staff (May 22, 2020).
Id.
100
Briefing with H&R Block (Aug. 14, 2019)
101
Id.
102
Id.
103
Id.
104
Id.
105
Id.
106
Id.
107
Id.
108
Id.
109
Id.
110
Id.
99

11

 C. Intuit (TurboTax)
Intuit makes several financial and accounting products, including the online tax software
TurboTax. 111 As an FFA member, the company offers the TurboTax Free File program to
individuals who meet annual eligibility requirements, which change each year and appear on the
TurboTax Free File website at the beginning of the tax season. 112 Intuit also offers a similar
commercial product named TurboTax Free Edition, which allows users with simple tax returns to
file for free; users can also elect to upgrade and pay for additional services, unlike with the Free
File product. 113
Intuit executives told Subcommittee staff that the company changed the name of its Free
File offering in October 2018 from TurboTax Freedom Edition to TurboTax Free File
Program. 114 Public criticism in 2018 had suggested that the similarity between Freedom Edition
and Free Edition (the company’s commercial free product that charges fees for some services)
confused taxpayers. 115 Intuit understood critics to have alleged that the name “Freedom Edition”
did not sufficiently convey that the product was free. 116 As a result, the company changed the
name of its Free File product.” 117 Executives told the Subcommittee that the change aligned
Intuit’s Free File product with the names of other Free File products offered by FFA members
and received approval from the IRS prior to the 2019 tax filing season. 118
In connection with this name change, Intuit non-indexed the landing page of its Free File
offering. 119 According to company executives, Intuit was concerned that the similar names for
“Free Edition,” its free commercial offering, and “Free File Program” could confuse online
search algorithms and potentially result in two similarly named TurboTax free sites listed next to
each other in organic search results. 120 (The website for Freedom Edition, the previous version
of Intuit’s Free File product, had been a part of search engine indexes since 2013.) 121 Intuit
executives noted, however, that the company published other webpages that linked to its Free
File offering and were part of search indexes. 122 After additional public reporting in 2019, Intuit
reversed course and removed the non-indexing language from its Free File Program website
code. 123
Intuit executives told the Subcommittee that they are unable to control organic search
results and did not know how the landing pages for TurboTax Free File Program or TurboTax
111

About Intuit, available at https://www.intuit.com/company.
IRS Free File Program Delivered by TurboTax, available at https://freefile.intuit.com/.
113
Available at https://turbotax.intuit.com/personal-taxes/online/free-edition.jsp.
114
Briefing with Intuit (July 31, 2019).
115
Id. See also Tik Root, Why are Millions Paying Online Tax Preparation Fees When they Don’t Need to?,
PROPUBLICA (June 18, 2018), available at https://www.propublica.org/article/free-file-online-tax-preparation-feesintuit-turbotax-h-r-block.
116
Email from Intuit to Subcommittee Staff (May 21, 2019).
117
Id.
118
Briefing with Intuit (July 31, 2019).
119
Id.
120
Id.
121
Id.
122
Id.
123
Id.
112

12

 Free Edition would appear in organic search results. 124 Intuit believed it was “doing the right
thing” and that non-indexing the old version of its Free File website was consistent with industry
practice. 125 One Intuit executive offered that it was “outrageous that journalists had claimed
Intuit’s decision to non-index Freedom Edition was a sinister backroom decision to prevent
people from filing with Free File.” 126 Intuit executives explained that they believed they had
done “more than anyone” to promote Free File—including paying for advertising—and that
those efforts were entirely voluntary under the program’s rules. 127 Intuit executives stressed that
the efforts the company took to compensate for lost traffic from non-indexing its Free File
Program landing page resulted in a “small increase” in people finding Intuit’s Free File product
through online search and using it to file for free, as compared to the previous year. 128
D. TaxHawk (FreeTaxUSA)
TaxHawk is an online tax preparation company, founded in 2001, that offers do-ityourself resources for filing taxes electronically with the IRS. 129 The company is a founding
member and continuous participant of the FFA. 130 TaxHawk offers its Free File product at
FreeTaxUSA.com/freefile and through a link on the IRS.gov website that resolves to this
address. 131 TaxHawk also provides commercial offerings though three websites: TaxHawk.com,
FreeTaxUSA.com, and Express1040.com. 132 All of the commercial offerings provide
preparation and e-filing of the federal tax return for free, regardless of complexity. 133
A TaxHawk executive told Subcommittee staff that IRS.gov is the place to start using a
Free File product. 134 As a result, the company has always non-indexed its Free File website
since 2001. 135 TaxHawk did not discuss the topic of indexing with the IRS until public reporting
on this issue in 2019, and the IRS never told TaxHawk that non-indexing was wrong. 136
Following direction from the IRS in 2019, the company has removed the non-indexing coding
and included its Free File site on search engine indexes to comply with the newest terms of the
MOU. 137

124

Id.
Id.
126
Id.
127
Id.
128
Id.
129
About TaxHawk, available at https://www.taxhawk.com/about.jsp; Briefing with TaxHawk (Mar. 12, 2020).
130
About TaxHawk, available at https://www.taxhawk.com/about.jsp.
131
IRS Free File Program delivered by FreeTaxUSA, available at https://www.freetaxusa.com/freefile/.
132
Available at https://www.taxhawk.com/software.jsp.
133
Email from TaxHawk to Subcommittee Staff (May 19, 2020).
134
Briefing with TaxHawk (Mar. 12, 2020).
135
Id.
136
Id.
137
Id.
125

13

 E. Drake (1040.com)
Drake provides professional tax preparation software, and processes more than 16 million
federal returns each year. 138 Drake also offers a do-it-yourself website, 1040.com, for
individuals seeking to file their tax returns electronically without the assistance of a
professional. 139 Drake joined the Free File program in 2011 and offered its Free File product on
1040.com until the company voluntarily left the program in 2019. 140
A Drake executive told Subcommittee staff that the company’s developers studied the
terms of the MOU prior to making a decision about indexing and concluded that customers
should only begin their experience at IRS.gov. 141 The company also believed that this approach
could best avoid a situation in which Free File users interacted with Drake commercial products,
which contained product offers and fees that the Free File program prohibited. 142 As a result,
Drake decided to non-index its Free File website from the start of its participation in the Free
File program in 2011. 143
Drake executives were unaware of any issues related to indexing for search engine results
until public reporting in 2019. 144 Following this reporting, the company consulted the IRS to
understand whether it was doing something wrong. 145 Drake executives stated the IRS did not
provide a direct answer to the company, but the agency instead pointed to public statements
regarding the intention that users would only start their Free File experience at IRS.gov. 146 A
Drake executive explained that the company made a business decision to exit the Free File
program in early 2019, before the increased public scrutiny of the program, but did not formally
leave until later in the year. 147
F. TaxSlayer
TaxSlayer is a cloud-based tax preparation software that provides resources for filing
federal and state taxes electronically with the IRS. 148 The company developed its own tax
preparation software in the late 1980s and entered the do-it-yourself tax return market in the late
1990s. 149 TaxSlayer is a founding member of the FFA and has been a continuous participant in
the Free File program since 2002. 150 TaxSlayer also offers a free commercial product named

138

About Drake Software, available at https://www.drakesoftware.com/about-us/about-drake; Briefing with Drake
Software (Mar. 4, 2020).
139
Briefing with Drake Software (Mar. 4, 2020); About Us, available at https://www.1040.com/about-us.
140
Briefing with Drake Software (Mar. 4, 2020).
141
Id.
142
Id.
143
Id.
144
Id.
145
Id.
146
Id.
147
Email from Drake Software to Subcommittee Staff (May 18, 2020).
148
About TaxSlayer, available at https://www.taxslayer.com/taxslayer-history?rdr=/mediaroom/companyinfo.
149
Briefing with TaxSlayer (Mar. 9, 2020).
150
Id. See IRS Free File Program delivered by TaxSlayer, available at
https://www.taxslayer.com/americanpledge/?source=TSUSATY2019

14

 TaxSlayer Simply Free that allows users to file a simple tax return for free. 151 TaxSlayer Simply
Free users also have the option to upgrade and pay fees for additional features, content, and
services. 152
A TaxSlayer executive explained to Subcommittee staff that the company has always
believed that entrance to the Free File program should begin at the IRS website. 153 In their view,
this approach provides “clarity and confidence” to users by showing them all Free File offerings
and allowing them to choose. 154 In an effort to ensure that users adhere to this process,
TaxSlayer provides a link back to IRS.gov if a user arrives at its Free File website through search
engine results. 155
TaxSlayer has always non-indexed its Free File website since the beginning of its
participation in the Free File program in 2002. 156 The company believed that this approach is
consistent with the intent of the language of the MOU. 157 A TaxSlayer executive stated that
TaxSlayer did not discuss indexing with the IRS at any point prior to 2019, although the
company has since removed the non-indexing code based on changes to the MOU. 158
III.

THE FREE FILE PROGRAM SUFFERS FROM A LACK OF INVESTMENT IN
MARKETING BY THE IRS

The Subcommittee learned that the IRS does not presently maintain a budget for
marketing the Free File program, nor has Congress specifically appropriated funds for this
purpose. 159 IRS officials could not recall the last time the agency had a marketing budget, but
they estimated it had been approximately six years. 160 FFA executives similarly stated that the
IRS had not maintained a marketing budget for the Free File program “for about a decade,” and
that the government has the responsibility to direct people to the program. 161 Subcommittee staff
asked whether the lack of budget for Free File marketing was the result of an internal IRS
decision or a decrease in congressional funding. 162 IRS officials stated, “It may have been an
IRS budget decision as part of the broader reduction in spending the agency received over the
last several years.” 163 As a result, the IRS usually only conducts a “media blitz” to promote the
availability of the Free File program. 164 MITRE explained that because the IRS does not have a

151

Available at https://www.taxslayer.com/products/taxslayer-free-tax-filing.
Id.
153
Briefing with TaxSlayer (Mar. 9, 2020).
154
Id.
155
Id.
156
Id.
157
Id.
158
Id.
159
Briefing with IRS (June 27, 2019).
160
Id.
161
Briefing with Free File Alliance (July 18, 2019).
162
Briefing with IRS (June 27, 2019).
163
Id.
164
Id.
152

15

 marketing budget for the Free File program, the Wage and Investment Division issues press
releases before and during tax filing season and promotes links to the IRS.gov website. 165
The MITRE report, however, stated that while the Free File program is a “long-standing
public-private partnership,” it suffered from a lack of awareness by both the public and the tax
software industry. 166 MITRE noted that by including Free File in a broader, annual marketing
campaign, the IRS might not necessarily reach the actual Free File-eligible population. 167
MITRE recommended that the IRS determine the level of awareness of the Free File program,
which it last analyzed in 2011, before pursuing congressional funding. 168
TIGTA’s audit concluded that the IRS had not allocated any funds to promote the Free
File program since Fiscal Year 2014. 169 The IRS previously had a marketing contract from
Fiscal Year 2009 to Fiscal Year 2014, which allocated between $750,000 and $1.5 million per
year for Free File marketing. 170 This funding supported newspaper, radio, and local television
advertisements about the program. 171 TIGTA told Subcommittee staff that they found no
evidence to suggest the IRS lacked authority to spend funds to promote Free File after Fiscal
Year 2014. 172 Instead, the IRS sought to “save money and be more efficient.” 173
H&R Block executives stated that the MOU sets forth the obligation of the IRS to
promote the Free File program and that the company does not believe it should be marketing the
program “in any manner;” therefore, it does not engage in any efforts to market the Free File
program. 174 Per the requirements of the MOU, H&R Block sends one reminder email to
individuals who used the company’s Free File product the prior year. 175 The company has also
referenced its Free File offering in press releases, which lists the various ways taxpayers may file
taxes free of charge. 176
Intuit executives detailed the ways in which they market their Free File offering. 177 In
2019, Intuit increased its advertising spending for online search platforms by 80 percent. 178
Intuit also increased its support for Tax Time Allies, a nonprofit organization that focuses on
online advertisement of the Free File program, to $1.5 million. 179 Additionally, Intuit sends six
165

Free File Program Assessment Final Report 53, MITRE (Oct. 3, 2019), available at
https://www.irs.gov/pub/newsroom/01_free-file-program-assessment-100319.pdf.
166
Id. at 82.
167
Id at 53.
168
Id.
169
TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION, U.S. DEP’T OF THE TREASURY, 2020-40-009,
COMPLEXITY AND INSUFFICIENT OVERSIGHT OF THE FREE FILE PROGRAM RESULT IN LOW TAXPAYER PARTICIPATION
9 (2020).
170
Id.
171
Id.
172
Briefing with TIGTA (Feb. 4, 2020).
173
Id.
174
Briefing with H&R Block (Aug. 14, 2019).
175
Id.
176
Id.
177
Briefing with Intuit (July 31, 2019).
178
Id.
179
Id.

16

 to eight reminder emails each year to previous users of the company’s Free File offering, which
the company noted is more than the single email required by the MOU. 180
A TaxHawk executive stated he believed the IRS lacked funding for marketing the Free
File program and instead does “some marketing that is low-cost or no-cost.” 181
A Drake executive declined to comment on the state of the IRS budget but noted that a
marketing campaign would help the IRS increase awareness of the Free File program. 182
A TaxSlayer executive stated that awareness is key to the growth of the Free File
program. 183 The company sends a reminder email to prior users of its Free File product,
participates in Tax Time Allies awareness events when invited, and also alerts prior Free File
users who attempt to use one of its commercial products that they could be eligible for Free
File. 184 A company executive explained that TaxSlayer could not speak as to why the IRS does
not perform marketing. 185
***
On December 26, 2019, the IRS and the FFA agreed to an addendum to the MOU that
established “clearly defined rules for online search practices.” 186 The addendum prohibits FFA
members from engaging in any practice that would exclude their Free File landing pages from
organic search results. 187 IRS officials told Subcommittee staff that they have begun conducting
organic searches to determine whether any FFA members have violated the addendum. 188 An
FFA executive told the Subcommittee that this change was not the result of a discussion between
the IRS and the FFA. Instead, the IRS imposed this change because “they believed this was a
better policy.” 189 The addendum also requires each FFA member to standardize the naming of
its Free File offering and use the following convention: IRS Free File program delivered by
(Member company or product name). 190 In addition, the addendum requires that the FFA’s
auditor conduct a review of member websites before and during the middle of the tax filing
season and provide aggregate findings to the IRS; the FFA must also provide written notification
that all member companies are in compliance. 191

180

Id.
Briefing with TaxHawk (Mar. 12, 2020).
182
Briefing with Drake (Mar. 5, 2020).
183
Briefing with TaxSlayer (Mar. 9, 2020).
184
Id.; Email from Intuit to Subcommittee Staff (May 21, 2020).
185
Briefing with TaxSlayer (Mar. 9, 2020).
186
IRS, U.S. DEP’T OF THE TREASURY, ADDENDUM TO THE EIGHTH MEMORANDUM OF UNDERSTANDING ON SERVICE
STANDARDS AND DISPUTES BETWEEN THE INTERNAL REVENUE SERVICE AND FREE FILE, INCORPORATED (2019),
available at https://www.irs.gov/pub/irs-utl/FFI%20Signed%20MOU%20Addendum%2012-26-19.pdf.
187
Id.
188
Briefing with IRS (Jan. 16, 2020).
189
Briefing with TaxHawk (Mar. 12, 2020).
190
IRS, U.S. DEP’T OF THE TREASURY, ADDENDUM TO THE EIGHTH MEMORANDUM OF UNDERSTANDING ON SERVICE
STANDARDS AND DISPUTES BETWEEN THE INTERNAL REVENUE SERVICE AND FREE FILE, INCORPORATED (2019),
available at https://www.irs.gov/pub/irs-utl/FFI%20Signed%20MOU%20Addendum%2012-26-19.pdf.
191
Id.
181

17

 All parties the Subcommittee interviewed expressed the view that Free File users should
begin their experience at the Free File website on IRS.gov. Many of these parties further noted
that millions of Americans are unaware of the Free File program and, by extension, the official
Free File website. Even with dedicated funding, a return to previous marketing efforts, and
increased IRS oversight of the Free File program, millions of Americans will likely continue to
use search engines when choosing an online tax preparation software. As MITRE found during
its review, for example, one search engine alone generated over 12 million visits to FFA member
websites and IRS.gov. 192 The IRS should ensure that FFA members have implemented the
suggested program name change to avoid similarities between Free File branding and branding
for commercial tax preparation products that could confuse taxpayers. To ensure the
effectiveness of the Free File program as taxpayer habits change, Congress, the IRS, and the FFA
should work together to maximize opportunities for Americans to find and use free tax filing
services.

192

Free File Program Assessment Final Report 43, MITRE (Oct. 3, 2019), available at
https://www.irs.gov/pub/newsroom/01_free-file-program-assessment-100319.pdf.

18