E-File Lawsuit

November 13, 2007 -- Millions of Americans are being charged illegal fees to file their federal taxes, that's the allegation of a class action lawsuit filed in Philadelphia.

The class action lawsuit was just filed on Tuesday and if the plaintiffs win millions of taxpayers could be getting refunds and perhaps more importantly, this has the potential to change the federal e-filing system for good. That would mean that all American taxpayers could e-file for free starting as soon as this coming tax season.

Nearly 54-percent of Americans filed their 2006 tax returns electronically. Stacie Byers of Manayunk was one of them.

"I choose to e-file because it's simple and easy."

Stacie bought H&R Block's tax cut software for help and included in the price is a fee to e-file; most taxpayers who e-file end up paying a similar fee even if they file online with

out additional software. Sometimes the fee is included with other products and sometimes they pay it separately.

"I had no idea that anybody was profiting over paying my taxes."

Even if you go to the government's official IRS website to e-file the government then directs you to one of a number of private companies that has a contract to facilitate e-filing, companies like H&R Block or Intuit which markets Turbo Tax.

"They're called the free filing alliance and it's a cartel of private companies whose purpose is to make a profit not to enable free filing but to stop free filing and to charge whatever the market will bear," said Thomas Marrone a consumer attorney at the firm Feldman, Shepherd, Wohlgelernter, Tanner & Weinstock.

Stacie is now the lead plaintiff in the class-action lawsuit filed on Tuesday in Philadelphia. The lawsuit alleges the cartel wrongfully charged Stacie and other taxpayers and failed to set their e-filing fees as required by federal law.

"Everyone obligation has to file their returns but they should not be charged a fee to file their returns and they certainly should not have to pay a fee to private companies," said Alan Feldman a consumer attorney at the firm Feldman, Shepherd, Wohlgelernter, Tanner & Weinstock

There is a way taxpayers who meet certain income requirements can e-file for free right now. The IRS says 70-percent of taxpayers are eligible but only a small fraction take advantage free filing.

H&R Block and Intuit said they cannot comment on the lawsuit because they haven't seen it yet.

Free File Alliance said:
The lawsuit is without merit. The Free File Alliance, which has been authorized by the IRS and Congress, is a pro-consumer public private partnership that has allowed more than 17-million taxpayers, most with low and moderate incomes to file tax returns at no charge. It has been a win for taxpayers and a win for consumers.

For more information:
Free e-filing

(Copyright 2007 by Action News and 6abc. All Rights Reserved.)

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