ABA TAX SECTION PUBLISHES TIPS FOR ONLINE TAX FILING,
CAUTIONS AGAINST LOANS AND SERVICES

WASHINGTON, DC—Since January, more than one million taxpayers have taken advantage of the IRS's new "Free File" service, which allows individuals to link to commercial tax preparers through the IRS website and file their federal income taxes online free of charge.

While the program has its advantages, including fewer mistakes and the prospect of speedier refunds, the American Bar Association Section of Taxation cautions taxpayers to understand the terms, conditions and costs associated with the various commercial services and loans offered online.

"Some of the commercial tax preparers in the Free File program would be more than happy to sell taxpayers a refund anticipation loan, or RAL," said Herbert Beller, chair of the ABA Section of Taxation. "But the fees and the interest charges associated with RALS are quite high, and the longer a taxpayer waits to pay off the loan, the more it will cost. Taxpayers should resist the temptation."

Beller says taxpayers who are expecting a refund and use Free File should get their refund in as little as a week to ten days, according to the IRS. But not everyone can participate in Free File, so they will need to do their homework before they begin.

"More than 60% of U.S. taxpayers qualify for Free File," said Beller. "Taxpayers need to go to the IRS website to determine if they qualify, which depends on income, age, state residency, and other factors."

To assist taxpayers, the Section of Taxation has put together a list of 10 tips to consider before filing federal taxes online, including:

• Watch out for "hidden fees." Companies may charge for consultations once your tax return is filed;
   
• Keep your paperwork. Don't rely on your computer to store data; and
   
• Don't procrastinate. Free File is only available through April 15th

A complete list of tips for filing your taxes online is available on the Tax Section website at www.taxtips4u.org.

The American Bar Association Section of Taxation has more than 20,000 tax lawyer members nationwide. Its goals include helping taxpayers better understand their rights and obligations under the tax laws and working to make the tax system fairer, simpler and easier to administer.

The American Bar Association is the largest voluntary professional membership organization in the world. With more than 410,000 members, the ABA provides law school accreditation, continuing legal education, information about the law, programs to assist lawyers and judges in their work, and initiatives to improve the legal system for the public.

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