The year 2005 saw a major change in the way people filed their taxes as a result of the initiative taken by the IRS. The Internal Revenue Service wanted more people to file their returns electronically and hence they gave the incentive of free tax filing from 2005 for people doing it online. This system is much more economical for the IRS and the processing also is faster and cheaper.
This free tax filing 2005 was not well received by the different tax preparers whose source of income depended on tax preparation and filing. To counter the move of the IRS the private tax preparers got together and announced that anybody filing for tax with the adjusted gross income of up to $50,000 could do it for free. Those whose adjusted gross income was more than $50,00 would not qualify for the free tax filing 2005.
Later the private tax preparers thinking that the IRS might come up with its own free tax preparation software agreed for the free filing of tax. There was an agreement between the IRS and the private tax services that on the whole the private services will provide free online tax preparation and filing for 60% of its customers every year. The IRS has not laid down any specific rules for the private tax service companies, and only wants them to fulfill their quota of free filing for 60% of its clients.
The free tax filing 2005 and tax preparation can be accessed via the website of the IRS. This online service is totally free and the person does not have to buy any software or pay any money as fees. This free tax filing for 2005 is available only through the website of IRS, and if you go to the website which prepares the tax directly, there is a charge of almost $20 for the very same service. The free tax filing for 2005 can be accessed by logging on to the website irs.gov and then clicking on the link which says "Free File". This will give a list of all the tax services which are providing the service for free to everybody, even if you have not signed in with that company.
Apart from the economics to the IRS, the taxpayer is also benefitted by online filing apart from the fact that it is free. The online interface provides the taxpayer an advantage of filing error-free forms and returns. Many of the common mistakes in tax preparation is spotted by the software and can be rectified immediately.