The IRS recommends that taxpayers file electronically — e-filing saves the government time and money, and is more accurate than IRS employees who type in the data from paper returns.
But the IRS refuses to set up its own Web portal to receive the filings. Instead, most Americans have no choice but to e-file through private companies like Intuit (Turbo Tax) and HR Block (Tax Cut).
In most cases, the companies charge an extra fee for e-filing. In other countries, free and direct electronic filing is a given. But in the United States, Intuit has lobbied hard to make sure taxpayers aren't allowed to e-file directly to the IRS.
Steve Ryan, a lawyer for the tax-preparation industry who negotiated a deal that has the IRS promising not to set up its own Web portal for e-filing, says his argument was simple.
"When the government becomes my competitor," Ryan says, "then I have every right to run an ad that says 'Big Brother is watching your keystrokes.'"