E-Filing Taxes and bogus Fees

I just finished up filing my 2009 taxes, and I just have to say I think it's a crock that it cost me extra money to file my taxes... If you've never e-filed before, the federal government mandates that companies offer a free option for e-filing taxes. You go through the process, putting all of your sensitive financial information into this company's online database. At some point in the process, you will casually be asked if you want to transfer all of your federal information to the state form to make things easier. "Sure," you think, figuring you'll just print out the state form (since e-filing state returns doesn't fall under the free software government mandate). Lo and behold, the company I used (TaxAct) wanted $14.95 to even print out my state tax return.

There's no doubt that e-filing saves time and money for tax departments and American citizens. Between labor costs for data entry and postage due, the savings must be somewhere in the $10 per return range. Add to this the benefit of "cleaner" data realized by strict validation routines, and I think e-filing is the only way to go for your average American taxpayer. By design, tax rules are the kind of thing that lend themselves perfectly to online forms. In fact, I think with the cut-and-dry rules produced by the IRS, translating these into business logic for an online system actually makes them easier to understand and enforce.

Altogether, I have to wonder why the IRS and state tax departments even bother using 3rd party companies to do the filing. Surely it wouldn't be difficult for them to build their own user-interface to handle filings. I do understand the argument that the 3rd party companies presumably have taxpayer interests in mind (thus would be more likely to get us a better return), since they are essentially competing for our business, but I draw the line at having to pay an extra fee to use the service. There has to be a middle ground here. I guess until the individual states (or the feds on their behalf) are able to get their act together enough to either create an in-house e-filing system, or force/pay 3rd party companies to do it for them at no cost to the taxpayer, I'm going to be stuck with the choice of either wading through the paper forms or paying the money. This time, TaxAct wins. The convenience of having my state return over and done with outweighed my desire not to give them a dime for a service that should be covered in the taxes I'm already paying. Enjoy my $14.95 you bastards.