Haven't Filed Yet? IRS Site Best for Free Tax Tools

NEW YORK (MainStreet) -- Rejoice, comrades: The Internal Revenue Service is now the people's tax preparer. The government agency we all love to hate has quietly become the first choice for help with filing your taxes.

Time was -- say, last year -- that a decent buck was made on the software and tools used in preparing business and personal taxes. H&R Block, Intuit -- heck, even Microsoft, made big bucks helping firms and people stay on the right side of the tax boogey man.

"I think we are up to $17 billion in market cap," Scott Cook, founder and chairman of the executive committee for Intuit, told me earlier this month. "And QuickBooks will be the foundation for further growth in other products as well."

Tax prep even had a lucrative Web 2.0 spin. Startups like Wave Accounting and Xero Accounting were turning counting beans into gold. Jamie Sutherland, the president of U.S. operations for Xero, told me this week that revenues more than doubled this year from $9 million to $19 million.

"The Web changes everything," Sutherland said.

Tax prep tools would be just another booming business in the digital age, save one small fact: Every player in this bean-counting tool market now faces an unstoppable foe -- the IRS itself.

With tax time looming -- remember, you have until midnight Tuesday to file -- tax payers face a bizarre new reality: IRS.gov is the place for tax returns.

By any rational measure -- utility, breadth of product, opportunity cost, all of 'em -- IRS.gov now offers the single most powerful, easiest to use and most efficient means of filing tax returns. Period.

Lenin would have loved it.

Want to get your taxes done by April 17? Simply surf over to IRS.gov and start browsing through the ridiculously rich offering of video tutorials, e-filing options and no-cost tools. There is so much stuff here that if you learned it all you could probably pass the CPA exam.

To get your particular return done, just start clicking. And up will come the correct form -- in my case, an interactive PDF on LLC filings. Then simply fill in the numbers, do the math as required. And hit print. What you end up with looks to me an awful like what QuickBooks or Xero cranks out.

Now, obviously, a professional accountant's review is important. And tools like QuickBooks and Xero offer other features, like invoicing and payroll. But for pure tax prep? Who needs 'em? Financial institutions like Citi, Chase and American Express all provide sophisticated account breakdowns for free as part their services. So assuming you have a feel for your numbers, have filed returns in the past and understand the basics of expenses, interest deductions and things like capital gains, IRS.gov works perfectly well.

An unconscious coup?

IRS spokespeople frankly chuckled when I called up to talk through the notion that their services were putting the tax software business out of business. Clearly the IRS is not staying up at night cramming Das Kapital. But what is happening is the agency is finally taking service seriously.

The organization brought in a bright, Harvard-educated fellow named Douglas Shulman to improve usability. And guess what, he has. In remarks to the National Press Club earlier this year Shulman showed off impressive stats for improved IRS efficiency, including effectively doubling user satisfaction.

"The IRS is now recognized as a highly efficient and effective institution to carry out important and high profile government initiatives," Shulman said in his remarks to the National Press Club earlier in April.

The bottom line is, as the tax deadline approaches, individuals and business -- with just a bit of professional help to make sure they are getting the proper deductions -- can absolutely use government-provided tools to do their taxes. No extra help from the private sector is needed.

Hugo Chavez could not have planned it out any better.

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