Many VA Taxpayers Will Lose Free Filing Tax Service

By Natalie Neumann

For the past ten years, nearly 97 percent of Virginians were eligible to file their state taxes using the Commonwealth's free online service. That benefit will end for many taxpayers in less than a month.

Faced with budget shortfalls, state lawmakers chose to save nearly $50,000 annually by terminating the iFile program and Governor Bob McDonnell agreed.

"It was overwhelmingly adopted by the general assembly and we're pinching pennies in every different way. We cut 4 billion dollars out of the budget. We're looking at a number of ways to conserve," says McDonnell.

A new program retains the free filing benefit for Virginians whose adjusted gross income is less than $57,000 a year but those who earn more will have to pay a tax preparer or buy a computer program, such as Turbo Tax, which includes electronic filing.

The company that owns Turbo Tax contributed to McDonnell's gubernatorial campaign last year, but he says the money did not influence his decision to sign the new bill into law.

"This was a General Assembly initiative. I didn't see the bill at all until the bill got to my desk," he says.

Switching programs could actually cost Virginia more than it expects to save because the Commonwealth figures it will cost it $90,000 to process paper claims from taxpayers who no longer will be eligible to file electronically for free.