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The IRS's Free Efile program can help many taxpayers in completing their federal tax return freely and eaisly. But very few taxpayers are using these services, probably because of security concerns.

Free Efile program is an association of tax software companies that prepares individual tax return for free on the IRS web site. And in 2007 this association consists of 20 companies. And according to it :

Before, fees had been charged not just for preparing and filing for state tax return but also for such services like password resets, live help or telephone technical support, professional tax return reviews, audit protection, amended returns and consultations.

This new, Free Efile system is not without its temptations, however. Once you're transferred to a vendor's site, you are offered choice of filing your federal tax return for free, with no other offers.

The IRS people are from the government, and they are there to help you. Whenever something is offered for free, you should at least consider it withoutit forgetting the potential downsides.

There is an extreme drop for the use of free file by taxpayers in 2005 from 2004, it was by 21%. I think much of that was a result of privacy protection and security concerns with electronically filed returns. The problem is current software doesn't allow you to encrypt portions of the return and leaves your personal financial information open to hackers with less ethical objectives.

Efile tax return is susceptible to theft in a number of ways,
  1. Computer hackers are penetrating a network's security system,
  2. Unauthorized users access tax return files by tapping into wireless networks. Such networks allow anyone using the network to get in to files on computers that are part of the network.
  3. Use of peer to peer software. Such software installed on one computer allows files to be shared with computers having similar software.
Despite, more than 3.9 million taxpayers use free efile program last year satisfactory. Out of those 94% said they would see it again, 96% said the system is somewhat easy to use, and 97% would recommend it to others

.