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Online tax filing program to charge high-income users

Virginia Free File program will connect taxpayers to private sector programs, will not charge taxpayers earning less than $57,000 annually

As the deadline for state taxes - May 3 - gets closer, the General Assembly has ceased the free online service through which Virginians file their income taxes.

The General Assembly passed a bill last month to replace "iFile" - a service that for 10 years has allowed almost all Virginians to file returns without any charge - with the more-restricted Virginia Free File program. The new program is modeled after the federal Free File program and will be offered to "certain lower-income taxpayers at no cost," according to the bill.

"This is a very simple change," said Del. Kathy Byron, R-Campbell County, the bill's sponsor. "Basically there will now be a link on the Web site that offers Free File. It connects 19 other groups from alliance of businesses. If you earn less than $57,000, adjusted gross income filing will still be free."

Virginia eliminated the previous file program to cut down on operating costs, said Isaac Wood, communications director at the Center for Politics and a former Cavalier Daily opinion columnist.\n"Anything that could save any amount of money was on the table," he said.

Moreover, the bill will eliminate a perceived problem wherein the tax collector - the state - also acted as the tax preparer, Byron said.

"The tax collector shouldn't be the tax preparer; that's a conflict," Byron said. "This job should be done in the private sector."

In addition, the new system should be much more efficient, offer better service, save tax payer dollars and cut down on the amount of work in some local offices, Byron said.

Some legislators, however, believe the bill will do just the opposite.

"It's a bad bill," said Sen. Creigh Deeds, D-Charlottesville, who spoke out against the bill Monday during the floor debate.

The bill only affects individuals who file their taxes electronically and earn more than $57,000 annually, Deeds said, but if those handful of people file their returns on paper to avoid an electronic processing fee of up to $30 in favor of 44-cent postage fee, the commonwealth will incur excessive expense processing fees on the paper returns.

"It's going to increase the number of paper filers and decrease efficiency in the process," Deeds said.

It is also likely, he added, that the replacement for iFile - which cost the state a relatively small sum of $49,200 per year - will cost more money in the long run.

Nevertheless, Byron maintains that the bill will help Virginians.

"This will allow Virginia Tax Payers to keep more of their hard-earned money," she said. "In the end, that's what it's about, saving more money so that we can send our kids to college and raise our families."

According to the text of the bill, the Virginia Free File Program will go into effect no later than Dec. 31.