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Audit finds just 2.5M people used free tax prep in 2019, despite 104M being eligible

It's because the process is "obscure and complex," the audit said.

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Angela Lang/CNET

An audit has found that just 2.5 million people out of the 104 million eligible people made use of free tax filing through the US Free File Program. But more than 34.5 million people who could have filed for free instead used commercial, paid software for their tax returns -- software from companies that are part of the program.

The Free File Program is a joint partnership between the IRS and Free File Inc. It provides tax return software free of charge to those who earn $69,000 or less. It uses software from program members including Intuit's TurboTax, H&R Block, FileYourTaxes, TaxSlayer and TaxHawk.

But the audit from the Treasury Inspector General for Tax Administration (TIGTA) -- published Feb. 3 and reported earlier Wednesday by ProPublica -- said taxpayers don't know that the only way to access free filing is via the IRS website.

The process is "obscure and complex," the audit found. "There is a lack of adequate advertising ... by the IRS."

The audit follows the IRS in December announcing a new tax filing agreement that prevents companies from hiding free products from internet searches. This was a response to a ProPublica report from April last year saying TurboTax maker Intuit makes it difficult for people to find its free software, directing searches for terms like "IRS free file taxes" to paid versions of its service.