IRS Electronic Filing System Sparks Privacy Fears

The Internal Revenue Service this year will flag taxpayers who use its free electronic filing program, touching off a privacy firestorm, according to wire service reports.

Software maker Intuit said it refused to comply with an IRS directive to identify by electronic code free e-filers who use its TurboTax software.

And TaxBrain, which last year offered free e-filing to taxpayers over 50, will withdraw from the IRS program.

The IRS maintains it is seeking routine information that will help it expand electronic filing.

Last year, 2.8 million people used the IRS’s program.