Return-Free Filing: What was the experience in California?
The State of California operated a pilot program for return-free tax filing for tax years 2005 and 2006. Participation was offered to 50,000 prescreened Californians who had previously filed as single taxpayers with no dependents, with income from wages only, and claiming the standard deduction. These taxpayers were sent "ReadyReturns," or already-completed state tax returns, and were given the option of either filing their ReadyReturn (on paper or online) or discarding it and filing their own conventional tax return later. The pilot program was popular among those taxpayers who used it, and California recently authorized the widespread availability of the ReadyReturn program for tax year 2007.
- The ReadyReturn pilot program had a participation rate of about 21 percent. Of the 11,000 participants, approximately half filed a paper copy and half filed electronically.
- The California Franchise Tax Board estimates that, in 2007, about 1 million taxpayers will be eligible for the ReadyReturn under the above criteria. About 3 million California taxpayers earn income from wages only, indicating that the program could be expanded relatively easily to a significant portion of the state’s population.
- An evaluation of the program indicated that it was a success. Of those filing an electronic ReadyReturn, 95 percent indicated that it saved time, as did 87 percent of participants filing a paper copy. Almost all participants indicated that they would opt to use the service the following year.