Tracy, CA--(Business Wire)--October 12, 2005-- TaxBrain.com, (http://www.taxbrain.com) is issuing stern warnings that the recently announced "Return Free" initiative from the IRS could sink low income taxpayers in a bureaucratic swamp of red tape and identity theft nightmares.

Under the proposal, the IRS would use data collected from prior year tax returns, employer records and financial institution reporting to cobble together tax returns for millions of taxpayers. The taxpayer would then be responsible for correcting any inaccuracies and oversights.

Why is the IRS proposing this? "Because it might save them a few dollars in processing costs," said Craig I. Petz, Vice President of Petz Enterprises, Inc., (http://www.petzent.com), whose online tax preparation brand TaxBrain.com is the fastest growing tax service in the U.S.

According to a column entitled "Inside the Beltway" published October 7, 2005, Washington Times (http://washingtontimes.com/national/20051006-112642-6222r.htm):

"If you think it's bad enough that the Internal Revenue Service collects your hard-earned tax dollars, imagine if an IRS agent prepared your income-tax returns, too. No, we're not joking.

The concept, called 'Return-Free' - where the IRS automatically prepares income-tax returns of those taxpayers with the simplest returns and then sends taxpayers the bill - is being considered by the President's Advisory Panel on Federal Tax Reform.

One of several Republicans who opposes the concept calls it 'flawed' and 'dangerous to taxpayers.' It 'creates a conflict of interest by making the tax collector the tax preparer,' Republican Study Committee Chairman Rep. Mike Pence of Indiana warns in a letter sent to the chairman of the tax reform panel, Rep. Connie Mack, Florida Republican.

And believe it or not, under the proposal, the individual taxpayer - not the IRS - still will be personally liable for mistakes."

TaxBrain.com Senior Tax Analyst Eric Hayes explained the problems, saying, "first, all the taxpayer's personal information would be included in this mass mailing. Tens of millions of these complete personal disclosures would be mailed out, an extremely high-risk target for identity theft. If intensely personal information is mailed to an invalid address, the new recipient could simply sign the return and mail it back to the IRS. A few weeks later a check for several thousand dollars shows up in the non-taxpayers hands."

"The taxpayer has now gotten cheated out of their legitimate tax refund and it would be the taxpayer's responsibility to fight the IRS bureaucracy to get the problem fixed."

"Worse," continued Mr. Hayes, "because by law the IRS cannot be liable for errors, those people with the least ability to understand the tax system would be the most vulnerable to system errors, penalties, and huge hassles."

Ironically, he Taxpayer Advocate, headed by Nina Olsen, is simultaneously pushing IRS reforms aimed at protecting taxpayers from just these types of problems. Recent proposals include licensing tax preparers out of concern for the quality of commercially available tax preparation services and the establishment of stricter rules regarding the use and protection of personal taxpayer information.

About TaxBrain.com®

TaxBrain.com is the only web-based tax solution delivering online preparation, filing, professional assistance and representation in all 50 states. TaxBrain.com is a full-service online tax center providing tax advice, tools, and resources all year to help taxpayers manage their tax burden with greater confidence and ease. For more information visit www.taxbrain.com/press.

About Petz Enterprises, Inc.

Petz Enterprises, Inc. (a closely-held California corporation) is a software development company and a leading provider of tax preparation and filing solutions for the professional and consumer markets, helping to automate and simplify federal, state and local tax compliance. PEI's Crosslink® line of professional tax software products enable tax practitioners and service bureaus to accurately prepare and file large volumes of individual tax returns. Founded in 1974, Tracy, CA-based PEI is dedicated to serving the needs of the professional tax community and individual taxpayers worldwide. For more information, visit http://www.petzent.com.