Filing Federal Taxes OnlineThe reason is, the majority of taxpayers cannot file their taxes online for free, you must be qualify under the IRS guidelines.
Visit the IRS website for complete information.
Some people may have (or think they have) particularly complex issues, or an inability to even sort the needed data for input. The available tax programs, which I believe do an excellent job leading anyone through filing, may not be for everyone (even just navigating a PC)...and certainly the fairly minor cost of retail ones have many features to help reduce tax, find benefits and even plan and understand finances for the future, that the IRS does not provide. I guess there is some comfort in thinking your not letting the IRS make all the decisions too! A huge number of people, even those with simple returns, still elect to have a person prepare it...which while perhaps able to add insight to some situations, in todays world basically means having someone else run the PC program for you.
Clearly, for anyone in a basic return situation...any system will work very well.
Finally, the IRS system does NOT provide a State Tax filing method, which normally requires much of the same information to be input and may well be more difficult. Don't have efile, etc. The commercial State programs are basically run with the Fed one, not independently.