
In a December 2024 report, the Government Accountability Office (GAO) said that the opportunities exist to expand access to the IRS' online tax
filing.
The report found that the the IRS followed leading practices in piloting Direct File. According to the report, these practices included identifying learning objectives and collecting relevant data including customer service requests.
The GAO pointed out that the IRS also identified lessons learned, including how to
develop website content more efficiently. The agency also continues to determine staffing
needs for a newly established Direct File Office. Additionally, the IRS is intending to expand the scope of taxpayers who can use Direct File in 2025
by adding support for the premium tax credit for health insurance as well as other tax
provisions and by permitting residents of an added 12 states to utilize the federal
Direct File system.
However, GAO also found that the IRS is behind schedule in recruiting
and training customer service representatives for the 2025 filing season because of insufficient coordination among IRS offices. Aside from this, the agency only limits
participation in Direct File to taxpayers who live in certain states, which facilitates
coordination between federal and state tax filing. But, GAO found that IRS
can face challenges in reaching agreements with all states, which raises equity
concerns for those taxpayers who are unable to access Direct File because of where they reside.
In the report, GAO made four recommendations to the IRS, these are:
• improving coordination among relevant offices to ensure the hiring of customer support employees;
• opening Direct File to all eligible taxpayers in the future;
• identifying additional data that could be prepopulated in Direct File and testing its accuracy;
• continuing to coordinate with state revenue agencies to expand access to Direct File and, as necessary, taking steps to ensure the availability of the federal Direct File program to eligible taxpayers in all states.
According to the GAO, the IRS agreed with three of its recommendations. However, the agency neither agreed nor disagreed with the GAO's recommendation to continue coordinating with state revenue agencies.
The IRS responded to the GAO in a Dec.13 letter. "We acknowledge GAO's interest in seeing Direct File offered nationwide with expanded eligibility for taxpayers with more complex tax situations, and your recognition of the challenges we continue to explore in the expansion of Direct File," stated IRS Deputy Commissioner Douglas O'Donnell in a letter responding to GAO's report. "The complex and nuanced nature of our nation's tax laws require careful thought and consideration before support for any additional tax provisions can be added to Direct File to ensure nothing compromises its accuracy or usability for taxpayers."
As background, the IRS successfully piloted its Direct File service from
February to April 2024 for taxpayers who have simple tax situations and who reside in one of
12 states. The program utilized interview-style questions to guide taxpayers through
preparing a return on an IRS website at no cost to the taxpayer.
The agency accepted
140,803 Direct File returns that helped many taxpayers with lower incomes
fulfill their filing obligations. Taxpayers reported that Direct File was an easier tax
preparation method compared to the system they had previously utilized. This is a factor that contributed to
IRS’s decision to make Direct File permanent.