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IRS to Make Its Free Direct File Program a Permanent Option Nationwide

Ruth Singleton
Published Date:
May 31, 2024

The IRS announced that it will make its free Direct File program “a permanent option for filing federal tax returns starting in the 2025 tax season.”

During the 2024 tax season, Direct File was a pilot program available to taxpayers in only 12 states: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.

The IRS said that its decision to expand the program nationwide and to make it permanent “follows a highly successful, limited pilot during the 2024 filing season, where 140,803 taxpayers in 12 states filed their taxes using Direct File. The IRS closely analyzed data collected during the pilot, held numerous meetings with diverse groups of stakeholders and gathered feedback from individual Direct File users, state officials and representatives across the tax landscape. The IRS heard directly from hundreds of organizations across the country, more than a hundred members of Congress and from those interested in using Direct File in the future. The IRS has also heard from a limited number of stakeholders who believe the current free electronic filing options provided by third party vendors are adequate.”

Earlier this month, IRS issued a report on the Direct File pilot. More than than 15,000 Direct File users participated in the General Services Administration’s Touchpoints survey, which collects comprehensive user feedback about government systems. The survey found that 90 percent of respondents ranked their experience as Excellent or Above Average. And when asked what they particularly liked, respondents most commonly cited Direct File’s ease of use, trustworthiness and the fact that it was free. In addition, 86 percent of the respondents said that their experience with Direct File increased their trust in the IRS.

“The clear message is that many taxpayers across the nation want the IRS to provide more than one no-cost option for filing electronically,” said IRS Commissioner Danny Werfel. “So, starting with the 2025 filing season, the IRS will make Direct File a permanent option for filing federal tax returns. Giving taxpayers additional options strengthens the tax filing system. And adding Direct File to the menu of filing options fits squarely into our effort to make taxes as easy as possible for Americans, including saving time and money.”

Accounting Today reported that the future of Direct File will depend on the results of the election in November, as many Republicans have stated that they oppose the program.

In February, 13 Republican state attorneys general sent a letter demanding that Treasury Secretary Janet Yellen halt the program, calling it “unnecessary and unconstitutional.”

Tax software vendors, including Intuit, which owns Turbo Tax, also oppose the program, Accounting Today reported. Intuit spokesperson Tania Mercado said, “Today's decision by Treasury and the IRS to expand Direct File doesn't change the fact that this program is a solution in search of a problem and every American can already file their taxes for free, without any cost to the government or taxpayers. This was true on the day Direct File was launched and remains true today. Out of those eligible for Direct File, only 140,000 taxpayers, or approximately 0.7 percent used it. In stark contrast, TurboTax has filed millions of completely free tax returns annually and has provided more than 124 million free tax returns over the past decade.”

Senate Finance Committee Chairman Ron Wyden (D-Ore.) praised the program. "Direct File expanding nationwide is tremendous news for taxpayers all over the country who are tired of getting ripped off by the big tax prep companies that routinely upcharge for unnecessary services, oversell the quality of their products and offer crummy customer service," he said in a statement. "Commissioner Werfel and Secretary Yellen handled this by the book, taking the time to build and test out a great new public service before announcing its expansion."




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