The IRS Direct File is Here to Stay - But Under Immediate Threat

In the March-April edition of this column, we reported on an important new public service that was being piloted in some portions of the country.

The program, called Direct File, was an effort by the Internal Revenue Service (IRS) to provide a public option for tax filing, bypassing the abusive tax preparation firms operated by big tech companies like Intuit.

The pilot program offered taxpayers in 12 states the option to file both their federal and state taxes online, for free, with the new tool offered by the IRS. While it’s not always easy to get excited about paying taxes, the program has actually helped thousands of working people access tax breaks to which they’re entitled, all without forking out exorbitant fees to the big tech tax preparation companies.

Following the success of the 2024 filing season, the IRS announced in late May that Direct File would be a permanent option, and that they would seek to expand the program to address more complex tax situations by inviting all states to partner with Direct File in the months ahead.

The pilot program went off without a hitch in 2024, with more 140,000 taxpayers filing using Direct File. More than 90 percent of filers reported that the experience was either “Excellent” or “Above Average”. The IRS estimated that Direct File users saved more than $5.6 million in fees by filing for free this year.

Of course, the program was controversial, with opposition being driven by Intuit TurboTax and the other big tax preparation companies. While the IRS has announced they’re making Direct File permanent, its opponents haven’t yet given up the fight.

The big tech tax preparers have convinced governors in 13 states to side with the corporations over their constituents and refuse to cooperate with Direct File. There is also an effort in Congress to slip a poison pill into upcoming appropriations negotiations, which would prohibit the government from using federal funds to “develop or provide taxpayers a free, public electronic return-filing system.” ■