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The IRS’s initiative for free tax filing, known as Direct File, faces uncertainty due to continued budget reductions stemming from the previous administration. Initially rolled out as a limited pilot in 2024, the program expanded its reach, aiding over 30 million taxpayers across 25 states for the 2025 tax filing season.
Backed by funding from the Inflation Reduction Act introduced in 2022, the program has come under fire from Republican lawmakers who have expressed concerns regarding its costs and the level of participation. In the past year, proposals have surfaced aiming to terminate the IRS’s free filing services.
Recent reports indicate that the future of Direct File may be jeopardized. However, a White House administration official has indicated that no definitive decisions concerning the program’s future have been made yet.
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During his Senate confirmation hearing in January, Treasury Secretary Scott Bessent pledged to maintain Direct File throughout the 2025 filing season, although he refrained from guaranteeing its viability in subsequent years. “I will consult and study the program and understand it better and make sure it works to serve the IRS’ three goals of collections, customer service, and privacy,” Bessent stated during his testimony before the Senate Finance Committee.
Despite this commitment, uncertainty lingers regarding the future of the free tax filing initiative.
As of April 17, the Direct File website announced that the program would remain available until October 15, in alignment with the deadline for taxpayers who opted for a federal tax extension.
In addition, many taxpayers have the option to file at no cost through IRS Free File, a collaborative effort between the IRS and the Free File Alliance, a non-profit group of tax software providers. The IRS extended the Free File program through 2029 in May 2024.
Diverse Opinions Surround IRS Direct File
Critics of the potential discontinuation of Direct File voiced their concerns. Senator Ron Wyden, D-Ore., and Ranking Member of the Senate Finance Committee, emphasized the importance of accessible tax filing. “No one should have to pay huge fees just to file their taxes,” he stated on Wednesday.
Wyden lauded the program as “a massive success, saving taxpayers millions in fees, saving them time and cutting out an unnecessary middleman.”
In January, over 130 Democratic legislators, led by Senators Elizabeth Warren, D-Mass., and Chris Coons, D-Del., expressed their support for Direct File.
Nevertheless, some detractors have pointed to the program’s low participation rates and expenditures. During its 2024 pilot phase, approximately 423,450 taxpayers created or accessed a Direct File account, with only about 141,000 individuals, roughly one-third of that number, submitting their returns through the platform, as reported by the Treasury Inspector General for Tax Administration in March.
This participation reflects the pilot’s limited mid-season launch in just 12 states and catered only to simple tax returns. It remains uncertain how many taxpayers utilized Direct File leading up to the April 15 filing deadline.
The reported cost associated with the Direct File initiative during its pilot was approximately $24.6 million, which included an additional $2.4 million for operational expenses.
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