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Several lawmakers and organizations are urging the Treasury and IRS to bring back the Direct File program for the next tax season.
IRS Direct File Pilot Program Sees Success: Over 140,000 Tax Filings and $90 Million in Refunds
This comes after the IRS finished its pilot program which offered taxpayers a simple, free way to file their federal taxes directly with the agency. By the end of the 2024 tax season, Direct File processed over 5,000 accepted returns daily totaling more than 140,000 filings. Taxpayers claimed over $90 million in refunds and reported $35 million in balances due. Millions visited the Direct File website to learn more, according to the report of Kplinger.
Despite its success, the program faces criticism from some Congress members and major tax preparation companies like Intuit TurboTax and H&R Block. However, many lawmakers and organizations are advocating for its return next year reaching out to Treasury Secretary Janet Yellen and IRS Commissioner Danny Werfel.
Commissioner Werfel emphasized the IRS’s commitment to providing convenient filing options noting that the pilot tested a free, easy, and accurate way to file taxes directly with the IRS. The pilot was available in 12 states and saw increased interest as the tax deadline approached.
Feedback from users has been positive, with 90% rating their experience as “Excellent” or “Above Average,” and 86% reporting increased trust in the IRS. California and Texas had the highest numbers of users, with 33,238 and 29,099 taxpayers, respectively. Other participating states included Nevada, New Hampshire, South Dakota, Tennessee, and Wyoming.
(photo: WXYZ)
A Successful Step Towards Free Tax Filing for Americans
Werfel also noted increased usage of other free filing options such as Free File and services at VITA and TCE sites, which focus on taxpayers with incomes under $79,000.
The pilot’s operational costs, including customer service and technology, totaled about $2.4 million. The IRS plans to analyze data from the pilot to guide future updates and improvements.
Senator Elizabeth Warren (D-Mass.) is leading the advocacy for the program’s continuation, calling the pilot an “incredible success” in a letter to Treasury Secretary Yellen and IRS Commissioner Werfel. The letter emphasized Direct File’s potential to provide a free and easy alternative to commercial tax preparation services.
The Coalition for Free and Fair Filing representing about 255 organizations, also praised the program’s popularity and highlighted concerns about misleading advertising by tax prep companies. They argue that Americans spend 1.7 billion hours and $31 billion annually on tax filing, and options like Direct File could reduce this burden.
Some members of the House of Representatives are concerned about the IRS acting as the tax preparer, filer, and auditor. The program’s future is still uncertain but the IRS plans to release a report on the pilot later this spring, providing further updates.
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