Though it may seem like the IRS’ free tax filing option available for its first full tax season this year may already be a thing of the past, taxpayers can still take advantage of it through mid-October – and perhaps beyond, even if only at the state level.
Direct File ‘As We Know It’
IRS Direct File made its launch in January after what the agency chalked up as a successful pilot program during a few-week period last tax season. Available to taxpayers in 25 participating states – over double the amount of states that opted into the pilot – the program allowed eligible individuals to complete and submit their tax returns with the IRS directly without the need for a third-party preparer.
Despite positive feedback from users, congressional Republicans and the Trump administration have long-since opposed the existence of Direct File, instead favoring a partnership between the agency and the commercial tax prep industry.
Direct File critics question the costs and necessity of the program started under former Commissioner Danny Werfel and funded in large part by the Inflation Reduction Act. Proponents cite the program’s popularity with participating users and data illustrating high accuracy rates on submitted returns.
Amid a turbulent political climate and ongoing leadership and staffing level announcements at the IRS, one is left to wonder if Direct File is, effectively, on ice. But the program is not down for the count yet, says Code for America Program Director Annelise Grimm.
“While Direct File as we know it may be gone, the idea that tax filing can be free and easy is here to stay,” said Grimm. “Code for America remains encouraged by efforts to preserve the legacy of Direct File and ensure taxpayers have access to free filing options in the future.”
Speaking with Checkpoint, Grimm clarified that “we still don’t have an official decision about whether Direct File will continue or not.”
E-Filing Tool Collaboration
Code for America has been in partnership with the IRS and several state revenue agencies since joining the tax arena in 2019. The organization helps build the tech infrastructure of government websites and tools geared towards improving the taxpayer experience and administering tax programs. During the Direct File Pilot, Code for America constructed FileYourStateTaxes, state tax e-filing software used alongside the federal tool in the states of New York, Arizona, North Carolina, New Jersey, Idaho, and Maryland.
“What we did is basically work out with the IRS an integrated approach that allows Direct File to be able to request that their data is shared with us with FileYourStateTaxes,” Grimm explained. “This past season, we took that data and we pre-filled the state tax return so that users could file really quickly with their state as well. And overall, that process turned out to be really successful, with a “98% satisfaction rate amongst our clients.”
Lack of Marching Orders
Without an official announcement one way or the other, the Direct File programmers are in the dark about whether to begin necessary preparations for next tax season. “There’s always a part of us that has to have that contingency plan of: if it does relaunch, we have to be ready, and we’re running out of time to be fully ready if we don’t know if the IRS is going to relaunch it or not.”
Many on the Direct File development team have either been reassigned to other IRS workgroups or are no longer at the agency, often because of voluntary resignation or a reduction-in-force. For the skeleton crew still working behind the scenes at Direct File, “it is pretty hard for us to imagine that they’re going to be able to successfully launch” in 2026, Grimm said, “just practically.”
She advocated for the continuation of the program’s availability to the millions of taxpayers eligible for Direct File. “[I]t’s an incredible service,” and “the vast majority of the work on it has been done. We need to make some updates for this year, but it would be such a shame to let that amazing work go to waste and all the investment of the states that have participated in Direct File.”
Grimm stressed that taxpayers can still use Direct File for their 2024 returns until October 15th. For any ineligible individuals, Grimm recommended those taxpayers partner with a Volunteer Income Tax Assistant, or VITA, “so that they can remotely work with a volunteer to prepare their taxes for free.”
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