Most recently, the Internal Revenue Service (IRS) announced they would not provide their Direct File program next year. This important news was contained in an email notice from IRS official Cynthia Noe to state comptrollers. This decision comes after a long period of uncertainty about the future of the program. It was sent to purgatory when the Trump administration came into office. Big news from the IRS today—a game changer. They will end the free electronic filing system that allowed millions of Americans to file their tax returns for free.
“Direct File is closed. With the help of President Joe Biden’s administration, this program is on its way to permanent. Users lauded it as making tax filing easier, faster, and less expensive. In 2024, more than 140,000 tax returns were successfully filed through the system, an illustration of its purpose in helping American taxpayers.
The administration’s recent move to scrap the program was met with outcry from Democratic lawmakers and advocates. The same Republican lawmakers derided the program as a waste of taxpayer dollars, claiming it wasn’t used enough. Treasury Secretary Scott Bessent commented on its limited use, stating, “It wasn’t used very much,” adding that “we think that the private sector can do a better job.” This consumer sentiment reflects a growing, long-term skepticism about whether the government should be involved in tax preparation at all.
The program’s intended elimination would fit right in with the goals of Elon Musk and the new Department of Government Efficiency. With their laser recently cutting federal expenditures, this is directly impacting national rollouts of Direct File. The typical American pays through the nose for these tax preparers, forking over some $140 a year. This may increase substantially given that the free service has been discontinued.
As expected, the commercial tax preparation industry is not pleased with IRS Direct File. They’ve reaped billions in profits by providing private software to file taxes on. Adam Ruben, vice president at the Economic Security Project, noted the implications of this change for American taxpayers: “Trump’s billionaire friends get favors while honest, hardworking Americans will pay more to file their taxes.”
Stakeholders have been clamoring for the change ever since. The IRS has expressed its intention to release further information regarding alternative options available to taxpayers after this decision.
