The IRS has reported that over 140,000 taxpayers utilized its new direct file pilot program during the tax season, resulting in savings of approximately $5.6 million in fees that would have been spent on commercial tax preparation services. The program, available in 12 states, allows individuals with simple W-2 forms to calculate and submit their returns directly to the IRS for free. Participants in the program claimed over $90 million in refunds. Despite the program’s success, officials have not confirmed whether it will be expanded for future tax seasons, citing the need to evaluate the data and collect feedback from stakeholders.
The direct file pilot program, launched on March 8, incurred costs of around $10.5 million for technology and product development, as well as an additional $2.4 million for customer service, cloud computing, and user authentication. While the Treasury Department aimed for 100,000 users for the pilot, over 140,000 taxpayers completed their taxes using the program. More than 3 million people checked their eligibility for the program, and over 400,000 individuals logged into the system. IRS Commissioner Daniel Werfel expressed pride in the program’s success, but the future availability of direct file will depend on further analysis and feedback.
Commercial tax preparation companies, such as Intuit, have opposed the development of the free file program, arguing that free filing options already exist for all Americans. Various organizations, including private tax firms, offer free online tax preparation assistance to individuals below certain income limits. Fillable forms are also available on the IRS website, but they can be complex and require taxpayers to calculate their tax liability. The tax season began on January 29 and the filing deadline for most individuals was April 15. The direct file pilot program was accessible to eligible taxpayers in select states, as well as in four states with an income tax, where state agencies aided in filing state returns.
In addition to the direct file pilot program, the IRS has received a total of 119.5 million returns this tax season, compared to 117.3 million in the previous year. Refunds for this tax season amount to $220 billion, an increase from $215 billion in the previous year. The IRS continues to process returns and provide assistance to taxpayers throughout the tax season. Individuals can stay updated on IRS news and developments by following the AP’s coverage of the Internal Revenue Service. While the direct file pilot program showed promise in providing a free and efficient way for taxpayers to submit their returns, the decision on its future availability will depend on further evaluation and feedback from stakeholders.
