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IRS Direct File is here to stay and will be available to more Americans next year 2024
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The IRS is making waves with its decision to cement the Direct File system as a permanent fixture, ensuring it will be accessible to even more taxpayers next year. On Thursday, the Treasury and IRS extended an invitation to all 50 states and Washington D.C. to join the program in 2024. This expansion follows a successful pilot program in twelve states, where over 140,000 taxpayers claimed more than $90 million in refunds, collectively saving around $5.6 million in filing costs.
IRS Commissioner Danny Werfel highlighted the benefits of this initiative, stating, "Giving taxpayers additional options strengthens the tax filing system. And adding Direct File to the menu of filing options fits squarely into our effort to make taxes as easy as possible for Americans, including saving time and money."
Looking ahead, the IRS plans to enhance Direct File to accommodate a wider range of common tax situations, making it a versatile and cost-effective tool for millions of Americans. This move is set to simplify the tax filing process significantly, offering taxpayers a streamlined, free electronic filing option.
Critics Remain
Direct File received high marks from pilot users this season with 90% of more than 11,000 users ranking their experience as “excellent” or “above average,” the IRS said. But many vocal critics, particularly among private tax preparation and software companies, remain.
"Less than 1% of the 19 million taxpayers eligible for Direct File this year opted to use it," stated David Ransom, spokesperson for the American Coalition for Taxpayer Rights, which includes various commercial tax preparation companies. "We find Direct File to be costly, confusing, and redundant, especially since commercial tax preparers facilitated over 23 million free returns this year, alongside an additional 3 million free returns through the IRS Free File Program. The IRS would better serve taxpayers by promoting the existing IRS Free File program."
The IRS Free File initiative partners with private tax preparation companies to offer low-income Americans free tax filing assistance through guided software. Those who don't qualify for the guided software can still use free fillable forms. Despite its good intentions, IRS Free File has faced criticism for providing insufficient support and for steering users towards paid services.
IRS says there’s room for everyone
“As a permanent filing option, Direct File will continue to be one option among many from which taxpayers can choose,” the IRS said in its release. “It is not meant to replace other important options by tax professionals or commercial software providers, who are critical partners with the IRS in delivering a successful tax system for the nation.”
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