A new analysis from National Taxpayers Union Foundation (NTUF) Friday praised reported plans by the Trump Administration to end the IRS’s Direct File program.
Concerns about the IRS’s legal authority to create Direct File, its costs, and the IRS’s failure to make progress in other strategic technology priorities are more than enough to justify terminating the program, according to the report.
“Ending the program now will return to Congress its rightful authority to determine Direct File’s future in light of these critical failures. Supporters of Direct File who want to make it easier and less costly to file taxes should focus their efforts on simplifying the tax code itself, which is where the real burden lies,” Debbie Jennings, NTUF Policy Manager and author of the report, said.
Direct File is the IRS’s in-house free tax filing software developed as a result of the Inflation Reduction Act (IRA).
The IRA required the IRS to conduct a study into the feasibility, cost, and benefits of an IRS-run free tax filing system. Immediately after releasing its report, the IRS quickly announced that it would develop a pilot of the free filing system, without providing Congress with time to review the initial study and determine the path forward.
The IRS also failed to properly account for Direct File costs, which were likely to go up significantly if the program were expanded.
Direct File may also be distracting the IRS from other key transformation projects. The IRA provided the IRS with $4.8 billion to modernize its information technology systems. Yet, despite the influx of funds, the creation of Direct File is one of the only major software initiatives that has been implemented from start to finish by the IRS since the IRA became law.
“While the IRS under the Biden Administration claimed that Direct File had high marks in user satisfaction and filled a needed gap in tax filing software, the benefits of the program never truly outweighed its costs. The Trump Administration is right to save taxpayer resources by ending Direct File after this season,” Jennings said.
Read the study.