The announcement, which was made jointly by U.S. Secretary of the Treasury Janet L. Yellen and IRS Commissioner Danny Werfel, made clear that the agency intended to extend and expand the Direct File program which operated as a pilot during the 2024 filing season.Direct File will be a permanent, free tax filing option—that's the word from the U.S. Department of the Treasury and IRS.
The pilot was announced in October 2023 and closed after the filing season ended in April 2024. The IRS has called it a success, saying that several hundred thousand taxpayers across 12 states signed up for Direct File accounts, and 140,803 taxpayers filed their federal tax returns using the new service. Eligibility was limited to taxpayers with simple returns in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming.
According to the report, the IRS spent several months studying how an IRS-run free direct e-file tax return system might work. Most taxpayers surveyed by the agency reported interest in using an IRS-provided tool to prepare and file their taxes. At the time, the IRS indicated it hoped to make that a reality for some taxpayers for the 2024 tax filing season.
While funding appears secure today—Werfel indicated in his remarks on May 30 that the Biden administration had budgeted $75 million for the program—that isn’t necessarily the last word. A program like Direct File will require additional financial support, especially as it expands to include more complex returns, and that may not sit well with some Republican members of Congress.
Alex Lundrigan, Federal Workforce Development and Finance Policy Coordinator at Young Invincibles, a national organization committed to expanding economic opportunity for young adults ages 18 to 34, echoed those comments, saying,"This is a monumental win for taxpayers, especially young adults and those in low-income communities, who will exponentially benefit from this free, easy, and public filing option.