IRS Moves Forward with Free Direct File Program

IRS has submitted a report to Congress evaluating the possibility of giving taxpayers the option of a free IRS-run electronic filing system, also known as "Direct File." The report focused on three areas: taxpayer opinions, cost and feasibility.

The report relied on information from IRS's Taxpayer Experience Survey (TES). The 2022 TES asked taxpayers whether they would be interested in using a free IRS-provided online tool to prepare and file their taxes. A majority of taxpayers responded that they would be either “very interested” or “somewhat interested.”

IRS also incorporated findings from an independent survey by the MITRE Corporation. The MITRE survey asked respondents to choose between three hypothetical options:

• A free version of the respondent’s current commercial tax preparation software;
• A free IRS-provided option in which taxpayers would manually enter their information into the IRS-provided product; and
• A free IRS-provided “return-free” option in which the IRS prepares and files the tax return using W-2 and 1099 information received from employers.

A majority of respondents stated that they would prefer to use one of the two IRS-provided options, and almost half of respondents stated they would continue to use a free version of their current commercial software. IRS is taking steps to begin a pilot project for the 2024 filing season. Learn more here.