The IRS is planning to launch a pilot program for a government-run, online tax filing system that’s free for all.
FILE - The Internal Revenue Service 1040 tax form for 2022 is seen on April 17, 2023. The IRS is planning to launch a pilot program for a government-run, online tax filing system thats free for all. After months of research, the IRS published a feasibility report on Tuesday, May 16, 2023, laying out taxpayer interest in direct file, how the system could work, its potential cost, operational challenges and more.
Now, the IRS plans to launch a pilot program for the 2024 filing season to test a “direct file” system and help the federal government decide whether to move forward with potentially implementing it in the future, IRS Commissioner Danny Werfel and the Treasury’s Chief Implementation Officer Laurel Blatchford said Tuesday.
The report shows that the majority of surveyed taxpayers would be interested in using an IRS-provided tool to prepare and file their taxes electronically — and that the IRS is “technically capable of delivering direct file, but doing so would require additional resources and add complexity to IRS operations,” Werfel said on a call with reporters., will remain in place, he added.
The study estimates that annual costs of direct file may range, depending on the program's usage and scope, from $64 million for 5 million users to $249 million for 25 million users. Steve Ryan, general counsel of the American Coalition for Taxpayer Rights, an advocacy group for tax companies said “a direct e-file system is unnecessary, costly and will divert attention and resources from more pressing priorities at IRS.”
Big tax preparation companies also have millions of dollars to lose if the program comes to fruition. Last year, more than 60 million taxpayers were serviced between Intuit, the parent company of TurboTax, and H&R Block.
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