IRS Closes Down Free Direct File Service
A Treasury report found that 0.5 percent of 146 million tax returns for tax year 2024 were filed via the program.Sen. Ron Wyden (D-Ore.), the ranking member on the Senate Finance Committee, released a statement on Nov. 6 criticizing the IRS’s decision. He said the program should remain in effect for the 2026 filing season, which is slated to start in January 2026.
Direct File was rolled out as a pilot program in 2024 for the 2023 tax year after the IRS was tasked with looking into how to create a filing system under the Inflation Reduction Act that was signed into law by President Joe Biden in 2022.
“I wrote the bill that created Direct File because the existing free options were insufficient and the big tax prep companies had been caught red-handed using deceptive practices to scam taxpayers into overpaying,” Wyden said.
“Direct File had low overall participation and relatively high costs and burdens on the federal government, compared to other free filing options,” the report stated.
It noted that less than 0.5 percent of all 146 million tax returns that were filed for tax year 2024 were submitted through the Direct File program, which cost the federal government about $41 million for that year.
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