IRS Ends Direct File Program
The IRS recently announced that it ended Direct File, a program that allowed eligible taxpayers to file tax returns directly with the IRS for free.
The Direct File online pilot program launched in 2023 in 12 states and expanded to 25 states for tax year 2024. Nearly 300,000 taxpayers used the program to file 2024 returns.
According to a recent Treasury Department report to Congress, for tax year 2024, returns submitted via Direct File totaled less than 0.5% of the approximately 146 million returns filed. The report recommends refocusing IRS efforts on strengthening existing free filing programs, particularly the Free File program, while engaging stakeholders to modernize and promote awareness of Free File.
The report also states that the Treasury and the IRS will:
- Conduct an updated taxpayer survey on preferences over different filing options that addresses methodological and other challenges present in earlier surveys
- Convene a Free Filing Modernization Summit
- Create a common understanding of a “free return” across all filing options available to taxpayers
- Collect more robust usage data from software providers
- Develop a supplemental report to Congress, including updates based on the actions listed above
To read the full “Report on the Replacement of Direct File,” click here.