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  5. The IRS says its direct file program saved Americans $5.6 million in filing fees. Now they're making it permanent.

The IRS says its direct file program saved Americans $5.6 million in filing fees. Now they're making it permanent.

Juliana Kaplan   

The IRS says its direct file program saved Americans $5.6 million in filing fees. Now they're making it permanent.
  • The IRS is making its free direct file tax program permanent after a successful pilot.
  • The program launched in 12 states and saw 140,000 accepted returns in five weeks.

The IRS knows how annoying it can be to sit down and try to crank out your taxes — and get to pay for the honor of doing so. And so, after a successful pilot run, the tax agency has announced that it's making its new free direct file program permanent. It's also inviting every state to sign on.

"Meeting your tax obligations in claiming the credits and deductions for which you're eligible should be easy. But the IRS has been underfunded for decades, so taxpayers haven't gotten the support they deserve," Treasury Secretary Janet Yellen said in a phone call with reporters. "Thanks to the Inflation Reduction Act, we are changing this."

The Direct File program first launched in twelve states for the 2023 filing season following a successful pilot. The program was catered towards filers with simple returns — and, according to Yellen, saw 140,000 accepted returns in just five weeks. That was well above the Treasury's goal of a hundred thousand returns.

Filers who used the program saved $5.6 million in tax preparation fees, according to the IRS and the Treasury Department. Nearly half of Direct File users had said they paid for tax preparation the year before, according to IRS Commissioner Danny Werfel. And filing generally took less than an hour, with many filing in just half an hour; Business Insider's Aaron Mok — who declared the program the "best way to do taxes" — said it took him under 40 minutes to file using Direct File.

Werfel said that the agency is also exploring ways to make more taxpayers eligible to use the program, including expanding Direct File's scope to cover more tax situations beyond simple returns.

"Since the direct file pilot was completed in April, we have heard directly from hundreds of organizations across the country, more than a hundred members of Congress, from individual direct file users, and those that are interested in using direct file," Werfel said. "The clear message is that many taxpayers across the nation want the IRS to provide options for filing electronically at no cost."

The new Direct File program has encountered some pushback from paid tax services. In a statement to BI last October upon the announcement of the Direct File pilot, Rick Heineman, a VP of communications at Intuit TurboTax, said that the program is "wholly redundant."

In response to the announcement of permanent Direct File, Intuit TurboTax spokesperson Tania Mercado said that the decision "doesn't change the fact that this program is a solution in search of a problem and every American can already file their taxes for free, without any cost to the government or taxpayers."

Werfel said that the IRS had heard from a "limited number" of stakeholders that current free filing options are getting the job done. He said that the feedback points to a tax system with multiple no-cost options, where taxpayers can opt into what works best for them.

Right now, the IRS and Treasury are extending the invitation to all 50 states to join the program, but not every state may opt in. The IRS anticipates reporting later this year which states — and filers — will be eligible.

"The numbers speak for themselves: the Direct File Pilot was a success, saving American taxpayers countless hours and millions of dollars filing their taxes," White House Deputy Chief of Staff Natalie Quillian said in a statement. "Now, we're bringing the program to a national audience. It's just one more example of how President Biden's Investing in America agenda is lowering costs for communities across the country."

Did you use Direct File and save time or money? Contact this reporter at