IRS Commissioner On Direct File Program: ‘It’s Gone’
from the going-going-gone dept
For no less than 25 years now, Techdirt has been writing about how the tax preparation industry, especially Intuit, has spent gobs of money bribing lobbying government to keep relatively low-earners from simple methods for filing their tax returns. The series of posts you can find in that link, particularly those in the last 5-10 years, will give you an idea of just how shady and shitty these companies have been to the public.
The short version goes something like this: the IRS partnered with large private tax prep companies to provide free online tax prep software for people making less than a certain dollar amount in exchange for the government not creating its own system for doing so. That’s it. The IRS didn’t pay these companies for their services. They just promised not to compete with them.
Now, why would these companies enter into such an arrangement? Is it because they wanted to help out lower income folks by offering free services? No, silly rabbit, they wanted to trick the public into paying for what they agreed to provide for free! And that’s exactly what companies like Intuit did, notoriously hiding its free services in every way it could and pushing qualified free-to-file applicants instead into paid tax prep services. The end result was fines from the FTC, Intuit attempting to hide refunds for the services it tricked the public into buying, and the discovery that it was tricking American veterans in the same manner, all the tune of $1 billion in income for Intuit alone.
Partially as a result of all of that above bullshit trickery, the government altered its deal with the tax prep industry and began offering its own Direct File program. For simple filers, the IRS piloted Direct File in 12 states in 2024, prepopulating a return for those that enroll, all based on information that the IRS already has, and asking participants to review it and either agree or dispute the information. Most overwhelmingly agree and the program was reviewed as “excellent or above average” by north of 90% of participants, which is of course why Trump and Elon Musk, back when they were besties, decided to fold the part of the government working on the program.
And now, Direct File is officially dead. IRS Commissioner Billy Long, who took a break from government in 2023 to work sales for two tax advisory companies, has declared Direct File “gone” while saying he “doesn’t care” about the program.
President Donald Trump’s massive spending and policy bill includes funding to research and “replace any direct e-file programs run by the Internal Revenue Service.” Already, the program is “gone,” Long said at a tax professional summit on July 28, Bloomberg Law reports.
“You’ve heard of Direct File, that’s gone,” Long said. “Big beautiful Billy wiped that out. I don’t care about Direct File. I care about direct audit.”
“Commissioner Billy Long is committed to modernizing the IRS and providing a taxpayer experience that meets today’s expectations, which includes giving taxpayers transparency into the status of their tax returns and audits,” an IRS spokesperson told CNBC Make It in an emailed statement.
That modernization effort reportedly is to rewind the clock several years and put us right back to where we were: a partnership between the IRS and the tax prep industry to offer free file programs. Modernization apparently means doing the thing we used to do that didn’t work.
The IRS has another free filing program where the agency partners with third-party tax preparation software companies to provide services to taxpayers, although there are varying eligibility requirements, including adjusted gross income and state of residence. You can use the IRS’ questionnaire tool to find an applicable partner.
There is literally no reason for any of this. Complaints from the GOP about how the program costs too much are obviously silly. The IRS has this information and the program should largely reduce the need for IRS audits and the like, since filers using it are using the IRS’ information. Complaints about conflicts of interest are also dumb, as the IRS is already the enforcer of taxation and participants have the option to dispute the information the IRS has. None of this makes sense…
…until you view it as a gift to the tax industry that has been lobbying against this program for decades before its creation. That’s all this is, a gift to the companies that lobbied for a favor.
And while Intuit exited the Free File program years ago, I’d be willing to bet my next tax return that they jump right back in now that they know the grift is back on.
Filed Under: billy long, direct file, donald trump, free file, irs, taxes
Companies: intuit
Comments on “IRS Commissioner On Direct File Program: ‘It’s Gone’”
Not quite gone
The I.R.S. open-sourced the Direct File code a few months ago. Quite possibly because they foresaw exactly this, given all the other government cuts that had been going on.
As a work of the U.S. government, it’s public-domain. As I write this message, it appears to still be on the I.R.S. GitHub account. I imagine someone will be taking that down once they realize, but nothing stops everyone else from making copies.
I haven’t looked at much of it, so I don’t know how it compares to other open-source efforts. It won’t be so “direct” with the servers shut down (one might have to print and mail), and as a now-unofficial project it will be less accessible. But some forward-looking state governments could probably re-purpose it for their own taxes, and maybe even automate the print-and-mail-to-Washington step.
The best way would of course be for the government to send you your taxes in the mail, already filled out for you to verify and send back.
Because they already know everything.
Re: Go paperless - it's cheaper
The reason the government wanted direct file is because dealing with all that paperwork is expensive.
But, yeah, ideally they would send you an e-form, already all filled out, and just waiting for your virtual signature.
Republican dumb dumbs don’t free file anyway. They pay some crappy chain to set them up with a standard deduction and front them the part of their refund they get to keep.
Re:
No Narcissus, those are yesterdays expectations. Tomorrows expectations are that poor Americans should pay all their savings to a cartel of tax preparation companies for the privilege of filing their obligatory tax return.
Modernization. Uh huh.
I am an American who relocated to a country in the EU almost a decade ago. It was shocking to me to understand just how incredibly backward the US is in dozens of ways.
The scenario reflected in this article is just one example. It takes me literally five minutes to sign off on my national tax statement annually, using a process very close to the one described. If there’s a problem and I need to dispute something, then I’d get into a slow, laborious European bureaucratic loop. But that’s never happened to me; I know of it only second-hand, from one of my acquaintances here. In my personal experience, it’s been accurate and perfectly smooth.
But as an American citizen living abroad, I also have to file my U.S. return every year. That takes hours, usually over a few days. It’s insane. And what’s more, there are frequently problems. Right now we’re struggling with a situation where one part of the IRS is yelling at us to pay our tax bill, even though another part of the IRS calmly reports our payment was processed (and our bank shows the payment cleared), and we cannot get the two parts of the agency to talk to each other.
And this is just one example. Don’t get me started on healthcare, or banking, or elections.
You folks still in the U.S. genuinely have no idea how far ahead the rest of the world is on multiple fronts.
Re: Same boat...
This mirrors my experience living in the UK. Taxes are done by the government and if I disagree, I can dispute whatever.
Yet thanks to the US’s requirement that all US emigrants must at least file taxes (& pay taxes in certain situations), I still have to deal with the IRS. The US is one of 2 countries that tax based on citizenship and not residency (Eritrea is the other 1). Absolutely bonkers.
Re: Re:
My wife and I have two kids who were very young when we first relocated. One of them was young enough that she speaks the local language more comfortably than she speaks English.
I am warning both of them that they’ll have a choice to make when they turn 18. By accident of their birth, the American state will believe it has its hooks in them forever.
Bonkers indeed.
Re: Re:
To add insult to injury, that’s very likely true in the U.S. as well. That is, the U.S. government is probably calculating your income taxes and just not telling you the result.
Employers have to send payroll data to the I.R.S.; therefore, employment income is mostly known (excepting tips and “under-the-table” work). All those calculations they make you do when filling the paper forms, they’re just gonna re-do; after all, people make mathematical errors, and don’t end up in prison for it.
Other countries just send you a bill to pay when taxes are due. We can’t even be bothered to make filing an easy task.
Direct File open sourced
From what I have heard, the Direct File software was fortunately open sourced before this bonkers decision:
https://github.com/IRS-Public/direct-file
Re:
“Almost fully” was what I heard. Either way, it should be good enough to base something on, and it’ll be interesting to see if someone takes it over and uses it in other contexts (such as for states, or for other countries entirely).
As another comment noted, go download it before it disappears. And there’s a good chance the filing won’t be so “direct” anymore.
Re: Re:
It also probably won’t work with changes to the tax code. It’ll always calculate your taxes as if it were 2024 unless someone does the work to update it.
Re: Re: Re:
Yeah, hence the idea of someone taking it over. But year-to-year changes aren’t generally too involved. Some new deduction appears, and just gets summed into “total deductions” which is handled as usual. Maybe the tax brackets change a little.
If insertions and deletions cause line numbers to change, that could either be tedious or simple, depending on how good the framework is. I haven’t yet seen enough code to form a judgment on that.
The grift goes on and on…