IRS Makes Free Online Tax Filing Program Permanent

WASHINGTON — A recently piloted platform that allows households to file their federal tax returns online and at no cost is being made permanent, Treasury Secretary Janet Yellen announced Thursday.

More than 140,000 taxpayers living in a dozen states used the Direct File system to file their federal tax returns this year, most spending less than an hour filing their returns, according to IRS officials.

With today’s announcement, the agency is inviting all 50 states and the District of Columbia to participate during next year’s filing season.

“President Biden is committed to saving Americans time and money and ensuring families receive the tax benefits they’re owed. Providing a free tool to all Americans who want the option to file directly with the IRS is key to achieving those goals,” Yellen said in a written statement.

“The Treasury Department and IRS look forward to working with states to expand Direct File to Americans across the country,” she said.

According to the IRS, the average American spends about $270 and a long day — about 13 hours — every year preparing their taxes.

It developed the new platform with the help of the White House U.S. Digital Service, the General Services Administration’s 18F team and private-sector partners.

Last year, taxpayers who participated in the pilot received more than $90 million in refunds, and saved $5.6 million in filing costs.

The IRS decided to go ahead with a full rollout after hearing from members of Congress, and dozens of community groups and nonprofits over the course of the pilot program.

“The numbers speak for themselves: the Direct File Pilot was a success, saving American taxpayers countless hours and millions of dollars filing their taxes,” said White House Deputy Chief of Staff Natalie Quillian in a written statement.

“Now, we’re bringing the program to a national audience,” she said.

Rep. Steny Hoyer, D-Md., chair of the Regional Leadership Council, a body created by House Democratic Leader Hakeem Jeffries, D-N.Y., to bolster American competitiveness, said the expansion of Direct File will be a great help to low- and middle-income families.

As House majority leader in the last Congress, Hoyer fought to secure funding for Direct File  in the Inflation Reduction Act, and he noted that 90% of users of the new system said they had a positive experience in using it.

“Crucially, 86% of participants said that their experience with Direct File strengthened their trust in the IRS,” he said, adding, “Direct File’s success helps demonstrate all that the IRS can do to improve taxpayer experience when the agency receives the federal resources necessary to do its job.”

In addition to enabling the direct filing of income taxes, Direct File also advances a goal of the IRS’ Strategic Operation Plan to ensure that taxpayers receive tax credits that they are eligible for, like the Child Tax Credit and Earned Income Tax Credit.

Dan can be reached at [email protected] and @DanMcCue