The Blubber

The IRS will officially launch a free online tax filing service for the 2024 tax season, per MorePerfectUnion.

The Internal Revenue Service (IRS) is moving forward with its initiative to develop a free tax filing program, named Direct File, and has announced the availability of a pilot version for certain taxpayers in 13 states next year. Despite ongoing threats from Republicans to reduce future funding or eliminate the agency entirely, the IRS, buoyed by increased funding from Democrats, is undergoing a significant operational overhaul. The long-term goal is for the IRS tax filing system to potentially serve as an alternative to private tax preparation companies such as H&R Block and Intuit’s TurboTax.

However, the initial online pilot program will have a limited scope, allowing only taxpayers in the 13 designated states with specific eligible tax situations to participate. The IRS expects several hundred thousand taxpayers to engage in the pilot. Critics, including H&R Block and Intuit, argue that a government-run system might provide a subpar taxpayer experience compared to existing private options, and they contend that the federal tax collector should not also serve as a tax preparer.

During a press call on Tuesday, IRS Commissioner Danny Werfel emphasized that Direct File, if pursued beyond the pilot, would simply be an additional choice for taxpayers in preparing their tax returns. Taxpayers will retain the option to use a tax professional, commercial tax software, or the existing Free File program offered by seven private companies.

The Direct File pilot program will focus on individual federal tax returns. Once the federal return is filed, taxpayers will be directed to a state-supported tool to file their state tax return. This pilot program aims to help the IRS assess the feasibility of expanding a government-run tax filing system to a broader range of taxpayers in the future.