The IRS is seeking ways to assist individuals in filing tax returns at no cost. We fully support making preparation and filing easier for individuals.
Background
The Inflation Reduction Act of 2022 directed the IRS to study the possibility of a free, direct e-file program. The IRS submitted the results in a report to Congress on May 16, 2023, entitled The Direct File report. The report included findings that a majority of taxpayers are interested in using a free IRS-provided service to prepare and file taxes and, that the agency is technically capable of delivering a Direct File program.
An independent survey conducted by MITRE Corporation provided useful quantitative results detailed in the Direct File Report presented to Congress. A summary of key findings included:
- The majority of people surveyed are likely to use the free IRS service
- 83% of people surveyed who currently use self-preparation software
- 57% of those who currently pay for tax preparation services
- Tax payers are sensitive to cost, security, and privacy when it comes to tax filing choices.
- Taxpayers who currently self-prepare their taxes, are younger, or have limited English proficiency are more likely to be interested in a Direct File tool.
Pilot in 2024
Starting in 2024, the IRS will pilot a program to enable individuals with very simple tax returns to file their 2023 individual taxes directly at no cost.
This is a good step in the right direction to simplify the tax preparation and filing processes for many Americans who have simple tax returns and to do so at no cost. We look forward to monitoring how the pilot goes for 2023 individual tax filings and will keep you apprised of updates from the IRS on the Direct File tool.
In the meantime, if your individual taxes are complex, now is the time to start organizing the input your accountant needs to avoid filing an extension or a harried March and early April.