WASHINGTON — The IRS is expanding its program that enables people to file their taxes directly with the agency totally free.
The Federal Tax Collector's Direct File Programwhich allows taxpayers to calculate and file their tax returns on to the federal government without using business tax preparation software, will probably be open to greater than 30 million people in 24 states throughout the 2025 filing season.
The program was piloted in 12 states throughout the 2024 tax season.
Now, IRS Commissioner Daniel Werfel says this system will probably be everlasting and the IRS will expand eligibility options for taxpayers.
“We are announcing significant enhancements to Direct File that will bring the service to millions more taxpayers in 2025,” Werfel said in a call with reporters Thursday. He said it is feasible that more states could select to affix this system in 2025.
RELATED: Kamala Harris says she’s going to cut taxes for the center class. Is that realistic?
The pilot program in 2024 allowed people in certain states with very basic W-2s to calculate and file their tax returns directly with the IRS. According to the IRS, those that used this system claimed greater than $90 million in refunds.
It was originally available to certain taxpayers in California, New York, Arizona, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming and Massachusetts.
States scheduled to be added in 2025 include: Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin.
“Other countries have been offering their citizens the opportunity to do something like this for years,” Deputy Finance Minister Wally Adeyemo said on the decision with reporters. Several nations within the Organization for Economic Cooperation and Development, including Germany and Japan, have similar systems with pre-filled tax forms.
The idea of direct filing isn’t viewed favorably by the business tax preparation software corporations which have made billions of dollars by charging people to make use of their software.
Additionally, a general IRS inspector general report released this week indicates that the IRS didn’t provide adequate privacy safeguards related to the IRS Free File Alliance. The alliance is a long-standing agreement between the IRS and a few business tax preparation corporations to supply free tax preparation services to low- and moderate-income taxpayers.
The Free File Alliance is separate from the Direct File program.
The IRS has been tasked with studying the way it could arrange a “direct file” system as a part of the cash it received from the Inflation Reduction Act signed by President Joe Biden in 2022. The IRS had nine months and $15 million to report on how such a program would work.
image credit : www.mercurynews.com