IRS to Pilot Free Tax Filing Tool in 2024

Democratic lawmakers are applauding the Internal Revenue Service's recent announcement that it will pilot a free tax-filing tool next year.

Sens. Elizabeth Warren, D-Mass., and Tom Carper, D-Del., as well as Reps. Brad Sherman, D-Calif., Katie Porter, D-Calif. and Don Beyer, D-Va., along with 99 Democratic lawmakers, told IRS Commissioner Daniel Werfel Monday in a letter they support "a strong tool available to as many taxpayers as feasible in 2024."

In late May, the IRS released its long-awaited report "demonstrating the feasibility and importance of a free, government-owned direct file tool, and announced its intention — at Treasury's direction — to pilot such a tool during the next filing season," the lawmakers said.

The IRS submitted its report to Congress evaluating a free, voluntary, IRS-run electronic filing system — commonly referred to as "direct file" — for taxpayers, stating that the agency is "taking steps to begin a pilot project for the 2024 filing season."

The tool, the lawmakers wrote, "will save many hardworking Americans the $140 on average they pay to file their taxes and help provide low-income taxpayers the opportunity to claim thousands of dollars in benefits that have been missed due to the expense and difficulty of filing a return."

The report also revealed that taxpayers would feel overall more secure filing their taxes directly with the government than through a private tax software company.

"The Free File program, a partnership with private tax preparation companies, has not been successful," the lawmakers said, noting that of the 70% of taxpayers who qualify, "the program reached only 2% in the 2022 tax year."

The lawmakers urged the IRS "to make this pilot of the direct-file tool available to as many taxpayers as is feasible, in order to deliver real value quickly to American taxpayers and demonstrate the value of modernizing the IRS, while also gathering data to make improvements and to better serve American taxpayers."

The average American often turns to tax preparation services that "should be free, are advertised to be free, but all too often are, in fact, not free for taxpayers," the lawmakers stated.

Taxpayer Experience 'Vastly Improved'

National Taxpayer Advocate Erin Collins told lawmakers in her mid-year report to Congress that she was "finally able to deliver some good news: The taxpayer experience vastly improved during the 2023 filing season."

Collins reported that the IRS "caught up in processing paper-filed original Forms 1040 and various business returns; refunds were generally issued quickly; and taxpayers calling the IRS were much more likely to get through — and with substantially shorter wait times. Overall, the difference between the 2022 filing season and the 2023 filing season was like night and day."