IRS MOVES FORWARD WITH FREE E-FILING SYSTEM IN PILOT PROGRAM TO LAUNCH IN 2024

Most taxpayers are interested in filing their taxes directly to the IRS for free, a new report says, and that option will be tested next year

The IRS has spent the past nine months studying whether U.S. taxpayers want to see a free, e-filing system run by the government — and is now preparing to launch a pilot program.

The prospect of a free, government-run, online tax filing system has been debated for a long time. Supporters argue that the option would make tax return services more equitable and accessible for taxpayers nationwide. But there’s also been pushback from some big tax-prep companies.

Now, the IRS plans to launch a pilot program for the 2024 filing season to test a “direct file” system and help the federal government decide whether to move forward with potentially implementing it in the future, IRS Commissioner Danny Werfel and the Treasury’s Chief Implementation Officer Laurel Blatchford said.

There are still few details available about the pilot as the agency determines the basic structure, but Werfel said that members of the public will have the option to participate.

The IRS was tasked with looking into how to create a “direct file” system as part of the funding it received from the Inflation Reduction Act, Democrats’ flagship climate and health care measure that President Joe Biden signed last summer. It gave the IRS nine months and $15 million to report on how such a program would be implemented.

The IRS published a feasibility report this week laying out taxpayer interest in direct file, how the system could work, its potential cost, operational challenges and more.