The Internal Revenue Service announced the closure of the Direct File pilot program with several hundred thousand taxpayers in 12 states enrolling in Direct File accounts and 140,803 taxpayers filing their federal tax returns through the new service.
By design, the Direct File pilot started small, and in mid-March, the IRS gradually increased the option’s availability. During the final days and weeks of tax filing season, there was increasing interest from taxpayers in pilot states in using the new tool. For the final week of filing season, Direct File processed more than 5,000 accepted returns each day, bringing the total number of returns filed to more than 140,000.
Overall, for the pilot, Texas ranked second among the leading states with accepted returns with 29,099, Florida (20,840), New York (14,144) and Washington (13,954). In the 12 pilot states, taxpayers who used Direct File claimed more than $90 million in tax refunds and reported $35 million in tax balances owed.
The IRS saw great interest in the Direct File option from taxpayers across the country. Millions of people, including many from outside Direct File’s 12 pilot states, visited the Direct File website to learn more about the new system. During the course of the pilot, more than 3.3 million taxpayers started the eligibility checker, 423,450 taxpayers logged into Direct File, and 140,803 taxpayers submitted accepted returns.
In cases where a user’s tax situation was beyond the scope of the pilot, they were directed to other options for completing their tax returns, including the independent Free File program that provides free private sector software. Overall, usage exceeded IRS expectations for the limited pilot and far exceeded what was necessary to provide sufficient data for the agency to evaluate.
“Since the beginning of the Direct File pilot program, we wanted to test new ways to provide taxpayers with an easy, accurate and free option to file their taxes online directly with the IRS,” said IRS Commissioner Danny Werfel. “We saw a strong response from the pilot and Direct File users generally found it fast and easy to use. This is an important part of our effort to reach taxpayers wherever they are, provide them with options to interact with the IRS in ways that work for them, and help them meet their tax obligations as easily and quickly as possible. We will review the results of the pilot and gather feedback to help us determine our future direction with Direct File. We anticipate making an announcement regarding future plans later this spring.”
The Direct File pilot was designed to test the feasibility of building a system that allows taxpayers to file their federal tax returns directly with the IRS for free. As part of this, the IRS needed to understand how Direct File would complement existing tax filing options, strengthen the tax filing ecosystem, and meet the Inflation Reduction Act’s transformational goals reflected in the IRS’s Strategic Operating Plan. IRS.
The agency’s approach to the Direct File pilot revolved around three themes:
– Get it right the first time: Direct File’s goal was to help every taxpayer file an accurate return and get all the tax benefits to which they are entitled.
– Taxes are the product: Direct File was designed to improve the tax filing experience.
– One option among many: While Direct File provided an additional free filing option, the IRS recognizes how taxpayers file their taxes is a personal choice.
The Direct File pilot offered customer support through a live chat feature, where users communicated with IRS employees in both English and Spanish. The innovative live chat feature allowed customer support to be integrated directly into the product and did not require taxpayers to leave Direct File for assistance through another channel, such as phone. Direct File customer service agents worked alongside the product team to ensure a united taxpayer experience. Lessons learned and technology developed by Direct File are shared throughout the IRS.
User comments
A General Services Administration (GSA) Touchpoints survey of more than 11,000 Direct File users found that 90 percent of respondents rated their experience as “Excellent” or “Above. average”.
“Direct File taught us important lessons,” Werfel said. “A team of experts from across government worked together, along with private sector partners with critical expertise, to create and test Direct File. This team designed and built Direct File from the ground up with help from contributors, and we worked with contributors to refine the system throughout the pilot. “We will consult with a wide range of stakeholders to understand how lessons from Direct File can help us improve the entire tax system, as well as evaluate next steps.”
“The IRS was also pleased to see increases in the use of other free options for taxpayers this filing season, including Free File and returns prepared on our VITA and TCE sites,” Werfel added.
Through the end of the pilot, the total amount spent by the IRS was $24.6 million, including the Report to Congress.
Pilot for 2024 tax filing season
The IRS launched the Direct File pilot for the 2024 filing season. The Inflation Reduction Act mandated that the IRS study the interest and feasibility of creating a direct electronic filing tool that taxpayers could use to prepare and file your federal tax return. The IRS commissioned an independent study, which indicated broad interest in such a system, which the IRS detailed in a Direct File Report to Congress in May 2023.
Initial testing began in early February with a handful of federal and state government employees, followed by brief open availability periods for more taxpayers to begin their returns. After a round of final testing in early March, Direct File opened to all eligible taxpayers in pilot states.
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