The Trump administration has decided to terminate the IRS’s Direct File program, a free electronic system for filing tax returns directly with the agency. This decision, revealed by two individuals familiar with the matter, signifies a significant policy shift from the previous administration.
Developed during President Joe Biden’s tenure, the Direct File program was praised by users for simplifying and expediting the tax filing process, while also being cost-effective. Nevertheless, the initiative faced criticism from Republican lawmakers and commercial tax preparation companies, who argued it was an inefficient use of taxpayer funds given the existence of other, albeit less user-friendly, free filing options.
Since the onset of the Trump administration, the program has faced uncertainty as Elon Musk and the Department of Government Efficiency initiated federal government budget cuts. Musk announced via his social media platform, X, in February that he had dismantled 18F, a government agency involved in technology projects like Direct File.
There was initial optimism that Musk and his team of computer programmers, known as the DOGE team, might enhance the Direct File system. However, according to sources, this optimism dwindled when IRS personnel assigned to the program were directed in mid-March to cease its development for the 2026 tax season.
These sources, requesting anonymity as they were not authorized to discuss the plans publicly, conveyed this information to The Associated Press.
Adam Ruben, vice president at the Economic Security Project, criticized the move, stating, “The fix was in from the beginning,” expressing disapproval that taxpayers were not involved in the decision-making process. He also labeled cost-cutting promises as unfulfilled.
Conversely, David Williams, president of the Taxpayers Protection Alliance, identified Direct File as flawed from inception due to costs and user drop-off during the filing process. The IRS reported that out of 423,450 taxpayers who logged into Direct File, only 140,803 successfully filed their returns in 2024.
“From hidden costs to taxpayer confusion, the program is riddled with issues,” Williams stated.
Introduced as a pilot program in 2024, Direct File emerged after the IRS was tasked with exploring a direct filing system funded by the Inflation Reduction Act, signed by Biden in 2022. The Democratic administration invested millions in its development, and the IRS announced plans for permanence last May.
Despite this, the program faced significant opposition from private tax preparation companies, which have profited substantially by charging for their services and have actively lobbied Congress against the IRS initiative. Americans generally incur around $140 annually on tax preparation.
Derrick Plummer, spokesman for Intuit, a commercial tax preparation firm, commented that Direct File was “a solution in search of a problem,” describing it as a misuse of IRS resources and taxpayer funds.
The IRS had processed 140,803 returns from taxpayers using Direct File across 12 states during the last tax season, with plans for expansion. However, the current user numbers remain unclear.
Amanda Renteria, CEO of Code for America, which collaborated with the IRS on integrating state tax filing into Direct File, termed the decision a breach of public trust during a crucial time for effective government service delivery.
Senator Elizabeth Warren, D-Mass., a supporter of Direct File, criticized Trump and Musk, accusing them of targeting the program to benefit large tax preparation companies. “Americans want a free and easy way to file their taxes — Trump and Musk want to take that away,” she stated in an email.
The original story was published on Fortune.com.
