Earlier this year, the IRS got folks talking when it announced it was launching a pilot program for a free direct online tax filing service. Today, the IRS has confirmed that the program is moving forward for the 2024 filing season. As part of the Inflation Reduction Act, Congress tasked the IRS with delivering a report on, among other things, the cost of developing and running a free direct e-file tax return system, including costs to build and administer each release, with a focus on multi-lingual and mobile-friendly features and safeguards for taxpayer data. The IRS released the report to Congress in May 2023.
According to the report, the IRS spent several months studying how an IRS-run free direct e-file tax return system might work, and that was “is committed to delivering significantly improved services by providing taxpayers with tools, information, and assistance to make it easier to comply with their tax filing obligations.” Most taxpayers surveyed by the agency reported interest in using an IRS-provided tool to prepare and file their taxes. At the time, the IRS indicated it hoped to make that a reality for some taxpayers for the 2024 tax filing season. Arizona, California, Massachusetts, and New York will work with the IRS in the Direct File pilot for filing season 2024 to integrate their state taxes into the pilot. Taxpayers in states without an income tax—Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, and Wyoming—may also be eligible to participate in the pilot.
The IRS was careful to note that Direct File does not replace existing filing options. It is, Werfel stressed, “just another choice.” Existing filing options such as tax professionals, free return preparation sites, commercial software, and authorized e-file providers. In addition, Free File, free tax preparation services like VITA and TCE, as well as a paper tax return or Direct File will still be available.
How do you think this will impact the stock ticker INTU? They own TurboTax.
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