In the Media
FAST COMPANY: The IRS is rolling out its free tax-filing tool to 30 million Americans—and surprisingly, it’s great
10. 11. 2024
With Direct File, the U.S. government built a free tax tool that stands up to traffic pressure and receives high marks from users.
Read the full original story in Fast Company.
This is “the first time the IRS is filling in data for you they already have,” says Adam Ruben, vice president of campaigns and political strategy at the Economic Security Project. He hopes the IRS will do far more automation in the future, prefilling Direct File with the data that it already has access to, “so that tax filing becomes even simpler and much quicker for people.”
Nearly 50 countries around the world prefill tax returns with government data, only requiring taxpayers to either sign off on or dispute the numbers. The IRS isn’t anywhere near this level of automation, but Direct File lead Bridget Roberts says the agency is “continuing to explore” adding prefilling features to Direct File for the coming tax season. Treasury Secretary Janet Yellen, meanwhile, has said that she hopes the IRS can eventually use W2s and other government information to prepopulate Americans’ returns in future versions of Direct File.
Direct File processed more than 140,000 returns this year, well above its 100,000 goal. And though H&R Block suffered some outages on tax day, there were no such reports for the IRS tool. A General Services Administration survey found that more than 90% of users rated it “excellent” or “above average”; 86% of users said the experience increased their trust in the IRS. Any internal skepticism evaporated.
Direct File will get an even bigger test next year. In May, the IRS announced that the tool was permanent and invited another 12 states to make Direct File available to its taxpayers for use by the next tax day, April 15, 2025, for a total of 24 states (including the 12 that were part of the pilot last year). The agency is aiming to have Direct File available to people in every state and Washington, D.C., “in a couple of years,” Roberts said. The tool will also handle more tax situations, including not just Social Security and unemployment income and some credits as last year, but also 1099 income under $1,500, retirement income, and money from the Alaska Permanent Fund dividend.
The team is now focused on getting Direct File ready by January. Even as more taxpayers and states use it, with more complex needs, the team is prioritizing keeping the platform simple and easy to use. That means continuing the conversations with taxpayers and making improvements based on that feedback.
The IRS expects that millions of people will complete their taxes through Direct File in 2025, which would mean tenfold growth from this season. “We need to make sure the systems are going to be ready for that,” says Alisa Luu, engineering director for Direct File at USDS. That involves estimating how many users per second they’re likely to get on the site and simulating that crush in a testing environment “to make sure the infrastructure, all the software pieces are working correctly,” she says.
There’s also the question of state taxes. This season, Arizona, Massachusetts, and New York deployed an integration tool that used an API built by USDS and copied residents’ data from their federal returns over to their state ones. That’s something that potentially every state could do, though some will be more complicated than others, says Ruben from the Economic Security Project.