Press Release

New Treasury Report Shows Trump Administration Officially Kills Popular Direct File Tool as a Favor to Tax Prep Industry

11. 06. 2025

Ending IRS Direct File to expand unpopular Free File will prop up billion-dollar tax prep companies and cost American taxpayers $23 billion per year

Washington, D.C. – In a quietly posted Treasury Department report to Congress, and subsequent emails from IRS officials to state tax officials as reported by TaxNotes and NextGov, the Trump Administration confirms the suspension of the popular IRS Direct File program. The same report identifies ways to incentivize and enrich the already wealthy private tax prep industry through the pre-existing and unpopular Free File Program. Adam Ruben, Vice President of Campaigns and Political Strategy at Economic Security Project offers the following statement on the report:

“We’ve known Direct File was doomed for months since the IRS disbanded the Direct File team; yet, this report, published quietly without a public announcement, is the first official communication from the Trump Administration that the wildly popular free tax filing tool is dead. The report reveals the true intentions of the Trump Administration to favor the wealthy tax prep industry over American taxpayers. 

The IRS Direct File tool was a gold standard of government efficiency and effectiveness – exactly what the Trump Administration has claimed to want from government. As an intervention, it made tax filing free, easy, and accessible. Users saved hours and an average of $160 in unnecessary filing fees charged by big tax prep companies like TurboTax. In two short years, Direct File earned a resounding 98% satisfaction rate, unrivaled by even the most popular consumer brands. And Direct File succeeded despite an intentional effort by the Trump Administration to undermine it from day one, restricting IRS communications about the program while publicly labeling it a failure.  

The allegedly new findings in this report are the same tired lies the tax prep industry has been trotting out for two decades to protect their profits. The language could be ripped from the pages of any industry lobbyist’s notebook. Despite repeated surveys showing 70-80% of taxpayers are interested in Direct File, the Trump Administration’s appointed authors contort the truth to argue the opposite. In an especially amusing turn, the report authors fielded an unscientific survey over the summer intended to provide illusory data for their claim that taxpayer interest in Direct File is low — but they apparently failed at their own propaganda, opting not to report the results in the study on account of, in their words, “its unscientific methodology.” The authors continue to apply a double standard when it comes to Direct File and Free File. Less than two years into the Direct File experience, despite sky-high satisfaction rates and fast growth, the IRS says taxpayers aren’t interested in Direct File. But the IRS says Free File, in its 24th year, run by billion-dollar companies that have a documented history of hiding their free tax filing option from customers, just needs a little more time and promotion to get off the ground. Direct File was expected to serve millions of taxpayers right off the bat; Free File gets to fail and continue.

The consequences of the Trump Administration’s decision to kill Direct File are more than philosophical; the hard cost to American taxpayers is $23 billion a year. Our research shows that when fully implemented nationwide, Direct File would have saved taxpayers approximately $11 billion annually in filing fees and time costs, while helping Americans claim up to $12 billion in tax credits they qualify for but currently do not claim.  

The bottom line here is that the government built something that people liked, but that doing so upset the private industry. So now the Trump Administration is bending to the power and influence of that industry at the expense of the American people. This is another sorry chapter in the decades-long campaign to undermine the IRS and erode public trust in government. At Economic Security Project, we remain committed to work to create a tax system that serves everyone, not just the wealthy and well-connected.”