IRS Direct File Axed to Satisfy Tax Prep Corporations

IRS Commissioner Billy Long formally announced the demise of Direct File, a relatively new system that for the past two years allowed taxpayers in some states to file their income tax returns online free of charge for submission of the filing.

People in twenty-five states could use it this year. The pilot program was widely regarded as successful with a 94% satisfaction rating by users.

The Economic Security Project reported

At maturity in five years, Direct File would save the average user $160 in filing fees and hours of their time each year, which saves Americans a total of $11 billion annually between filing fees and time costs. By breaking down barriers to filing, Direct File would also deliver up to $12 billion each year in additional tax credits to low-income families currently missing out.

Private tax preparation and filing companies began lobbying to eliminate Direct File after Donald Trump was elected, weeks before he was sworn into office as President. It undercuts their position as gatekeepers who can charge a filing-fee toll for even the simplest income tax return by the poorest taxpayer. Republican lawmakers who received substantial donations from tax filing companies promptly pressured Trump to shut down Direct File by executive order.

Long is a former Congressional representative from Missouri. In January 2025, Trump nominated him to become head of the IRS and he received $137,000 in donations, a third of which came from tax consultancies . He used the donations to repay himself $130,000 that he had lent to his unsuccessful Senate campaign in 2022.

In March, Elon Musk used his “Department of Government Efficiency” to halt work on Direct File, effectively killing it. Long’s announcement only makes its death formal and official. DOGE is a subset of a White House IT team, not a government department.

The Economic Security Project reported that Direct File delivered excellent value to taxpayers:

For every dollar invested in the program, Direct File delivers $106 in benefits to American taxpayers, between savings on tax preparation fees and access to untapped tax credits.

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