- The Trump administration is reportedly considering ending the IRS pilot program that allows taxpayers to file directly without using paid services, despite its expansion to 25 states and potential to serve 30 million taxpayers in 2025.
- While supporters highlight the program’s potential to reduce filing costs, opponents criticize its administrative expenses. IRS data shows a low success rate of returns submitted during testing.
- Tax preparation companies like TurboTax-owner Intuit and H&R Block have lobbied against the program. They cite the complexity of the tax code, which fuels a $14 billion industry for paid filing services.
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A free IRS program allowing taxpayers to file their taxes directly without a tax preparation service could be short-lived.
The Associated Press reports the Trump administration is considering scrapping the program, citing two unnamed sources.
The pilot program initially offered to 12 states allowed users to file for the 2024 tax season. It grew to 25 states for the 2025 season, allowing what the IRS estimated to be 30 million taxpayers to file without paying an accountant or outside tax filing service. The 2022 Inflation Reduction Act funded the implementation.
Supporters of the program spearheaded under the Biden administration lamented the high cost of filing taxes. They saw this as a viable alternative, while opponents criticized the cost of administering it. IRS data shows only 140,803 of the 423,450 taxpayers who tested out the program successfully submitted a return, AP found.
Hints at elimination
Elon Musk, Trump’s special government employee who runs the Dept. of Government Efficiency, posted to X in February that the IRS division responsible for the program had been “deleted.” The post prompted IRS officials to reassure users that the program was still operational.
One month later, an official with the General Services Administration confirmed that all members of the 18F tech team had been eliminated.
Everyone hates tax season
Every April 15th, a famous 1994 letter from former Defense Secretary Donald Rumsfeld to the IRS makes the rounds. He tells the agency that he filed his taxes and has “absolutely no idea” whether his tax returns are accurate.
“The tax code is so complex and the forms so complicated that I know that I cannot have any confidence that I know what is being requested and therefore I cannot and do not know, and I suspect a great many Americans cannot know, whether or not their tax returns are accurate,” he said.
It was one of many Rumsfeld sent to the government revenue agency protesting the complexity of the tax code.
It’s that complexity, all 9,834 sections accompanied by a six-volume set of corresponding regulations, that makes the assistance of an accountant or service like TurboTax a $14 billion industry.
TurboTax-owner Intuit and H&R Block spent millions lobbying in 2023 to oppose the IRS’ Direct File system, according to OpenSecrets.
As a pre-emptive strike against the incoming taxpayer-funded service, tax filing companies offered free filing services. Still, the average taxpayer spends $140 preparing their tax returns annually, according to AP.
