As tax season looms, there’s growing tension between Democratic and Republican lawmakers about the fate of Direct File, the IRS’s no-cost tax filing initiative.
Recently, Direct File extended its reach to a select group of taxpayers in 25 states and managed to handle about 140,000 returns in 2024 as part of a pilot program introduced mid-season. Initially, this trial was limited to straightforward returns across 12 states.
This program has stirred up controversy, especially among Republicans, who are pressing for its discontinuation. Their criticism raises doubts about Direct File’s viability should the GOP control the White House and Congress.
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During Thursday’s Senate confirmation hearing, Scott Bessent, President-elect Donald Trump’s nominee for Treasury Secretary, addressed the future of Direct File.
“If confirmed, I promise to ensure Direct File remains operational for the upcoming tax season,” stated Bessent, leaving future plans undisclosed.
Bessent’s statement followed a show of support from over 130 Democrats, led by Senators Elizabeth Warren and Chris Coons. They backed Direct File, praising its efficiency in government interactions and emphasizing consumer savings of an estimated $5.6 million in federal tax preparation fees, with potential future savings of billions. They urged against abandoning the program.
Meanwhile, Rep. Adrian Smith, alongside 27 House Republicans, penned a letter in December to Trump urging the termination of Direct File through an executive order on his first day in office.
“The program’s inception and expansion threaten taxpayers’ freedom from government overreach and present costly challenges,” Republicans argued.
Despite launching last season in 12 states for simple returns, Republicans remain critical, citing the 140,000 returns processed against the total eligible filers. Last May, the IRS reported that Direct File’s trial cost $24.6 million, with an additional $2.4 million for its ongoing operations.
Over the past year, Republicans in both houses have proposed legislation to halt the IRS’s free filing initiative. In early 2024, attorneys general from 13 states labeled Direct File “unnecessary and unconstitutional” in a letter to the Treasury Department.
