The Internal Revenue Service (IRS) is at the center of a significant proposed change that President-elect Donald Trump may consider once he assumes office in January.
A growing number of Republican Representatives are urging the President-elect to terminate the IRS’ Direct File program. They argue that this initiative is both “unauthorized and wasteful,” highlighting a potential conflict of interest.
IRS Expands Direct File Program
In a formal letter, these representatives express their concerns about the IRS taking on multiple roles simultaneously, describing it as both the “tax assessor, collector, preparer, and enforcer—all in one.”
The Direct File program permits taxpayers to submit straightforward tax returns directly to the government agency without any fees, thus bypassing the need for paid third-party services. In 2024 alone, this service was utilized by 140,000 Americans.
The push from Republicans includes a call for Trump to “take immediate action, including but not limited to a day-one executive order, to end the Internal Revenue Service’s (IRS) unauthorized and wasteful Direct File pilot program.”
The Internal Revenue Service (IRS) building makes a notable presence on April 15, 2019, in Washington, D.C. This date marks the crucial deadline for U.S. residents to submit their income tax returns.
Direct File Program Initial Launch
In March 2024, the IRS launched the Direct File pilot program across 12 states, offering residents in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State, and Wyoming the chance to use this streamlined filing service.
Expansion for 2025 Tax Season
For the 2025 tax filing season, the program expanded its reach to an additional 12 states. Residents in Alaska, Connecticut, Idaho, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, and Wisconsin will now have access to Direct File.
Program Accessibility and Updates
Initially, the Direct File program was limited to individuals with simple tax returns. However, for the 2025 filing season, the IRS has broadened the program’s scope, making it accessible to a wider range of taxpayers.
Looking ahead to 2024, certain types of income will be eligible for reporting through Direct File:
- W-2 Form
- Social Security Income
- Unemployment Compensation
Expanded Support for 2025 Filing Season
With the 2025 filing season, Direct File will broaden its support to include:
- 1099s for interest income exceeding $1,500
- Retirement Income
- 1099 for Alaska residents reporting the Alaska Permanent Fund Dividend
Additional Taxpayer Credits and Deductions for 2025
In 2025, Direct File will also accommodate taxpayers claiming the following:
- Child and Dependent Care Credit
- Premium Tax Credit
- Credit for the Elderly and Disabled
- Retirement Savings Contribution Credits
Beyond these, the service will support taxpayers claiming the standard deduction as well as deductions for:
- Student Loan Interest
- Educator Expenses
- Health Savings Accounts
In an announcement dated October 3, IRS Commissioner Danny Werfel expressed enthusiasm, stating, “We’re excited about the improvements to Direct File and the millions more taxpayers who will be eligible to use the service this year.”
Our primary objective is to enhance the overall experience of tax filing, enabling taxpayers to fulfill their obligations with ease and efficiency. The introduction of Direct File will play a pivotal role in realizing this vision as we continue to expand and refine our services.
Concerns from Republican Lawmakers
In a recent communication to the President-elect, Republican lawmakers have expressed their apprehensions. They argue that, under the pretense of offering a convenient “free-to-file” alternative, the IRS assumes multiple roles as the tax assessor, collector, preparer, and enforcer whenever this program is utilized.
The following representatives have endorsed the letter: Adrian Smith, Chuck Edwards, Claudia Tenney, Mike Kelly, Carol D. Miller, Ron Estes, Beth Van Duyne, Erin Houchin, Michelle Fischbach, Mark Alford, Darin LaHood, and Pete Sessions.
The document is also backed by: Don Bacon, W. Gregory Steube, Nathaniel Moran, David Kustoff, Rick W. Allen, August Pfluger, Gregory F. Murphy, Andrew S. Clyde, William R. Timmons, Vern Buchanan, Andrew R. Garbarino, Keith Self, Steve Womack, Young Kim, and Nicole Malliotakis.
