The Internal Revenue Service (IRS) is moving ahead with a plan to build its own free tax filing program, named Direct File. They announced yesterday that a pilot version will be available to some taxpayers next year.
Eventually, Direct File could serve as an alternative to private tax preparation companies like H&R Block and Intuit’s TurboTax.
But for now, the pilot program will be limited in scope. Only taxpayers in 13 states with specific, eligible tax situations will be able to participate.
The Direct File pilot will cover only individual federal tax returns. But once a federal return is filed, taxpayers will be guided to a state-supported tool that they can use to file their state return.
Critics of Direct File argue that a government-run system will likely provide a worse taxpayer experience than what is currently available, and that the federal tax collector should not also play the role of tax preparer.
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Bautis Financial Advisor Commentary: October 16, 2023