What was the IRS Direct File program?

Direct File was a free, IRS-operated online tool allowing eligible taxpayers to file their federal taxes directly without using third-party software.

Why did the IRS cancel Direct File?

The IRS shut down Direct File due to high operational costs and low taxpayer participation, as advised by a Treasury report.

What are the alternatives to Direct File for free tax filing?

Taxpayers can use IRS Free File for incomes up to $84,000, Free Fillable Forms for all income levels, or Volunteer Income Tax Assistance (VITA) for eligible individuals.

Home / Business and Economy / IRS Free Tax Tool Shut Down Amid Shifting Priorities

IRS Free Tax Tool Shut Down Amid Shifting Priorities

9 Dec

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Summary

IRS Direct File tax tool officially ended, shutting down after less than two years.
The program served nearly 300,000 taxpayers across 25 states in its final year.
The IRS cites high costs and low participation as reasons for the shutdown.

IRS Free Tax Tool Shut Down Amid Shifting Priorities

The IRS Direct File, a free online tax-filing tool, has been officially discontinued, ending its short operational run of less than two years. This program offered taxpayers a streamlined, no-cost method to file federal taxes directly with the IRS, serving close to 300,000 individuals across 25 states during its 2024 tax year. The closure signifies a rapid policy reversal for a service initially promoted as a significant consumer benefit.

The decision to eliminate Direct File stemmed from a recent Treasury report to Congress, which advised discontinuing the tool due to escalating costs and insufficient user engagement. Despite initial projections of millions of users, the pilot program's cost per return was significantly higher than anticipated, reaching approximately $225. This led to its portrayal as costly and underutilized, prompting the shutdown.