Trump Admin to End IRS Direct File Free Tax Tool/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The Trump administration plans to terminate the IRS Direct File program, which offered a free and simple way for Americans to file taxes. The decision comes amid lobbying pressure from commercial tax prep companies and ongoing government cutbacks under Elon Musk’s leadership. While Treasury says no final decision has been made, IRS staff were reportedly told to stop development.
IRS Direct File Shutdown – Quick Look
- IRS staff were instructed in March to stop development on Direct File for the 2026 tax season.
- Treasury Department claims no official decision has been made, despite internal directives.
- The program, launched in 2024 under Biden, received strong public support and positive user feedback.
- Private tax software companies opposed Direct File, arguing it undercut their services.
- Critics say ending the program prioritizes corporate profits over taxpayer savings.
- Direct File processed over 140,000 accepted returns in its pilot year across 12 states.
- The program had planned to expand nationally in 2025.
- Elon Musk’s DOGE initiative was floated as a possible tech solution before the shutdown plans.
- Advocacy groups and lawmakers condemned the move as a betrayal of public interest.
Trump Administration Moves to Eliminate IRS Direct File Free Tax Filing Program
DEEP LOOKS
WASHINGTON (AP) – The Trump administration is reportedly moving to eliminate the IRS Direct File program, a free online tax filing tool that has helped tens of thousands of Americans file their federal returns directly with the government. The decision, according to two officials familiar with the matter, appears to be part of broader efforts by the administration to streamline or dismantle federal programs deemed “unnecessary.”
Direct File was a major initiative launched during President Joe Biden’s administration, designed to provide a no-cost, user-friendly alternative to commercial tax filing services like TurboTax and H&R Block. Its pilot rollout in 2024 saw over 140,000 accepted tax returns submitted in 12 states, and it had been scheduled for wider availability in 2025.
IRS Team Told to Halt Work on Direct File
Two individuals with knowledge of the matter told the Associated Press that IRS personnel involved in Direct File were ordered in March to discontinue all planning and development for the 2026 tax season.
Though the Treasury Department publicly insists that no final decision has been made, internal communications suggest the program’s fate has already been sealed. The sources requested anonymity because they were not authorized to discuss internal government deliberations.
Elon Musk and Government Tech Cuts
The program’s future had already appeared uncertain after Elon Musk, leading the Department of Government Efficiency (DOGE), began cutting technology-focused initiatives. In February, Musk posted on his X platform (formerly Twitter) that he had “deleted” the 18F agency, a government tech group instrumental in building tools like Direct File.
At one point, there was speculation that Musk’s DOGE programmers might revamp and take over Direct File. But with no action and staff sidelined, those hopes have largely faded.
Praise from Taxpayers, Pushback from Industry
Direct File earned high marks from users, who praised its simplicity, affordability, and speed. Many saw it as a long-overdue solution to the complicated, expensive process of filing taxes in the United States.
But the program also faced stiff opposition from private tax prep companies, which have made billions in profits from filing services. These companies argued that the IRS’s involvement in tax preparation created an unfair government-backed competitor.
“Direct File is and has been a solution in search of a problem,” said Derrick Plummer, a spokesperson for Intuit, the maker of TurboTax. “It’s a drain on critical IRS resources and a waste of taxpayer dollars.”
Criticism from Advocates and Lawmakers
Advocacy groups and lawmakers responded to reports of the program’s shutdown with sharp criticism.
“The fix was in from the beginning,” said Adam Ruben, vice president at the Economic Security Project, a group that has long supported government-run tax filing. “Cutting costs and saving money for families were just empty campaign promises.”
“This is a betrayal of public trust,” added Amanda Renteria, CEO of Code for America, which partnered with the IRS to expand Direct File to state tax systems.
Senator Elizabeth Warren, D-Mass., one of Direct File’s most vocal backers, also condemned the decision:
“Trump and Musk are going after Direct File because it stops giant tax prep companies from ripping taxpayers off for services that should be free,” she said. “Americans want a free and easy way to file their taxes — Trump and Musk want to take that away.”
Mixed Reviews on Performance
Critics of the program, including David Williams, president of the Taxpayers Protection Alliance, claimed that despite high expectations, the platform fell short.
“From hidden costs to taxpayer confusion, the program is riddled with issues,” said Williams. “Many users didn’t even complete their returns.”
According to IRS data, 423,450 people logged in to use the system during its initial launch, but only 140,803 submitted completed and accepted tax returns.
Bigger Picture: Who Benefits?
The average U.S. taxpayer currently spends about $140 annually on tax preparation. Direct File was positioned as a cost-cutting measure for households and an effort to make the IRS more accessible.
The program was developed with funding from the Inflation Reduction Act, passed under Biden in 2022, and had already cost tens of millions of dollars to build and deploy.
Supporters argue the real issue isn’t cost—it’s power and profit.
“Direct File threatens the business model of companies who’ve been charging Americans for something that could be free,” Ruben said. “That’s why it’s being shut down.”
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