Dear Commissioner Werfel and Secretary Yellen,
Last summer, many of us wrote to you to celebrate the IRS Direct File report and your concurrent announcement that the IRS would pilot Direct File in 2024. We said then that “we believe that a free and accessible direct file tool will be transformational for American families.” We said the evidence showed that Direct File would be popular, and would save families time and money.
Nine months later, thanks to the incredible work of the IRS and its partners across the country, it is clear that Direct File can and will transform the American tax filing system. You have proven that Direct File has the power to take the headache and cost out of filing taxes for tens of millions of Americans. As one taxpayer put it, it was “just so darn easy.” We congratulate you on the outstanding work of the past year, and we call on you to make Direct File permanent and expand it in the coming years.
Since last year, it has become only more evident that America’s tax filing system does not work for low- and middle-income families. In the first months of this year, after years of duplicitous marketing, Intuit was barred from promoting their products as free, and the FTC sued H&R Block for its own suite of deceptive advertising practices. (Both companies are challenging the FTC's actions.) Today, tens of millions of Americans continue to pay billions of dollars to file returns they are supposed to be able to file for free. The Economic Security Project reported in March that a mature Direct File program would save existing taxpayers $11 billion in filing fees and time savings. Moreover, America’s broken filing system leads millions of families to forego billions in refunds. ESP also estimated that Direct file would help families claim up to $12 billion currently left on the table every year.
Meanwhile, research has continued to demonstrate that Direct File is a tremendously popular program. September 2023 Hart Research polling showed 88% support for Direct File; and GQR polling in February 2024 showed astronomical 94% support for Direct File in five key states. And, through the Coalition for Free and Fair Filing, groups have begun to build a mass movement supporting Direct File. Many of us were among the hundreds of national, state, and local organizations that promoted Direct File to our constituencies this year, empowered storytellers to talk about their experiences, recruited user research participants, and talked to our representatives at all levels of government to promote and support this work. And in the final weeks of the filing season, Direct File went absolutely viral, with over 50,000 taxpayers using the tool in the final week alone. We have seen the tremendous excitement only continue to grow as Direct File reached more taxpayers, and we are ready to build on this foundation in the years to come.
Most importantly, you and your teams have proven the cynics wrong and shown that Direct File can and will work for taxpayers. The product made available this year was user-friendly and human-centered, and treated taxpayers with the dignity they deserve. The complimentary feedback was pervasive, and the reviews universally positive. One taxpayer called it “the most convenient way I’ve ever filed taxes.” Direct File’s mobile-first design and bilingual functionality and live chat support powerfully demonstrated your team’s commitment to accessibility. Thanks to your scaled rollout and iterative approach, Direct File launched smoothly and without incident. And the state filing integrations — identified in the Direct File report as a principal area to test in the pilot — were also successful.
The Direct File pilot was designed to test whether this approach to free, public, electronic tax filing could work. There can be no doubt that the answer is a resounding “yes.” It is time to make Direct File a permanent fixture of the American tax system.
As you institutionalize Direct File, we expect that you will build on it in critical ways.
First, Direct File must quickly expand to more states. We know that this relies on states themselves, and indeed many of us are engaged in Coalition-driven work to support tax departments and governor’s offices in our own states and across the country to prioritize Direct File integrations in the coming years.
Second, Direct File must expand to cover more tax situations — such as gig work income and other scenarios that apply to a broad swath of low- and middle-income Americans. We trust that as you build on Direct File’s functionality you will continue to prioritize the tax needs of those families who can least afford to pay private preparers, and most need the support they access through the tax code. Continuing to engage families in the design and development of Direct File will help keep the product focused on those who need it most.
Third, we believe Direct File can and should further streamline the tax filing process. Taxpayers struggle every year to collect their tax documents and provide data the IRS already has on file — and as the Direct File report indicated last year, some taxpayers expect that an IRS-provided filing tool would pre-populate their tax data. Secretary Yellen, as you said earlier this year, it would be “very natural” to build on the product and add pre-population to Direct File. In fact, Direct File already took its first steps into pre-population late in the filing season, pre-populating prior-year AGI. We urge you to build on this work in the coming years, truly breaking down barriers for all tax filers.
Thank you, again, and congratulations on all the incredible work you have done to revolutionize the tax system, and build the 21st century tax administration our country deserves. We look forward to continuing to support this work to build a better, more equitable, and more universal tax system for the years to come, so that everyone can file their taxes online easily and for free.
Sincerely,
