Report Released On Direct File
At a time when public trust in government agencies is teetering, the Internal Revenue Service — already one of the least popular federal entities — is now angling for even more power, and critics say it's doing so under the guise of “convenience.” At the center of this controversy is the IRS’s Direct File program, a pilot initiative quietly ushered in through the Inflation Reduction Act — a bill championed by Democrats and signed by President Biden in 2022.
The concept behind Direct File is simple on paper: allow taxpayers to file their taxes directly with the IRS online, bypassing private-sector options like TurboTax or certified accountants. But simplicity, critics argue, masks a clear conflict of interest — namely, that the same agency tasked with collecting taxes should not be responsible for preparing them.
Unlike private tax preparers who are incentivized to find every deduction and credit available to satisfy clients and win repeat business, the IRS benefits when taxpayers overpay. The more revenue collected, the more justification the agency has to grow its budget, its workforce, and its influence.
And this isn’t just a theoretical concern. According to an Inspector General report, Direct File’s initial rollout excluded key tax credits, including education credits that could have saved taxpayers up to $2,500 each. Hundreds of eligible filers were shortchanged — an early but potent sign that the IRS’s entry into tax preparation could result in systematic under-claims, ultimately enriching the Treasury at the expense of the taxpayer.
Despite this, the IRS is moving ahead. In fact, it’s now circulating a deeply flawed “feedback survey” about the pilot program — one that lacks basic controls like limiting duplicate responses and fails to ensure a representative sample. Critics call it “feedback theater” — designed not to gauge honest reactions, but to generate favorable statistics the IRS can use to justify further expansion of Direct File.
But the numbers tell a different story. Less than 1% of eligible taxpayers used the program. Even among those who started the process, only about a third finished their returns. Many cited Direct File’s limited functionality, confusing design, and narrow eligibility criteria as deal-breakers.
Then there’s the matter of cost — or, more precisely, cost overruns. Congress initially allocated $15 million to the IRS for the pilot. But according to the National Taxpayers Union, the agency blew past that number, pulling funds from other parts of its budget to push Direct File across the finish line. One Inspector General’s audit bluntly stated the IRS couldn’t even produce documentation explaining how it arrived at its initial budget figures.
All of this paints a picture of a bloated bureaucracy chasing more authority, even when the product it’s offering is flawed, unwanted, and riddled with inefficiencies. What’s at stake isn’t just software — it’s control of the tax process itself, a critical pillar of financial accountability in a democratic society.
For some, Direct File represents a push toward European-style government tax systems, where the state calculates what you owe and expects you to pay up — no questions asked. But in a country where transparency, checks, and individual agency remain foundational, that model feels more coercive than convenient.
The federal government already has a staggering $38 trillion in national debt and issued $236 billion in improper payments just last year, according to the Government Accountability Office. Trusting the same institutions with even more control over how taxes are filed and calculated raises legitimate questions — not just about efficiency, but about intent.
Supporters of Direct File argue it’s about simplifying taxes for working families. But with plenty of free, proven resources already available through public-private partnerships, the push for a government-run system seems less about service and more about centralizing power.