Good News for Millions of Americans? Bad News for Tax Professionals?

The IRS recently announced that starting with the 2025 tax season, a free electronic filing system called Direct File will be available to taxpayers in 24 states. This tool allows individuals to file their federal tax returns at no cost, potentially saving hundreds of dollars in tax preparation fees. It builds on the success of a 2023 pilot program.

The Department of Treasury claims that Direct File will save taxpayers an estimated $5.6 million annually in preparation fees. However, the IRS estimates the system will cost up to $249 million annually—and some argue the actual costs could be even higher. This has sparked significant pushback from taxpayer advocates and members of Congress, who are calling for reevaluating the program’s costs and benefits.

Critics point out that many taxpayers already qualify for free filing services through existing agreements with commercial tax providers, meaning they’ll switch from private services to Direct File.

Why introduce a system with added burdens like customer support, software development, hosting, and licensing costs? The IRS, after all, is not known for its customer service. Its primary role is tax collection, and with Direct File, the agency would take on the roles of tax preparer, auditor, and enforcer—potentially leaving taxpayers at a disadvantage.

Is this a risky move? Should the IRS be expanding its role in this way? What are your thoughts?

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