Still, aside from Monday’s announcement, Direct File’s success has proven to be highly subjective.
For the most part, people who have tried the Direct File software — which, in its question-and-answer format, closely resembles TurboTax or other commercial tax software — have given it rave reviews.
“Against all odds, the government has created a really good piece of technology,” marveled a writer for the Atlantic, describing himself as “giddy” while using the website to chat live with a helpful IRS employee. Tech Friend magazine columnist Shira Ovide called it “visible proof that government websites don’t have to stink.” On the line, people chirped praise after submission theirs taxeslike the user who called it “the easiest tax experience of my life.”
While users might be a happy bunch, however, there weren’t many of them compared to other tax filing options — and their positive reviews are unlikely to diminish the opposition Direct File has faced from tax software companies and Republicans from the start. . Those problems are likely to continue if the IRS wants to renew it for another tax season.
The program opened to the public in the middle of tax season, when many low-income filers had already claimed their refunds — and was limited to taxpayers in 12 states, with just four types of income (wages, interest, Social Security and unemployment). But it has grown in popularity as tax season has progressed: The Treasury Department said more than half of all Direct File users completed their returns over the past week.
Commercial software companies continue to denounce Direct File as unpopular and unnecessary – pointing out that its user base is still smaller than those using other options.
“There’s no real demand for this,” said David Ransom, an attorney for the software industry group the American Coalition for Taxpayer Rights. “There is political pressure to try to create demand that clearly doesn’t exist.”
The IRS has also come under fire from within the government, with the Government Accountability Office releasing a report last week faulting the agency for failing to fully document how much it cost to build the Direct File site.
Whether the software gets a second year, predicted former IRS Commissioner Mark Everson, “depends 100 percent on who the Treasury secretary is in January.”
A second term Biden administration would likely relaunch Direct File, perhaps even expanding the parameters the software can handle and offering it in more states. On the other hand, if former President Donald Trump wins the election, his prospects are less certain. While Trump’s own position on Direct File is unknown (his campaign declined to answer questions), Republicans at the national and state level have been critical of government-run tax filing.
But some advocates argue that Direct File could survive, even under a president who didn’t support it, since the IRS has a lot of discretion in how it spends its own budget.
“I don’t think they built it to shut it down,” said Adam Ruben, whose organization, Project Economic Security, promotes the website to taxpayers. “I’ll be surprised if next year we don’t see it expand to more states and more tax situations.”
David Kautter, former assistant secretary of the Treasury for tax policy, said the IRS will not equate the number of beneficiaries with success or failure.
“The IRS would say… that we didn’t aim very high. We tried to make this a controlled pilot program,” he said. “If the IRS can develop a user-friendly interface, then it has the potential to become very popular” in the future.
One unexpected twist was that the publicity surrounding Direct File drew attention to other long-term, government-backed options. The Free File Alliance, a group of private companies that offer free versions of their software to eligible taxpayers, said that as of April 5, more than 1.7 million households were using the Free File software, a 16 percent increase compared to the same period last year. year.
Meanwhile, the IRS-backed volunteer income tax assistance programs prepared 2.3 million free returns, an increase of 200,000 compared with last year, Treasury Secretary Janet L. Yellen told reporters on Friday.
The IRS also announced the hiring of more than 5,000 customer service officers since receiving tens of billions of dollars in additional funding from Congress in 2022. This year, its workers answered more than 85 percent of taxpayer phone calls, compared with 15 percent before the new funding, the IRS said.
Overall, it was “one of the best tax filing seasons the nation has seen in years,” IRS Commissioner Danny Werfel said in an interview Friday.
Four taxpayers agreed to let a Washington Post reporter watch as they tried to use Direct File.
In California, Tristan Brown, a lobbyist for the state teachers union, spent 15 minutes filling out his information before realizing he had received a $140 dividend, a form of income that Direct File wouldn’t let him report.
“I guess I’m stuck. Which is pathetic. I feel like a lot of people will have [an investment] bill that would have that,” he said. “Now I’ve let TurboTax take my money again.”
Mia Francis, a barista, encountered similar problems. Eight minutes later, she learned that the site wouldn’t allow her to file because she lived and earned a year in a non-participating state before moving to Massachusetts. “I move a lot. Unless they have it somewhere… you can use it if you’ve lived in more than one state, it’s unlikely I’ll be able to do that,” she said as she stared at the screen.
But two taxpayers made it to the end.
Havilah Fowler, an 18-year-old barista, was nervous about filing her first tax return. The identity verification process was difficult and took her more than an hour, including waiting for a video call. Then she read and reread some instructions.
For example, she wasn’t sure what “standard deduction” meant. “What’s going on? Google will explain it better,” she said.
However, when she got to the last page and saw that a refund was on its way, she cheered and clapped.
Describing herself as an “inexperienced taxpayer”, Natalie Comerford, 20, clicked several times when the site offered buttons to explain or clarify tax terms. She read explanations about how to correctly enter information from her W-2s from part-time jobs, what “estimated tax payments” are, and whether she is eligible for tax credits. Less than an hour after she started, she submitted her application.
“Usually government sites are really clunky,” she said. “That was really easy.”