IRS to Roll Out Its Pilot Tax Filing Program in 13 States Next Year

The Internal Revenue Service announced on October 18 that it will start testing its own free tax filing software called Direct File in 13 states next year.

"This is a critical step forward for this innovative effort that will test the feasibility of providing taxpayers a new option to file their returns for free directly with the IRS," said IRS Commissioner Danny Werfel in a press release which announced the news. "In this limited pilot for 2024, we'll be working closely with the states that have agreed to participate in an important test run of the state integration. This will help us gather important information about the future direction of the Direct File program."

Taxpayers from California, New York, Arizona and Massachusetts will be able to file both federal and state taxes via Direct File program in 2024, while residents of Alaska, Florida, Nevada, South Dakota, New Hampshire, Tennessee, Texas, Wyoming and Washington may also become eligible next year, due to those states not having income taxes.

The move by the IRS is seen as a swing at leading private tax preparation services such ast TurboTax and Intuit, which have openly argued that the taxpayers will end up with a worse experience than before, and stated that the federal tax collector should not act in the role of the tax preparer as well. Still, the IRS seems to be going forward with the plan, and will allow taxpayers to continue using private tax filing software. 

“I can’t stress enough that Direct File, if pursued further after the pilot, would be just another choice taxpayers have to help them prepare their tax returns,” Danny Werfel added.

Taxpayers participating in the 2024 pilot program will be able to reach out to IRS customer support representatives, which will provide tax law clarifications and technical assistance related to Direct File.