Data shows the IRS’ Direct File free tax-filing tool has helped save taxpayers money. Now lawmakers want to know why the Trump administration may soon pull the plug on the program.
The Trump administration is planning on ending Direct File, the Associated Press reported earlier this month, citing people familiar with the plan. The program, launched during Joe Biden’s presidency, has been credited by some users with making it easier and cheaper to file their taxes, saving the average user $160 in tax preparation fees and hours of their time, according to the Economic Security Project, an advocacy group focused on enhancing financial fairness and security for Americans.
But the IRS has also faced blowback to Direct File from private tax prep companies that have made billions from charging people to use their software.
“Direct File is and has been a solution in search of a problem, a drain on critical IRS resources and a waste of taxpayer dollars,” Derrick Plummer, a spokesman for the commercial tax preparation company Intuit, the maker of TurboTax, told the AP.
DirectFile was used by about 141,000 taxpayers in 12 states when it debuted in 2024, according to the U.S. Government Accountability Office (GAO). Although it was expanded to 25 states in 2025, the IRS hasn’t yet released data on how many people used it during the tax season that ended on April 15.
$100 billion on tax prep
Americans spend more than $100 billion each year to prepare and file their returns, according to the National Taxpayers Union Foundation. Direct File was developed as a method to help taxpayers avoid paying tax-prep and filing fees.
However, Republican lawmakers and commercial tax preparation companies — including Intuit, the owner of TurboTax, H&R Block — have complained the Direct File program is a waste of taxpayer money because free filing programs already exist. One such service is Free File, a partnership between the IRS and tax-prep companies.
On Monday, more than 170 Democratic and independent lawmakers sent a letter to Treasury Secretary Scott Bessent and IRS acting commissioner Michael Faulkender asking them to commit to keeping Direct File open and operating. No Republican lawmakers signed the letter.
“Ending this free, easy-to-use and popular program would be an insult to American taxpayers, eliminating an important alternative to commercial options provided by the tax prep industry,” the Democratic lawmakers, led by by Sen. Elizabeth Warren of Massachusetts, wrote in the April 21 letter.
Under the Trump administration, the IRS is undergoing a cost-cutting overhaul, with plans to eliminate up to 40% of its roughly 100,000-person workforce after the end of tax filing season, according to an internal memo obtained by CBS News. The agency is also expected to shed more than 20,000 IRS employees through its Deferred Resignation Program offer.
Those changes are part of the Trump administration’s efforts, overseen by the Department of Government Efficiency, or DOGE, to cut federal spending.
“No decisions on the future of Direct File have been made as of yet,” a Treasury spokesperson told CBS MoneyWatch. “It is a failed program at a cost of tens of millions of taxpayer dollars per year.”
Pushback against Direct File
Direct File has drawn pushback from some Republican lawmakers, with more than 20 GOP representatives asking President Trump to “immediately end the IRS’ unlawful Direct File pilot program upon taking office in January,” according to a Dec. 10 statement from Rep. Adrian Smith, a Republican from Nebraska.
“The program’s creation and ongoing expansion pose a threat to taxpayers’ freedom from government overreach, and its shaky rollout and structural flaws have already come at a steep price,” the Republican lawmakers said in their letter.
The IRS spent about $13 million on the Direct File pilot in 2024, according a December report from the GAO. That funding came from money the tax agency received from the Inflation Reduction Act, which Mr. Biden signed into law in 2022.
While consumer advocacy groups and some tax experts have praised Direct File for creating a free pathway for some taxpayers to file their returns, the service hasn’t earned universal praise.
Direct File was “problematic” from the start, David Williams, president of the Taxpayers Protection Alliance, which describes itself as a nonpartisan organization that disseminates research and analysis on the government’s effects on the economy, told the AP.
Pointing to the program’s costs, Williams noted that many people who start the free-filing process never finish. According to the IRS, while 423,450 taxpayers logged into Direct File in 2024, only 140,803 of them submitted accepted returns.
Despite those criticisms, taxpayers who have used Direct File give the program high marks. About 96% of taxpayers who used the 2024 pilot program said they were “satisfied” or “very satisfied” with the service, a Code for America survey found.
“Taxpayers have spoken loudly and clearly: Direct File works well for them, and more Americans want access to it,” the April 21 letter from Warren, Sanders and other lawmakers said.
contributed to this report.
