The IRS on Wednesday expressed interest in working with states to better understand the technology and policy challenges they face in adopting a free tax-filing tool being developed by the agency.
In a letter to the Federation of Tax Administrators, IRS Commissioner Danny Werfel said states interested in participating in the pilot project have until Sept. 4 to express interest ahead of the 2024 tax-filing season. The project follows the results of a nine-month study published in May showing that most U.S. taxpayers are interested in filing their taxes directly to the IRS for free.
A free, government-run system for filing taxes directly to the IRS would augment the agency’s existing e-file option, which is available to individuals with an adjusted gross income of $73,000 or less. The May report estimated that the program’s cost would depend on how many users it attracted — from $64 million for 5 million users to $249 million for 25 million users.
Werfel wrote in his letter that the pilot, which the Department of the Treasury has directed the IRS to conduct during the 2024 tax-filing season, will help the agency “better understand taxpayer preferences and needs” and “improve services to help taxpayers meet their obligations and receive the tax credits and benefits for which they are eligible.”
“We continue to engage one-on-one with states,” Werfel wrote. “We want to restate our desire to talk with any state that may be interested in working with us on the pilot, as well as states that simply want to learn more about Direct File. We are interested in continuing to learn from states directly, and from FTA, about the challenges they may face when integrating with a Direct File pilot, be they technological, policy-driven, or other concerns.”
The IRS will over the next several weeks finalize its plans for the pilot project and then begin working on “technical aspects,” he wrote.