IRS moves forward with free e-filing system in pilot program to launch in 2024

NEW YORK — Most taxpayers are interested in filing their taxes directly to the IRS for free, a new report says, and that option will be tested next year. Now, the IRS plans to launch a pilot program for the 2024 filing season to test a “direct file” system and help the federal government decide whether to move forward with potentially implementing it in the future, IRS Commissioner Danny Werfel and the Treasury’s Chief Implementation Officer Laurel Blatchford said Tuesday. The new, direct e-file program being tested “could potentially save taxpayers billions of dollars annually,” said Blatchford, who noted that an individual taxpayer pays an average of $140 preparing their tax returns each year. The report’s initial cost analysis shows that a pre-file option run by the IRS “could cost less than $10 per return to provide, and of course would be free to taxpayers — by comparison, simple electronic filing options currently available to taxpayers are around $40.” The study estimates that annual costs of direct file may range, depending on the program’s usage and scope, from $64 million for 5 million users to $249 million for 25 million users. Werfel on Tuesday acknowledged concerns surrounding a possible direct file system, notably operational challenges, but maintained taxpayers should chose the filing option that works best for them and that “the IRS cannot run the tax system alone.” “We rely on an extensive network of partners across tax professional groups, the software communities, the payroll community and countless dedicated organizations that work directly with taxpayers,” Werfel said.