At Hearing, Secretary Yellen Agrees with Warren on Great Taxpayer Reviews of Direct File Pilot, Potential to Keep Building the Tool to Make Filing Easier for More Americans
“[The first filer] was really thrilled. She said that she had saved $400, that it was easy to use… She found it gave her the confidence to be able to do her own taxes using this tool rather than having to go to a paid preparer.”
“[I]f [taxpayers] like it, it would be very natural to continue to build on it. There's a lot more functionality that can be built into this system. One day we hope, for example, information that taxpayers receive – W2s and other things – could be used to pre-populate the program, making it even more usable and friendly.”
Washington, D.C. – At a hearing of the U.S. Senate Finance Committee, U.S Senator Elizabeth Warren (D-Mass.) highlighted the positive feedback that the IRS’s Direct File pilot in 12 states has received from taxpayers and asked Secretary of the Treasury Janet Yellen to commit to expanding and extending the program in 2025 if positive feedback continues.
Senator Warren pointed out that the average American spends about $150 and nine hours to prepare their taxes and that this year’s Direct File pilot means that about a third of taxpayers in the 12 pilot states are eligible to file their taxes quickly, easily, and for free. Secretary Yellen agreed that taxpayers have found Direct File accessible and easy to use, and shared a glowing testimonial from the first filer to use the tool, highlighting that the IRS successfully used new funding from President Biden and Congressional Democrats’ Inflation Reduction Act to create a tool that meets taxpayers’ needs.
Senator Warren asked Secretary Yellen about expanding and extending the Direct File program in 2025. Secretary Yellen committed to continuing to evaluate the feedback Direct File receives from taxpayers, and that if taxpayers continue to find the tool accessible and easy to use, “it would be very natural to continue to build on it.” Secretary Yellen noted that there is “a lot more functionality that can be built into this system,” including using the data that the IRS already has to make filing easier.
Transcript: Hearing on the President’s Fiscal Year 2025 Budget for Treasury
U.S. Senate Finance Committee
March 21, 2024
Senator Elizabeth Warren: Thank you very much, Mr. Chairman. Last week the IRS launched a pilot program called Direct File, a first of its kind tool for Americans to file their taxes online directly with the IRS for free, for real. This is a big win for taxpayers. The average American spends about 150 dollars and nine hours on average just preparing their taxes. Why? Because TurboTax and other big tax prep companies advertise their services as free and then suck people in and pile on fees and charges. That is how they make money. The IRS is starting small with a pilot that the Treasury Department requested to gather feedback from taxpayers to figure out how to improve the tool. Direct File is live right now in 12 states, including Massachusetts, for about one third of taxpayers. Mostly people with pretty simple taxes.
Secretary Yellen, from what you can tell so far in the pilot, have taxpayers found Direct File accessible and easy to use?
Hon. Janet Yellen, Secretary of the Treasury: I think they have. A good example would be the very first individual who used it was interviewed for an AP story –
Senator Warren: A sort of patient zero?
Secretary Yellen: And she was really thrilled. She said that she had saved $400, that it was easy to use. She is somebody who I think doesn't like computations. She found it gave her the confidence to be able to do her own taxes using this tool rather than having to go to a paid preparer. Of course the feedback that we got before launching it formally, people who tried a trial version of it liked it very much. We saw a clear need to provide a simple and free tool. We are really hoping to build on what we learn. There's a little bit more time to go. We expect many more filers to use it. They will give feedback on what their experience was. This is something that should be easy, user-friendly, and free. There is feedback within the program, a chat function. You can call someone if you have a question. We will try to improve it over time. We’ll start small and build on it.
Senator Warren: Free and easy. Two great words. This is a five star review. I am pleased to see what the IRS is doing with the funding that Congress provided.
Secretary Yellen: Absolutely, this is because there was the IRA funding.
Senator Warren: A recent report said that expanding the tool, if the tool eventually goes nationwide and is available in all the states and available in more situations where you file your taxes, then it could save taxpayers $23 billion a year. That would be a return of over $100 for every one dollar that the IRS invests in this program. That is why Deputy Secretary of the Treasury Wally Adeyemo said this year’s pilot would be "The first step in an iterative process and a way to use lessons learned to inform the growth of the tool." Let me ask you, Secretary Yellen, if taxpayers continue to give Direct File these kinds of rave reviews, will you expand and extend it in 2025?
Secretary Yellen: We're going to evaluate the feedback we get. But if they like it, it would be very natural to continue to build on it. There's a lot more functionality that can be built into this system. One day we hope, for example, information that taxpayers receive W2s and other things could be used to pre-populate the program, making it even more usable and friendly.
Senator Warren: I am so glad to hear this. No one is excited to pay their taxes. But if you are going to pay your taxes, making it free and making it easy, trying to do everything we can to make government work for the American consumer, I think, is terrific. I just want to say to all the taxpayers tuning in from Massachusetts or any of the 11 other states that are now in the pilot project, go to DirectFile.IRS.gov and click on it and see if you’re eligible and try this free and easy opportunity to pay your taxes.
Thank you, Madam Secretary.
Secretary Yellen: Thank you.
###
Next Article Previous Article
