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Danny Werfel

Direct File is here to stay

The Biden administration is expanding the Direct File program as it attempts to make it easier and cheaper for individuals to file their annual returns.

“Direct File is an important component of a strong comprehensive tax system that gives taxpayers electronic filing options that best suit their needs,” IRS Commissioner Danny Werfel said on a call with reporters Thursday.

The IRS ran a pilot version this year of the program allowing people to file their taxes online for free directly with the IRS. It ran in 12 states for taxpayers with simpler returns, and about 140,000 people took part. Next year, the IRS plans to allow all 50 states and Washington, D.C., to decide whether to opt into the program.

The agency also plans to expand the program to more tax situations in the coming years so more taxpayers can take advantage of the program. Werfel said a focus of that build-out will be tax situations that impact working families.

Still, this won’t necessarily be easy. Tax preparation software companies like TurboTax owner Intuit and H&R Block have fought against Direct File.

But Werfel sought to combat the idea that the government-run platform would become the only option or squeeze out other choices. Werfel said the agency “will continue to support all filing options.”

Some Democrats, though, directly frame the Direct File option as a challenge to services like TurboTax. Here’s what Senate Finance Committee Chair Ron Wyden (D-Ore.) said:

The announcement is a win for Democrats and progressive groups who’ve clamored for a government-run filing option. Republicans meanwhile have railed against Direct File. Still, Werfel said he’s not concerned about possible GOP wins in November curtailing the program’s future.

“We also think it is nonpartisan that taxpayers should have options for how they file and that the broader the menu of options, the better for all Americans regardless of political stripe,” Werfel said.

But that’s not a universal view, and some Democrats are ready to get political on the issue. Wyden said he’s “convinced that Donald Trump and Republicans in Congress will shut it down if they have the opportunity. Taxpayers must remember that Direct File is on the ballot in November.”

— Laura Weis

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