The "Big, Beautiful Bill" mandates the IRS to evaluate alternatives to the Direct File online tax filing system, with a budget of $15 million for this task. Historically, the IRS has operated Free File, a public-private partnership, but it has seen only 3% participation among eligible taxpayers. Companies involved in Free File faced legal issues for misleading clients toward paid options. The IRS introduced Direct File in 2024, which received favorable reviews despite low utilization amid speculation about its continuation.
The "Big, Beautiful Bill" passed by House Republicans directs the IRS to study how to replace Direct File, a free online tax filing system.
The IRS has relied on a public-private partnership called Free File for decades to offer most Americans a free way to file taxes, but only 3% utilized it.
Some tax prep companies in the Free File program have pushed clients towards paying for services even when they qualified for free options, leading to legal settlements.
After debuting Direct File in 2024, the IRS expanded this option, receiving positive feedback despite low uptake influenced by uncertainty about its future.
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