Trump Administration To Scrap IRS Direct File Program, Sources Say
The Trump administration is reportedly planning to shut down the IRS’ Direct File program, a free electronic tax filing system launched under President Joe Biden, according to two individuals familiar with the decision.
The Direct File system, introduced as a pilot in 2024, was praised for simplifying tax filing and reducing costs for users. However, it faced opposition from Republican lawmakers and private tax preparation companies, who argued that similar free services already exist—though they are often difficult to use.
Since Trump took office, the program’s future has been uncertain. Elon Musk, who now leads the Department of Government Efficiency, has significantly reduced federal programs and agencies. In February, Musk announced on his social media platform, X, that he had shut down 18F, a government tech agency involved in projects like Direct File.
There was initial speculation that Musk’s tech team, nicknamed the “DOGE” group, might take over and improve Direct File. However, two sources say IRS staff working on the program were instructed in mid-March to stop development for the 2026 tax season—effectively signaling its end.
These individuals spoke to the Associated Press on condition of anonymity, as they were not authorized to discuss the matter publicly. The Treasury Department has not officially confirmed the decision.
Adam Ruben, a vice president at the Economic Security Project, criticized the move, calling it “an outrage.”
“It’s clear this decision wasn’t made with everyday taxpayers in mind,” he said. “Promises to cut costs for families are proving hollow.”
On the other hand, David Williams of the Taxpayers Protection Alliance said the program was flawed from the start. He pointed to its high costs and a significant number of users who didn’t complete the process. In 2024, 423,450 users logged into Direct File, but only 140,803 submitted and had their returns accepted, according to IRS data.
“From hidden costs to user confusion, the program was riddled with problems,” Williams said.
Direct File was funded through the Inflation Reduction Act signed by Biden in 2022. The IRS invested tens of millions into its development and initially planned to make it permanent. However, the program has faced stiff resistance from tax software companies, which profit from paid services and have spent millions lobbying against free alternatives. Americans typically spend around $140 annually to file their taxes.
A spokesperson for Intuit, the maker of TurboTax, echoed those concerns, calling Direct File “a solution in search of a problem” and “a misuse of IRS resources.”
Despite criticism, the program had gained traction. It was available in 12 states during the 2024 tax season and was expected to expand to half the country this year, though usage figures for 2025 remain unclear.
Amanda Renteria, CEO of Code for America—which partnered with the IRS on state-level integrations for Direct File—called the decision “a betrayal of public trust.”
“Trump and Musk are dismantling Direct File to protect the profits of major tax prep companies at the expense of ordinary Americans,” Senator Elizabeth Warren, a vocal advocate for free tax filing options, said in a statement.
Source: AP News
