In November of last year, the Trump administration pulled the plug on the Internal Revenue Service’s free online filing system, Direct File, which had been introduced in 2024 as a pilot program for eligible taxpayers in 12 states and continued in 2025 with an additional 13 states.
A government report, issued at the end of 2024 found the program to be popular among those who used it. “Overall, those using Direct File in the pilot states report very high satisfaction with the service and very high likelihood to recommend it to others. Compared to those using alternatives, Direct Filers are much more likely to say tax filing this year was more straightforward than last year and that their costs and time spent filing were reduced.”
The month after the Treasury Department issued a report on replacing Direct File Treasury Secretary Scott Bessent confirmed the plan to shutter Direct File. “I think that we have better alternatives, it wasn’t used very much, and we think the private sector can do a better job,” he said.
“Direct File had low overall participation and relatively high costs and burdens on the federal government, compared to other free filing options,” the report stated. “For tax year 2024, returns submitted using Direct File constituted less than 0.5 percent of the approximately 146 million returns filed.”
For a pilot program with built-in geographic, income, and eligibility limits, that should come as a surprise to no one.
The report also asserted that Direct File’s “complexity and technical demands also diverted IRS resources from other core priorities,” a concern that didn’t seem to trouble the administration during the DOGE-driven gutting of IRS resources that saw, among other cuts, nearly one-third of its auditors pushed out. Those “core priorities” apparently include the IRS’s other programs, such as the privatized Free File, which the report says “were not fully promoted or optimized during this period.” In that program, the IRS has identified eight “trusted partners” that tax filers can find on an official IRS webpage that looks like a particularly garish page from a 1980s-era Yellow Pages (ask your parents–or grandparents).
The “trusted partners” include companies that shared tax filers’ data with Meta and Google for years. In 2022, then-participant Turbo-Tax maker Intuit agreed to a multistate legal settlement requiring it to repay $141 million to more than four million tax filers charged for services they were eligible to receive for free. A Pro-Publica report charged that the industry group Free-File Alliance effectively wrote the IRS rules governing their own industry.
We wrote about Direct File a number of times–including when In the Public Interest joined a coalition of organizations supporting the program’s continuation and expansion.
In that, we state something that we’ve said many times but always bears repeating: “Businesses do one thing—they sell stuff.”
The tax prep companies aren’t in business to save tax filers money–their goal is to make money for themselves. What they’re offering with Free File is the kind of free no one can afford.
Donald Cohen
Executive Director