The IRS Comes for TurboTax With Free ‘Direct File’ Service in 13 States Next Year

The Internal Revenue Service will offer a pilot run of its free, electronic tax filing service, called Direct File, in thirteen states for the 2024 tax season.

The rollout of the Direct File pilot is a massive blow to tax preparation vendors, such as Intuit (TurboTax) and H&R Block, who have spent nearly $40 million in lobbying efforts since 2006 to block a free government service, according to the Associated Press.

“This is a critical step forward for this innovative effort that will test the feasibility of providing taxpayers a new option to file their returns for free directly with the IRS,” said IRS Commissioner Danny Werfel in a press release.

Direct File will be available to taxpayers in Massachusetts, New York, California, and Arizona for the 2024 tax filing season. The program will also be available for residents of states that don’t levy state income taxes, including Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.

Taxpayers in participating states will have a chance to file their federal tax return for free, directly with the IRS on their smartphone, tablet, or computer. The service was created with funds from the Inflation Reduction Act aimed at improving technology in the IRS and providing taxpayers with more choices in how they file. Direct File’s pilot scope is limited for its first run, and only taxpayers with relatively simple returns can use the service.

“In this limited pilot for 2024, we’ll be working closely with the states that have agreed to participate in an important test run of the state integration. This will help us gather important information about the future direction of the Direct File program,” said Werfel.

Intuit was not thrilled about the news of a competing service from the federal government calling Direct File a “thinly veiled scheme where billions of dollars of taxpayer money will be unnecessarily used to pay for something already completely free of charge today.”

“In addition to now paying for ‘free’ tax preparation, Direct File is asking Americans to file their taxes directly with the IRS after the organization publicly acknowledged systemic inequities that see low-income filers and Black taxpayers targeted for audit at a higher rate than non-Black taxpayers,” said Intuit spokesperson Tania Mercado via an emailed statement. “The Direct File scheme is a solution in search of a problem, and that half-baked solution now has the potential to become a financial nightmare for tens of millions of taxpayers.”

H&R Block did not respond to Gizmodo’s request for comment.

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