IRS Launching Pilot Program For Tax Filing

( – A new report from the IRS suggests many taxpayers are interested in a free direct electronic filing system provided by the agency itself. The taxman took ninth months and spent $15 million to investigate the feasibility and desirability of the IRS to implement its own free e-file system that would allow taxpayers to directly file online instead of using a third-party or mail-in system.

The change was announced by IRS Commissioner Danny Werfel and Treasury official Laurel Blatchford on Tuesday, May 15th. Little is known and few details are available regarding the pilot program and its new e-file system, but Werfel suggested that taxpayers will be able to participate come next year. 

The crafting of the new system was a part of Joe Biden’s “Inflation Reduction Act,” the agency was given 9 months and $15 million to investigate as part of the legislation that still hasn’t reduced inflation. Their report showed that it was doable, but would require additional resources and complicate IRS duties. 

There is a free e-file option already available for low-income earners which will still be available, and folks are welcome to continue to submit paper filings even though those take months to process. Blatchford noted that taxpayers generally spend $140 per year to have their taxes prepared, and the new system could save the public billions if everyone used it instead. 

Supporters suggest that the addition would make things easier and fairer, while large tax processing companies and accountants disagree. Regardless a new pilot program will be available for the first time in 2024 for the 2023 tax year, and the outcome will inform whether or not the system will become a mainstay for the tax agency. 

The cost to the government is another matter, with as few as 5 million users out of the U.S. population of 350 million, the program would run $64 million. Bump that number to 25 million users and the cost increases to $249 billion. Steve Ryan is with the American Coalition for Taxpayer Rights, which lobbies on behalf of tax companies and he called the new system, costly, unnecessary, and not a priority for the IRS.

Werfel commented that companies will still be required and that this system would only add another option to the pool of possibilities for how people go about paying their income taxes. 

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