Smith Lauds IRS Decision to Halt Democrats’ Failed, Unlawful Direct File Program

Decision Restores Focus to Improving, Expanding Proven and Existing Free Tax Filing Programs

Washington, D.C. - Years after Democrats unlawfully expanded IRS authority and cooked the books to create Direct File, a forced government-run tax filing scheme, the Trump Administration will suspend the troubled program after finding numerous failures as described in a new report. The IRS will instead pursue better, proven free options for tax filers.

The now-suspended government-run option had the lowest participation of all free tax preparation programs, despite aggressive efforts by Democrats to promote it at the expense of successful longstanding programs already available that should have been expanded. As part of the working families tax cuts enacted in July, Ways and Means Republicans included a directive to study the program's failures based on years of oversight work, resulting in this report and suspension of the wasteful program.

Ways and Means Chairman Jason Smith (MO-08) issued the following statement:

"It wasn't just unlawful for Democrats to expand the authority of the IRS without congressional authorization, it turns out that taxpayers simply didn't want to use the costly and ineffective government-run Direct File tax program either that would have made the IRS the tax preparer, filer, and auditor for Americans. There was nothing 'free' about this program. It cost the American people at least $41 million for tax year 2024, an estimate that doesn't account for the additional costs borne by filers to file their state taxes separately, or by the agency overall to support the program. That's at least $138 per return, when existing programs like Free File cover more people and operate at little cost to taxpayers. No wonder, according to the Inspector General, Democrats had to get Leftist organizations to write fake studies in support of the program. Even the Obama-Biden chief information officer said the new system was 'guaranteed to fail.'

"American workers and families deserve a tax filing system that meets their needs and will help them see the benefits of the working families tax cuts Congress passed earlier this year, including no tax on tips, no tax on overtime, and no tax on Social Security. Fortunately, Treasury is finally shifting resources towards solutions that work, including IRS-affiliated free tax preparation programs, as well as the public-private partnership for free tax filing and improving technology at the agency.

"Ways and Means Republicans have fought hard for years to ensure resources go where they are needed to help taxpayers, rather than dump more funding into programs that are failing. Finally, we have an Administration that will do the right thing."

Background

• Democrats included in their partisan so-called "Inflation Reduction Act" an "independent third party" to report on "the overall feasibility, approach, schedule, cost, organization design, and Internal Revenue Service capacity to deliver such a direct e-file tax return system."
• To produce that report, President Biden's IRS hired New America - an organization populated by Democrat Party operatives and other left-leaning officials - which had already stated "the government…can and should build this tool in the coming years."
• The Biden Administration also appointed a left-leaning professor to assist in the supposedly "independent" review of the direct file proposal - an individual that has previously been on the record openly championing the establishment of such a program at the IRS.
• To make matters worse, the IRS conveniently cherrypicked the results of a "nonpartisan" MITRE study in their final report to Congress, omitting the study's findings that most working-class Americans do not want an IRS direct file system, citing a lack of trust in government.
• A direct file program like that imagined in the Inflation Reduction Act has been a long-time priority of Senator Bernie Sanders, Senator Elizabeth Warren, and Representative Alexandria Ocasio-Cortez to give the IRS control over both the filing and auditing of tax returns.

READ: ICYMI: Former Obama-Biden Chief Information Officer Says New IRS E-File System "Guaranteed to Fail"

READ: Watchdog: IRS Cooked the Books on Direct E-File Study, Misled American Taxpayers

READ: Report on Direct E-File Program Confirms Biden Administration Always Intended to Make the IRS America's Tax Preparer, Filer, and Auditor

READ: Smith, Schweikert Call Out Biden Administration for Cooking the Books on IRS E-File Study