INTERVIEW: Rep. Adrian Smith celebrates Direct File's demise and explains what's next for Americans' tax filing system
Rep. Adrian Smith explains why President Donald Trump was right to kill Direct File, and tells the Washington Reporter what's next for tax filing.
For almost two months, House and Senate Republicans like Rep. Adrian Smith (R., Neb.) have voted to reopen the government and end the Schumer Shutdown. But one government program that Smith and his colleagues won’t lament the end of is the IRS’s controversial Direct File tax preparing service.
In an interview with the Washington Reporter, Smith said that President Donald Trump’s administration was right to do away with the program and he explained that what became Direct File was never authorized to begin with.
“The fact that the IRS went forward with Direct File without congressional authority to do so is fairly indicative of what their plans were in a broader perspective,” Smith said. “So you package everything the Democrats did together, whether it was 1099-K changes, whether it was 87,000 IRS agents, whether it was Direct Files supercharging the IRS that has been having such a hard time with very fundamental customer service is especially problematic, and I would say, especially problematic for so many of my constituents, say farmers and ranchers, who are small businesses that are subjects with just the way they file their taxes and so forth, I think they would be in the crosshairs of what IRS would seek to do.”
Smith, one of the top Republicans on the Ways and Means Committee, noted that Direct File was always supposed to be a “little, small, targeted pilot project.” But, he explained, “the next thing we know, we had a launch of a much bigger program that even proved to be inefficient under its own measures.”
The Nebraska lawmaker is right that Direct File was a failure by its own metrics. The Reporter previously exposed the litany of Direct File failures, which included that virtually no one used it. “Fewer than 0.5 percent of all taxpayers tried it. In the pilot states, usage was 0.3 percent. Our Hill sources tell us that even the program’s harshest critics assumed that far more taxpayers would at least try it.”
Smith, who was in Congress during the explosive era of the Lois Lerner scandal, in which the IRS targeted conservative organizations for extra scrutiny, said that the agency’s politicization under President Joe Biden was “like a newer version of Lois Lerner.”
But that politicization has continued even under Trump’s stewardship. One of the lawyers for the IRS Chief Counsel’s office was placed on leave after a Daily Wire report showed that he called on Americans to “resist” the president.
Smith wants the “tax filing process and involvement of the IRS needs to be more technologically based rather than personality based…There are personalities that get involved. Lois Lerner was a personality back when she was aggressive in that capacity. And adding 87,000 new human beings without getting their technology right is an example of the expanded power and authority that is unwarranted.”
Fortunately for American taxpayers, Smith already succeeded in rolling back some of that IRS expansion. One of Smith’s bills was the first piece of legislation in the last Congress, the Family and Small Business Taxpayer Protection Act; much of it was folded into the Working Families Tax Cut.
“We reversed so much of that since they they did that with their IRA,” he explained. “But it shows how political their posture is for the shutdown right now. They fought so hard to add all these IRS personnel; there are multiple reasons for that, but they were trying to move the dials to say they were going to raise more revenue, but even when they had the resources to do it, they were not hiring at the rate that they needed to to even meet those numbers, even with the resources to do so.”
But, there’s more work to be done, he said. “We need an ongoing effort to monitor customer service to make sure that taxpayers’ questions are getting answered,” Smith added. “I don’t think that small businesses are anxious to be audited, and they they would like to see a smooth process to get their questions answered and that’s a reasonable ask that they would have, and that’s something that we should be able to deliver on. And I am anxious to keep a close monitor of that.”
While there is minimal indication that today’s Democrats are eager to shrink that size of the IRS, Smith noted that this position is the outlier.
“Going back to to the Clinton administration, where even Bill Clinton ascertained that the IRS was going too far, and he pulled them back because they were performing so many audits of innocent people, and it was getting out of hand, so even they dialed it back, I think that’s instructive of how we want to make sure there is good compliance, and I think we can do that with customer service and new technology,” he reflected. “That has not been a priority during the Biden administration.”
Below is a transcript of our interview with Rep. Adrian Smith, lightly edited for clarity.
Washington Reporter:
Congressman Smith, we saw giant news this week on Direct File. This is something you’ve been talking about, legislating about, for years at this point. From your perspective, did Trump do the right thing in finally terminating this?
Rep. Adrian Smith:
The short answer is yes. The fact that the IRS went forward with Direct File without congressional authority to do so is fairly indicative of what their plans were in a broader perspective. So you package everything the Democrats did together, whether it was 1099-K changes, whether it was 87,000 IRS agents, whether it was Direct Files supercharging the IRS that has been having such a hard time with very fundamental customer service is especially problematic, and I would say, especially problematic for so many of my constituents, say farmers and ranchers, who are small businesses that are subjects with just the way they file their taxes and so forth, I think they would be in the crosshairs of what IRS would seek to do.
Washington Reporter:
You’ve you’ve said now and previously that the IRS never even had the authority to launch this program. So, how did it end up happening under Biden? And how do you ensure that Democratic administrations don’t abuse this authority to do something like this again?
Rep. Adrian Smith:
Well, they supposedly were going to do this little, small, targeted pilot project. It was supposed to just be a study to study feasibility and so forth. But the next thing we know, we had a launch of a much bigger program that even proved to be inefficient under its own measures.
Washington Reporter:
In July, you wrote to the IRS commissioner, asking the IRS to revoke this controversial revenue ruling that the Biden administration made that targeted taxpayers. Why was that something, as you think about the oversight that you were doing with IRS hiring, IRS political targeting, that stand out to you?
Rep. Adrian Smith:
In particular, you look back to the days of Lois Lerner and just the overall posture that the Democrats had with the IRS and I think it was problematic moving forward with their measures of nonprofits and so forth. It certainly begs a lot of questions, anytime the IRS seems to be invoking more authority.
Washington Reporter:
What do you make of the makeup of the IRS, where you do have these people making these rules who are highly partisan left wing actors?
Rep. Adrian Smith
A lot of it is like a newer version of Lois Lerner. Our tax filing process and involvement of the IRS needs to be more technologically based rather than personality based. As you point out, there are personalities that get involved. Lois Lerner was a personality back when she was aggressive in that capacity. And adding 87,000 new human beings without getting their technology right is an example of the expanded power and authority that is unwarranted. And going back to to the Clinton administration, where even Bill Clinton ascertained that the IRS was going too far, and he pulled them back because they were performing so many audits of innocent people, and it was getting out of hand, so even they dialed it back, I think that’s instructive of how we want to make sure there is good compliance, and I think we can do that with customer service and new technology. That has not been a priority during the Biden administration.
Washington Reporter:
This is my only shutdown-adjacent question; Democrats are currently furloughing hundreds of thousands of federal workers across the country, and yet, as you were mentioning in the previous administration, one of their top priorities in the federal government hiring space was this 87,000 new IRS employees. How is that hiring process going on right now?
Rep. Adrian Smith:
We reversed so much of that since they they did that with their IRA. But it shows how political their posture is for the shutdown right now. They fought so hard to add all these IRS personnel; there are multiple reasons for that, but they were trying to move the dials to say they were going to raise more revenue, but even when they had the resources to do it, they were not hiring at the rate that they needed to to even meet those numbers, even with the resources to do so.
Washington Reporter:
One of your bills was the first piece of legislation in the last Congress, the Family and Small Business Taxpayer Protection Act. A lot of it was folded into the Working Families Tax Cut. What do you want to focus on next in this space legislatively?
Rep. Adrian Smith:
We need an ongoing effort to monitor customer service to make sure that taxpayers’ questions are getting answered. I don’t think that small businesses are anxious to be audited, and they they would like to see a smooth process to get their questions answered and that’s a reasonable ask that they would have, and that’s something that we should be able to deliver on. And I am anxious to keep a close monitor of that.
Washington Reporter:
I want to end with Tuesday’s elections, and how you view them in Nebraska specifically, and then more broadly, whatever the thoughts you have. There are some indications that Democrats want to throw millions of dollars at Dan Osborn again for his Senate campaign. Do you think that that is a wise investment for them?
Rep. Adrian Smith:
I think it’s unwise. There was an article that just came out in the Lincoln paper about how he was channeling a bunch of campaign dollars to his wife. It shows that they opened a Wyoming LLC where you don’t have to disclose owners, and two days later, his wife got $50,000 from the campaign. It lists out the process there. But to your question, if Dan Osborn is inspired by Zohran Mamdani, which I imagine he is, then I think Nebraskans will not take kindly to that. And ultimately, Mr. Osborn is kind of trying to ride the fence on things rhetorically, and yet, we know what his leanings are. And I think that that’s becoming more apparent all the time.
Washington Reporter:
Do you have other thoughts on what this means for you and for other Nebraska Republicans in 2026, or do you not read into that much as far as looking in Nebraska specifically for next year?
Rep. Adrian Smith:
I don’t think there were any surprises Tuesday night. The Democratic nominee in New York City won the general. That’s no shocker. Virginia votes for Democrats statewide most of the time, anyway. Likewise, New Jersey. I think that the fact that any of those were a race is probably instructive across the board. We want to make sure that we are pushing policies out of Washington that are that growing the economy and growing opportunity at every turn.
Washington Reporter:
Congressman, thanks as always for chatting.