SCOOP: Five takeaways from Treasury's "costly catastrophe" experiment with Direct File
Why the IRS's Direct File is "another reminder that progressives fail at everything they do."
A new Treasury Department report gives credence to what conservative leaders like Sen. Tom Cotton (R., Ark.) said all along: President Joe Biden’s IRS “Direct File” experiment was costly and failed to deliver on its promises. Here are five takeaways from Treasury’s report that was made public yesterday:
1. 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.
2. The cost was massive: The IRS spent at least $225 per return in its first year and $138 per return in 2024. And the Treasury report suggests the real cost, counting for all personnel time, may be magnitudes higher than this. For comparison, taxpayers have plenty of free options to file their taxes today. Ironically enough, taxpayers will likely see higher taxes in the future to pay for the failed Direct File program.
3. Most people were ineligible: Despite all the hype, most Americans couldn’t use the program. Anyone who was self-employed or who itemized deductions was ineligible for Direct File, meaning it only worked for the simplest returns.
4. It was unpopular: Treasury took a poll and only 19 percent of taxpayers had heard of Direct File. The poll did not ask whether respondents hated the IRS power grab but we suspect if they did, many Americans would have said they do not want the IRS to act as preparer and auditor.
5. No one needs this: The IRS already partners with companies through the Free File Alliance — a program that costs taxpayers less and serves more people.
A Senate source told the Washington Reporter that their “boss opposed the program because it is a conflict of interest. The IRS wants more of your money. You shouldn’t trust it to be your tax preparer. But this report shows the program was a bigger trainwreck than we could have imagined. What on earth was the IRS thinking putting billions of dollars into this costly catastrophe? This is worse than [Biden Secretary of Transportation] Pete Buttigieg’s electric charging fiasco. This is another reminder that progressives fail at everything they do.”