IRS Change Proposed In Senate Finance Bill
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
Republican Senators have proposed getting rid of two of the Internal Revenue Service's free tax filing programs, which allow millions of Americans to file their taxes free of charge.
The Senate Committee on Finance has unveiled its amendments to the One Big Beautiful Bill Act, which was approved by the House of Representatives in May. It includes a proposal to "terminate" the IRS Direct File, as well as investigating whether that and the Free File program could be replaced.
Why It Matters
The Associated Press reported earlier this year that the Trump administration plans to end the Direct File program, which is only in its second year.
In February, former Department of Government Efficiency head Elon Musk said he had "deleted" an arm of the General Services Administration, known as 18F, which helped build and run the program, as part of his sweeping cutbacks across federal agencies.
What To Know
IRS Direct File is available in 25 states and allows taxpayers with relatively simple tax returns to file without the need for a third party. According to the IRS, some 30 million taxpayers were eligible to use Direct File to file 2024 federal tax returns during the 2025 tax filing season.
Stock image/file photo: Internal Revenue Service sign at the IRS Building in Washington, DC in March 2018.
Stock image/file photo: Internal Revenue Service sign at the IRS Building in Washington, DC in March 2018.
GETTY
Free File helps taxpayers with adjusted gross income under $84,000 per year file federal income tax returns online using guided tax preparation software.
The proposals include a provision that would direct the Treasury Department to "terminate the current Direct File program at the IRS," as well as "author a
report evaluating the establishment of a public-private partnership between the IRS and private sector tax preparation services to offer free tax filing, potentially replacing both the existing Direct File and Free File programs."
Direct File has only been running for two years and was piloted in 12 states in 2024 for the 2023 tax season. The IRS described the initial launch as a success, with 140,803 taxpayers using it in its inaugural year and more than 3.3 million taxpayers across all states using the eligibility checker.
It was later expanded to 25 states for the 2024 season. No information is publicly available for how many used the service this year. Newsweek has contacted the IRS via email for the figures.
Democrats have previously expressed concerns over ending the program. A letter signed by approximately 200 lawmakers was sent to Treasury Secretary Scott Bessent in April of this year, requesting that the program be extended for the 2025 tax year.
While the program is designed to help lower tax preparation costs for Americans, it has attracted some criticism. In May 2024, Tania Mercado, spokesperson for TurboTax's parent company Intuit, told Newsweek that the program is "a solution in search of a problem and every American can already file their taxes for free, without any cost to the government or taxpayers."
What People Are Saying
Democratic lawmakers in their letter to Bessent: "Ending this free, easy-to-use, and popular program would be an insult to American taxpayers, eliminating an important alternative to commercial options provided by the tax prep industry."
Mercado, speaking to Newsweek in February 2024: "Direct File is not free tax preparation, but rather a thinly veiled scheme where billions of taxpayer dollars will be unnecessarily used to pay for something already completely free of charge today."
What Happens Next
No date has been given for when the termination of Direct File could begin. The Senate is looking to pass its amendments on the bill by Independence Day—July 4—at which point it would return to the House for a final vote before being signed by the president.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Boston Globe
36 minutes ago
- Boston Globe
Trump says Musk is ‘off the rails' with his third-party effort
Advertisement Their close bond crumbled in a public spectacle last month, as Trump pushed his sprawling domestic policy bill through Congress. Musk panned the legislation, which is projected to add trillions to the federal debt, as a 'disgusting abomination.' He has said he would support primary challengers against any Republican who voted for the legislation, which passed with almost unanimous Republican support, but he has given few details about his new political party. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up 'Backing a candidate for president is not out of the question, but the focus for the next 12 months is on the House and the Senate,' Musk wrote on his social platform X on Sunday. Trump has also threatened to cut billions of dollars in federal contracts and tax subsidies for Musk's companies. Advertisement Trump said Sunday night that Musk had opposed the legislation because it eliminated the electric vehicle mandate, which would have been a boon for Tesla, one of Musk's companies. 'I have campaigned on this for two years and, quite honestly, when Elon gave me his total and unquestioned Endorsement, I asked him whether or not he knew that I was going to terminate the EV Mandate -- It was in every speech I made, and in every conversation I had,' Trump wrote in his post. 'He said he had no problems with that -- I was very surprised!' Musk did previously support ending the electric vehicle tax credits, but has done an about-face more recently, as Tesla's sales have dropped this year. Trump also said that Musk was furious that the president had pulled the nomination of Jared Isaacman, who has twice launched into orbit in a SpaceX vehicle and is a close friend of Musk, to run NASA. Trump withdrew the nomination after a White House official highlighted for Trump that Isaacman had previously donated to prominent Democrats. Isaacman met with Trump during the transition and disclosed the donations before he was nominated. But as Trump's relationship with Musk was fracturing, a White House official resurfaced the donations, according to two people with knowledge of the matter. Trump, who also has not walled off his or his family's business interests from the government, offered another reason Sunday for pulling Isaacman's nomination. 'I also thought it inappropriate that a very close friend of Elon, who was in the Space Business, run NASA, when NASA is such a big part of Elon's corporate life,' Trump wrote. Treasury Secretary Scott Bessent said Sunday that the goals of Musk's past government cost-cutting effort, through the Department of Government Efficiency, were popular. But the billionaire himself, Bessent said, was not. Advertisement 'I believe that the boards of directors at his various companies wanted him to come back and run those companies, which he is better at than anyone,' he said on CNN on Sunday. 'So I imagine that those board of directors did not like this announcement yesterday and will be encouraging him to focus on his business activities, not his political activities.' This article originally appeared in
The Hill
38 minutes ago
- The Hill
Trump threatens additional tariffs on nations ‘aligning' with ‘anti-American' BRICS
President Trump threatened to impose an additional 10 percent tariff on countries 'aligning' themselves with the BRICS bloc of developing nations. 'Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy. Thank you for your attention to this matter!' Trump wrote in a Truth Social post Sunday evening. The threat comes after members of the BRICS group issued a declaration on Sunday condemning the U.S. increase in tariffs, as well as the strikes on Iran — all without mentioning Trump by name. The group's statement raised 'serious concerns' tariffs, saying they are 'inconsistent with WTO (World Trade Organization) rules' and threaten to 'reduce global trade, disrupt global supply chains, and introduce uncertainty.' The group also criticized NATO's decision to increase defense spending to 5 percent of GDP by 2035 — a decision prompted by Trump's insistence that Europe shoulder more of the alliance's defense burden. BRICS was founded by Brazil, Russia, India, China and South Africa, but the group last year expanded to include Indonesia, Iran, Egypt, Ethiopia and the United Arab Emirates. Brazil, which is hosting this year's two-day summit, has sought to avoid more controversial issues to avoid becoming the target of higher taxes. Trump has threatened to impose 100 percent tariffs against the bloc if they take any moves to undermine the dollar. Trump's 90-day pause on his sweeping reciprocal tariffs is set to expire on July 9. Treasury Secretary Scott Bessent has said the higher tariff rates will be imposed on Aug. 1 if countries do not strike trade deals with U.S. sooner. The Associated Press contributed.
Axios
44 minutes ago
- Axios
Trump issues 10% tariffs warning over BRICS policies
President Trump said Sunday night any country "aligning themselves with the Anti-American policies of BRICS" will be charged "an ADDITIONAL 10% Tariff" and there'll be "no exceptions to this policy." Why it matters: While Trump didn't elaborate further, BRICS issued a statement hours earlier saying the 11 nations-strong bloc that includes Brazil, Russia, India and China had "serious concerns about the rise of unilateral tariff and non-tariff measures which distort trade," which it said was "inconsistent with" World Trade Organization rules.
