logo
The One Big Beautiful Bill Act Didn't Kill IRS Direct File But It Sure Feels Like It

The One Big Beautiful Bill Act Didn't Kill IRS Direct File But It Sure Feels Like It

Forbes15-07-2025
NORTH HALEDON, NJ - APRIL 15: In this photo illustration, a 1040 U.S. Individual Income Tax Return document is seen on a desk on April 15, 2024 in North Haledon, New Jersey. (Photo illustration by) Getty Images
Direct File is officially dead—at least that's the sense coming out of the IRS at the moment. A recent IRS press release reminds taxpayers who requested an extension that 'IRS Free File makes it easy.'
That feels… innocuous, right? But the mention of Free File in the (very) brief 123-word press release, without referencing Direct File, which also remains open through October 15, 2025, suggests that the IRS is already ready to turn the page on the program.
Free File is an existing program offered as part of a public-private partnership between the IRS and Free File Inc., formerly the Free File Alliance. Through this partnership, tax preparation and filing software providers make their online products available to eligible taxpayers (as compared to Direct File, an IRS program).
Free File debuted in 2003, but not without controversy. It was developed to provide free e-filing services to most taxpayers, with the goal of helping the IRS meet the 80% e-file target established by the Restructuring and Reform Act of 1998.
At the time, many wondered why the federal government partnered with the private tax prep industry instead of creating its own software. In 2002, Treasury Secretary Paul O'Neill made it clear to then IRS Commissioner Charles Rossotti that the agency should partner with the private sector. As a result, the government entered into a memorandum of understanding pledging not to enter the tax return software and e-file services marketplace.
You'd assume taxpayers would flock to e-file for free. The e-file market did explode, but not necessarily for free services, leading to allegations that some providers were directing taxpayers to paid services. In 2019—the last year the Free File agreement was signed—up to 100 million taxpayers, or 70% of filers, were eligible to use Free File. The actual use was closer to 3%.
In 2016, then-Forbes staffer Sam Sharf wrote an account of how, despite qualifying to file for free, it cost her $118.64 to file her 2014 tax return with TurboTax. A few years later, ProPublica wrote a series of articles focusing on the lengths to which it claims tax software companies went—such as extensive lobbying and hiding free options—to get taxpayers to pay for services. In April 2019, ProPublica noted, "Intuit has changed the code on its Free File page so that the actually free version of TurboTax is no longer hidden from Google and other search engines." H&R Block was also accused of purposefully steering taxpayers away from free products.
The allegations created quite a stir—and resulted in litigation.
Today, tax preparation software companies are prohibited from hiding free filing services from Google or other search results pages. Additionally, if you can't file for free after visiting a company's Free File website, you must be able to return to the Free File website to find another offer. Each IRS Free File company must provide information when you don't qualify, with a link to the IRS.gov Free File site.
Following the changes, two traditional Free File participants, Intuit and H&R Block, opted out of the program. Eight private-sector Free File partners provided online guided tax software products in 2025: 1040.com, 1040Now, EzTaxReturn, FileYourTaxes.com, FreeTaxUSA, OnLine Taxes, TaxAct, and TaxSlayer. Direct File
The controversial Direct File program allows eligible taxpayers to file taxes directly with the IRS online for free. The word "controversial" is a nod to the fact that while the IRS touts the program as beneficial to taxpayers and says the initial feedback was overwhelmingly positive, some Republicans in Congress weren't happy with the program.
As part of the Inflation Reduction Act, Congress tasked the IRS with delivering a report on, among other things, the cost of developing and running a free direct e-file tax return system. The report was to include he costs to build and administer each release, with a focus on multi-lingual and mobile-friendly features and safeguards for taxpayer data. The IRS released the report to Congress in May 2023.
According to the report, most taxpayers surveyed by the agency had interest in using an IRS-provided tool to prepare and file their taxes. At the time, the IRS indicated it hoped to make that a reality for some taxpayers for the 2024 tax filing season.
When the tax filing season opened in January 2024, the IRS announced a limited-scope pilot of Direct File, which it claimed would allow the IRS to evaluate the costs, benefits, and operational challenges associated with providing the option to taxpayers. The pilot, the IRS claimed, was a success. The tax agency said that Direct File users reported a high degree of satisfaction and quick answers to their filing questions.
In a GSA Touchpoints survey of more than 11,000 Direct File users, 90% of respondents ranked their experience with Direct File as "Excellent" or "Above Average." Most survey respondents who filed taxes in the prior year reported having to pay to prepare their taxes last year. Among survey respondents, 47% of users paid to file their taxes last year, and 16% did not file last year at all. When asked what they particularly liked, respondents most commonly cited Direct File's ease of use, trustworthiness, and that it was free. According to the IRS, taxpayers filed—for free—to obtain more than $90 million in refunds and saved an estimated $5.6 million in filing costs.
(You can read what some taxpayers had to say to Forbes about their experiences here.)
After the first year, the Treasury Department declared that Direct File would be a permanent, free tax filing option. The IRS also expanded the program in 2025 to include more states and the ability to handle a wider range of income, credits, and deductions. 2025 Brought More Changes To Direct File
The free tax software program had been marked as safe for the 2025 season, with now-Treasury Secretary Scott Bessent committing to the program during his confirmation hearing. "I will commit that for this tax season … Direct File will be operative," Bessent said. However, less than 48 hours after the end of the regular tax filing season, reports flew that the program would be axed.
That was confirmed in May when the House version of what is now the One Big Beautiful Bill Act (OBBBA) included a provision to eliminate IRS Direct File. The original language directed Treasury to ensure that the IRS Direct File program has been "terminated" no later than 30 days after the bill became law. That bit didn't survive.
But OBBBA does include a provision creating a task force to deliver a report on the 'cost of enhancing and establishing public-private partnerships which provide for free tax filing for up to 70 percent of all taxpayers calculated by adjusted gross income, and to replace any direct e-file programs run by the Internal Revenue Service.' The task force is also tasked with taking the pulse of the public on 'opinions and preferences regarding a taxpayer-funded, government-run service or a free service provided by the private sector.' The amount of money earmarked is $15,000,000.
If you're feeling a bit of deja vu, you're not wrong. The Inflation Reduction Act of 2021—the law that led to the creation of Direct File—also established a task force to design a direct file tax return system. The task force was required to explore the "(I) the cost (including options for differential coverage based on taxpayer adjusted gross income and return complexity) of developing and running a free direct efile tax return system, including costs to build and administer each release, with a focus on multi-lingual and mobile-friendly features and safeguards for taxpayer data; (II) taxpayer opinions, expectations, and level of trust, based on surveys, for such a free direct efile system; and (III) the opinions of an independent third-party on the overall feasibility, approach, schedule, cost, organizational design, and Internal Revenue Service capacity to deliver such a direct efile tax return system." The cost? Also $15,000,000. Last Gasps From Congress
Not everyone is giving up on the program. U.S. Rep. Emilia Sykes (D-Ohio) has introduced legislation to not only save, but expand, the program. The legislation, called the 'Get Your Money Back Act,' would fully reinstate the Direct File program, while requiring states to opt in to the service.
'For many, the tax filing season can be time-consuming, expensive, and confusing, even though most taxpayers have relatively simple returns, which is why the Direct File program was both effective and popular,' said Sykes in a statement. 'Unfortunately, even before the Treasury Secretary ended the program, Ohioans weren't able to take advantage of this program because our state's government never opted in. My legislation would implement this successful program nationwide, improving everyone's experience with tax season.'
Sykes officially introduced the legislation on June 30, 2025. It has since been referred to the House Committee on Ways and Means. There has been no additional action to date. Forbes Trump Administration Will Reportedly Nix IRS Direct File, Eliminating The Free Tax Filing Option By Kelly Phillips Erb Forbes House Tax Plan Would Kill Direct File And Rescue Controversial Contingency Fees By Kelly Phillips Erb Forbes IRS Announces Direct File Program Will Be Available In Twice As Many States In 2025 By Kelly Phillips Erb
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

NFL players, employees fined for selling Super Bowl tickets: reports
NFL players, employees fined for selling Super Bowl tickets: reports

Yahoo

time7 minutes ago

  • Yahoo

NFL players, employees fined for selling Super Bowl tickets: reports

More than 100 NFL players and dozens of club employees are to be fined or suspended for selling their allocations of tickets for this year's Super Bowl on secondary markets, US media reported on Friday. ESPN reported that players who sold allotted tickets will be fined one-and-a-half times the face value of the tickets sold and be barred from receiving tickets to the next two editions of the Super Bowl. Players amongst those caught will be given the option of purchasing tickets if their team reaches the Super Bowl in 2026 or 2027. Players who decline to pay the fines face being suspended, ESPN cited league and union sources as saying. ESPN quoted an NFL memo sent to teams which said employees and players had sold tickets to "bundlers" working with a ticket resale site. Tickets to the Super Bowl are consistently one of the hottest -- and most expensive -- tickets in North American sport, fetching as much as $10,000 on resale sites. "Our initial investigation has determined that a number of NFL players and coaches, employed by several NFL Clubs, sold Super Bowl tickets for more than the ticket's face value in violation of the policy," NFL chief compliance officer Sabrina Perel wrote in the memo. Perel cited "long-standing league policy" which "prohibits League or club employees, including players, from selling NFL game tickets acquired from their employer for more than the ticket's face value or for an amount greater than the employee originally paid for the ticket, whichever is less." Perel added that the league will enhance mandatory training before Super Bowl LX for all league personnel to emphasize the rules and "the broader principle that no one should profit personally from their NFL affiliation at the expense of our fans." The league, meanwhile, also planned to improve training to avoid a repeat, with the possibility of stiffer sanctions for future offenses. "No one should profit personally from their NFL affiliation at the expense of our fans," Perel wrote in the memo. rcw/js

Meta Clashes With Apple, Google Over Age Check Legislation
Meta Clashes With Apple, Google Over Age Check Legislation

Yahoo

time7 minutes ago

  • Yahoo

Meta Clashes With Apple, Google Over Age Check Legislation

(Bloomberg) -- The biggest tech companies are warring over who's responsible for children's safety online, with billions of dollars in fines on the line as states rapidly pass conflicting laws requiring companies to verify users' ages. Trump Awards $1.26 Billion Contract to Build Biggest Immigrant Detention Center in US The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Can This Bridge Ease the Troubled US-Canadian Relationship? Salt Lake City Turns Winter Olympic Bid Into Statewide Bond Boom Trump Administration Sues NYC Over Sanctuary City Policy The struggle has pitted Meta Platforms Inc. and other app developers against Apple Inc. and Alphabet Inc.'s Google, the world's largest app stores. Lobbyists for both sides are moving from state to state, working to water down or redirect the legislation to minimize their clients' risks. This year alone, at least three states — Utah, Texas and Louisiana — passed legislation requiring tech companies to authenticate users' ages, secure parental consent for anyone under 18 and ensure minors are protected from potentially harmful digital experiences. Now, lobbyists for all three companies are flooding into South Carolina and Ohio, the next possible states to consider such legislation. The debate has taken on new importance after the Supreme Court this summer ruled age verification laws are constitutional in some instances. A tech group on Wednesday petitioned the Supreme Court to block a social media age verification law in Mississippi, teeing up a highly consequential decision in the next few weeks. Child advocates say holding tech companies responsible for verifying the ages of their users is key to creating a safer online experience for minors. Parents and advocates have alleged the social media platforms funnel children into unsafe and toxic online spaces, exposing young people to harmful content about self harm, eating disorders, drug abuse and more. Blame Game Meta supporters argue the app stores should be responsible for figuring out whether minors are accessing inappropriate content, comparing the app store to a liquor store that checks patrons' IDs. Apple and Google, meanwhile, argue age verification laws violate children's privacy and argue the individual apps are better-positioned to do age checks. Apple said it's more accurate to describe the app store as a mall and Meta as the liquor store. The three new state laws put the responsibility on app stores, signaling Meta's arguments are gaining traction. The company lobbied in support of the Utah and Louisiana laws putting the onus on Apple and Google for tracking their users' ages. Similar Meta-backed proposals have been introduced in 20 states. Federal legislation proposed by Republican Senator Mike Lee of Utah would hold the app stores accountable for verifying users' ages. Still, Meta's track record in its state campaigns is mixed. At least eight states have passed laws since 2024 forcing social media platforms to verify users' ages and protect minors online. Apple and Google have mobilized dozens of lobbyists across those states to argue that Meta is shirking responsibility for protecting children. 'We see the legislation being pushed by Meta as an effort to offload their own responsibilities to keep kids safe,' said Google spokesperson Danielle Cohen. 'These proposals introduce new risks to the privacy of minors, without actually addressing the harms that are inspiring lawmakers to act.' Meta spokesperson Rachel Holland countered that the company is supporting the approach favored by parents who want to keep their children safe online. 'Parents want a one-stop-shop to oversee their teen's online lives and 80% of American parents and bipartisan lawmakers across 20 states and the federal government agree that app stores are best positioned to provide this,' Holland said. As the regulation patchwork continues to take shape, the companies have each taken voluntary steps to protect children online. Meta has implemented new protections to restrict teens from accessing 'sensitive' content, like posts related to suicide, self-harm and eating disorders. Apple created 'Child Accounts,' which give parents more control over their children's' online activity. At Apple, spokesperson Peter Ajemian said it 'soon will release our new age assurance feature that empowers parents to share their child's age range with apps without disclosing sensitive information.' Splintered Groups As the lobbying battle over age verification heats up, influential big tech groups are splintering and new ones emerging. Meta last year left Chamber of Progress, a liberal-leaning tech group that counts Apple and Google as members. Since then, the chamber, which is led by a former Google lobbyist and brands itself as the Democratic-aligned voice for the tech industry, has grown more aggressive in its advocacy against all age verification bills. 'I understand the temptation within a company to try to redirect policymakers towards the company's rivals, but ultimately most legislators don't want to intervene in a squabble between big tech giants,' said Chamber of Progress CEO Adam Kovacevich. Meta tried unsuccessfully to convince another major tech trade group, the Computer & Communications Industry Association, to stop working against bills Meta supports, two people familiar with the dynamics said. Meta, a CCIA member, acknowledged it doesn't always agree with the association. Meta is also still a member of NetChoice, which opposes all age verification laws no matter who's responsible. The group currently has 10 active lawsuits on the matter, including battling some of Meta's preferred laws. The disagreements have prompted some of the companies to form entirely new lobbying outfits. Meta in April teamed up with Spotify Technology SA and Match Group Inc. to launch a coalition aimed at taking on Apple and Google, including over the issue of age verification. Competing Campaigns Meta is also helping to fund the Digital Childhood Alliance, a coalition of conservative groups leading efforts to pass app-store age verification, according to three people familiar with the funding. Neither the Digital Childhood Alliance nor Meta responded directly to questions about whether Meta is funding the group. But Meta said it has collaborated with Digital Childhood Alliance. The group's executive director, Casey Stefanski, said it includes more than 100 organizations and child safety advocates who are pushing for more legislation that puts responsibility on the app stores. Stefanski said the Digital Childhood Alliance has met with Google 'several times' to share their concerns about the app store in recent months. The App Association, a group backed by Apple, has been running ads in Texas, Alabama, Louisiana and Ohio arguing that the app store age verification bills are backed by porn websites and companies. The adult entertainment industry's main lobby said it is not pushing for the bills; pornography is mostly banned from app stores. 'This one-size fits all approach is built to solve problems social media platforms have with their systems while making our members, small tech companies and app developers, collateral damage,' said App Association spokesperson Jack Fleming. In South Carolina and Ohio, there are competing proposals placing different levels of responsibility on the app stores and developers. That could end with more stringent legislation that makes neither side happy. 'When big tech acts as a monolith, that's when things die,' said Joel Thayer, a supporter of the app store age verification bills. 'But when they start breaking up that concentration of influence, all the sudden good things start happening because the reality is, these guys are just a hair's breath away from eating each other alive.' (Updates with App Association statement in 24th paragraph.) Burning Man Is Burning Through Cash Confessions of a Laptop Farmer: How an American Helped North Korea's Wild Remote Worker Scheme It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Elon Musk's Empire Is Creaking Under the Strain of Elon Musk A Rebel Army Is Building a Rare-Earth Empire on China's Border ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

MLB trade deadline: Eugenio Suárez, Mitch Keller, Seth Lugo among prized players who could move
MLB trade deadline: Eugenio Suárez, Mitch Keller, Seth Lugo among prized players who could move

Yahoo

time7 minutes ago

  • Yahoo

MLB trade deadline: Eugenio Suárez, Mitch Keller, Seth Lugo among prized players who could move

PHOENIX (AP) — The Arizona Diamondbacks got the trade deadline party started on Thursday night when they dealt 2024 All-Star Josh Naylor to the Seattle Mariners for two pitching prospects. That probably won't be the last time the D-backs make news before the July 31 deadline. Arizona has had a disappointing season with a 50-53 record and now appears to be one of the most active sellers on the MLB market, dangling third baseman Eugenio Suárez and starting pitchers Zac Gallen and Merrill Kelly. The potential buyers include teams like the New York Yankees, New York Mets, Detroit Tigers, Philadelphia Phillies, Chicago Cubs and Los Angeles Dodgers, who are all trying to beef up their rosters in hopes of a deep playoff run. The market is heating up quickly: The Yankees acquired third baseman Ryan McMahon from the Rockies on Friday while the Mets added left-handed reliever Gregory Soto from the Orioles. The D-backs have been one of the most intriguing teams in baseball over the past few weeks because management has had to make a tough decision whether to buy or sell. Arizona had a 50-50 record after sweeping the St. Louis Cardinals following the All-Star break but were then swept by the Houston Astros. Those three losses appeared to seal their fate as sellers — though Arizona general manager Mike Hazen said he's still open to changing course. 'I want to see this team to continue to go out there and play,' Hazen said. 'I haven't decided what it's going to look like, honestly. I'm open-minded to a number of different things. ... Quite frankly, we're listening to what people have to say and what people have to offer and we're going to do what's best for the long term for this organization.' Naylor's already gone and he'll help a Seattle lineup that could use a little more punch. Suárez is having one of the best seasons of his career, slugging 36 homers over 101 games, and is arguably the best bat on the market. Here's a look at some of the top players who could be available as teams try to upgrade for the stretch run: Eugenio Suárez, 3B, Arizona Diamondbacks Suarez is just an average defensive third baseman these days, but that's not why teams want to acquire him. He's got the kind of bat that can carry a team for weeks at a time, major pop from the right side of the plate. He has 312 career homers, is well-liked in the locker room and has been productive in limited postseason at-bats with a .300 average. Mitch Keller, SP, Pittsburgh Pirates The 29-year-old Keller has been overshadowed in the Pirates' rotation thanks to the emergence of young star Paul Skenes, but the right-hander has been a reliable starter for the past four seasons and was an All-Star in 2023. The one catch is it'll take a sizable haul for the Pirates to make a deal: He's under contract through 2028 as part of a relatively reasonable $77 million, five-year deal. Seth Lugo, SP, Kansas City Royals Lugo has thrived in Kanas City over the past three seasons, moving to the starting rotation from the bullpen and providing consistent results. The 2024 All-Star has a 7-5 record with a 2.95 ERA over 19 starts this year. Zac Gallen, SP, Arizona Diamondbacks Gallen is having the worst full season of his career with a 7-11 record and 5.58 ERA but could still be an attractive add for a team that needs a starter. The 29-year-old right-hander has been one of the top pitchers in the National League over the past five years, finishing in the top 10 of the Cy Young voting in 2020, 2022 and 2023. His stuff is still good and he's had a handful of dominant starts this season. Merrill Kelly, SP, Arizona Diamondbacks The 36-year-old righty has quietly been one of the most consistent pitchers in baseball with a 9-5 record and 3.32 ERA. He was also excellent during the D-backs' postseason run in 2023 with a 3-1 record, 2.25 ERA and 28 strikeouts over 24 innings. Kelly doesn't have an overpowering fastball but has a five-pitch mix that has consistently delivered results. Sandy Alcantara, SP, Miami Marlins The 29-year-old Alcantara isn't the same pitcher he was when he won the 2022 NL Cy Young Award, but the right-hander still has quite a bit of upside. He gave up just one unearned run over seven innings in a win against the Padres on Wednesday, which might help his value. His rotation partner Edward Cabrera — another right-hander — could also garner attention with a 3.48 ERA over 17 starts. Ryan O'Hearn, 1B/DH, Baltimore Orioles The 31-year-old is having a career year with a .281 average, .375 on-base percentage and 14 homers, helping him earn All-Star honors for the first time in his career. His left-handed bat would be useful in a contender's lineup. ___ AP MLB:

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store