LAS VEGAS (KTNV) — The Internal Revenue Service is evaluating the future of a pilot program, which the agency says helped over 4,000 Nevadans file their taxes for free this year.
As mandated by the Inflation Reduction Act, the IRS delivered a report to Congress in May 2023 that found there was broad interest in a tool to electronically file taxes directly with the IRS. Shortly after that, the IRS looked at ways to create a direct e-filing option. That led to the creation of the Direct File Pilot program.
The program was available for 13 states this tax season, including Nevada and California.
According to the IRS, more than 3.3 million taxpayers started the eligibility checker to see if they could use the program, 423,450 taxpayers logged into Direct File, and 140,803 taxpayers submitted accepted returns. You can see that breakdown below.
Of those returns, the agency states they issued more than $90 million in tax refunds and collected $35 million in tax balances due. The Treasury Department estimates that Direct File users saved $5.6 million in tax preparation fees.
"Overall, usage was in line with our expectations for the limited pilot, and it far exceeded what was necessary to provide sufficient data to evaluate," an agency report states in part. "During the final week, more than 5,000 taxpayers submitted returns each day using Direct File, and the system stood up well under the high-volume push of the tax season's final days."
In the past, tax preparation companies said a pilot program like this isn't needed because free tax prep services already exist and that the cost of operations would be high.
However, according to the IRS, the cost to develop the program came in "much lower than initial estimates".
"Through the end of the pilot, the total amount spent by IRS was $24.6 million, including the Report to Congress. Direct File's operational costs — including customer service, cloud computing and user authentication — were just $2.4 million," the report states.
IRS officials state they're going through all of the data compiled during the pilot program to determine whether or not Direct File will be available in the future and they expect to make a final decision later this year.
