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IRS Will Test Government-run Free File System in 2024

IRS Commissioner Danny Werfel said the agency has developed a prototype
of an online tax filing system it will pilot in 2024. IRS Commissioner
Danny Werfel said the agency has developed a prototype of an online tax
filing system it will pilot in 2024.

IRS Commissioner Danny Werfel said the agency has developed a prototype
of an online tax filing system it will pilot in 2024. Kent Nishimura /
Getty Images
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By [51]Adam Mazmanian
| May 17, 2023

The move could presage the large-scale deployment of free,
government-furnished online tax prep services.

* [52]Treasury

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The IRS announced plans on Tuesday to test a free, government-owned
online system for taxpayers to file tax returns directly with the
government.

The news coincided with the public release of a
[53]congressionally-mandated report on the viability of a free file
system that was included in the Inflation Reduction Act.

According to a survey included in the report, 73% of the public is
interested in a free, IRS-provided tax filing system.

The U.S. Digital Service collaborated with the IRS on a prototype of an
online direct tax filing system, IRS Commissioner Danny Werfel told
reporters on a press call. Werfel said the tool was mobile-friendly and
multilingual and contained basic functionality but didn't operate on
actual tax data or interface with IRS systems.

News of the prototype was first reported on Monday by the Washington
Post and the Wall Street Journal.

"Taxpayers interacted directly with the prototype in controlled
usability testing sessions, providing the IRS with insight into whether
the experience of such an IRS-provided tool would meet taxpayer
expectations," Werfel told reporters on Tuesday.

The planned pilot program for the 2024 tax year is still in the early
stages of development. Werfel said details on how the IRS planned to
identify and communicate with potential pilot program participants were
still to be determined. Werfel added that he did not expect the pilot
to include advanced functionality like pre-population of taxpayer
information or pre-determinations of taxpayer obligations.

Related articles

[54]IRS free file figures into Senate Dems' reconciliation bill

[55]'Taxpayer Advocate' pushes for IRS to make its own free, direct
e-file system

[56]IRS outlines tech modernization, CX plans as part of $80 billion
overhaul

Werfel said the IRS authority to field such a program is covered under
its mission to provide assistance and advice to taxpayers, and is on
par with Taxpayer Assistance Centers and telephone return programs.

"If there are questions by members of Congress or oversight entities
that believe that this situation is fundamentally different…then we
want to hear from them and understand what their concerns are," Werfel
said.

Werfel also said that the testing of the direct free-file system won't
immediately disrupt the existing Free File system, supplied by
commercial tax prep companies in partnership with the tax agency.
Werfel noted on the press call that the current program has been
extended via a new memorandum of understanding through the 2025 tax
year. Under previous iterations of the IRS collaboration with the Free
File Alliance, the tax agency agreed not to extend government-supplied
tax prep software to filers.

Werfel also told reporters that the agency's mixed record on delivering
on big IT projects is related to funding uncertainty. The $80 billion
of multi-year money included in the Inflation Reduction Act includes
support for technology modernization.

"Year to year sometimes we get the funding we expected. Sometimes we
find ourselves in a continuing resolution. Sometimes the funding is
zeroed out. And that can destabilize an effort to meet cost, schedule
and performance of the technology advancements," Werfel said.

FCW staff writer Natalie Alms contributed reporting to this story.
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