The Biden administration announced Friday that its first-of-its-kind free tax filing website came in under budget and earned high marks from users, and that officials will decide this spring whether to renew the experimental program for another tax season.
The software, which resembles commercial offerings from companies like Intuit and H&R Block, allows taxpayers to file directly to the government free.
Experts say a nationwide rollout could someday disrupt the multibillion-dollar tax preparation industry; Americans spend more than $200 a year, on average, to file a return using software or a tax preparer.
On Friday, IRS commissioner Danny Werfel said that 140,803 households completed their tax returns using the new Direct File software which was available partway through tax season in 12 states and only to people with limited types of income and tax circumstances.
Tax prep companies and Republicans in Congress and statehouses have been fiercely critical of the Direct File program.
The IRS spent $10.5 million to develop the site and $2.4 million to run it during tax season, which would amount to just $17 in operating costs per tax return processed, or $92 in total costs per filing.
The agency also spent more than an additional $10 million for an initial study and report to Congress on the idea of a free filing site. »
