from the going-going-gone dept
For no less than 25 years now, Techdirt has been writing about how the tax preparation industry, especially Intuit, has spent gobs of money bribing lobbying government to keep relatively low-earners from simple methods for filing their tax returns. The series of posts you can find in that link, particularly those in the last 5-10 years, will give you an idea of just how shady and shitty these companies have been to the public.
The short version goes something like this: the IRS partnered with large private tax prep companies to provide free online tax prep software for people making less than a certain dollar amount in exchange for the government not creating its own system for doing so. That’s it. The IRS didn’t pay these companies for their services. They just promised not to compete with them.
Now, why would these companies enter into such an arrangement? Is it because they wanted to help out lower income folks by offering free services? No, silly rabbit, they wanted to trick the public into paying for what they agreed to provide for free! And that’s exactly what companies like Intuit did, notoriously hiding its free services in every way it could and pushing qualified free-to-file applicants instead into paid tax prep services. The end result was fines from the FTC, Intuit attempting to hide refunds for the services it tricked the public into buying, and the discovery that it was tricking American veterans in the same manner, all the tune of $1 billion in income for Intuit alone.
Partially as a result of all of that above bullshit trickery, the government altered its deal with the tax prep industry and began offering its own Direct File program. For simple filers, the IRS piloted Direct File in 12 states in 2024, prepopulating a return for those that enroll, all based on information that the IRS already has, and asking participants to review it and either agree or dispute the information. Most overwhelmingly agree and the program was reviewed as “excellent or above average” by north of 90% of participants, which is of course why Trump and Elon Musk, back when they were besties, decided to fold the part of the government working on the program.
And now, Direct File is officially dead. IRS Commissioner Billy Long, who took a break from government in 2023 to work sales for two tax advisory companies, has declared Direct File “gone” while saying he “doesn’t care” about the program.
President Donald Trump’s massive spending and policy bill includes funding to research and “replace any direct e-file programs run by the Internal Revenue Service.” Already, the program is “gone,” Long said at a tax professional summit on July 28, Bloomberg Law reports.
“You’ve heard of Direct File, that’s gone,” Long said. “Big beautiful Billy wiped that out. I don’t care about Direct File. I care about direct audit.”
“Commissioner Billy Long is committed to modernizing the IRS and providing a taxpayer experience that meets today’s expectations, which includes giving taxpayers transparency into the status of their tax returns and audits,” an IRS spokesperson told CNBC Make It in an emailed statement.
That modernization effort reportedly is to rewind the clock several years and put us right back to where we were: a partnership between the IRS and the tax prep industry to offer free file programs. Modernization apparently means doing the thing we used to do that didn’t work.
The IRS has another free filing program where the agency partners with third-party tax preparation software companies to provide services to taxpayers, although there are varying eligibility requirements, including adjusted gross income and state of residence. You can use the IRS’ questionnaire tool to find an applicable partner.
There is literally no reason for any of this. Complaints from the GOP about how the program costs too much are obviously silly. The IRS has this information and the program should largely reduce the need for IRS audits and the like, since filers using it are using the IRS’ information. Complaints about conflicts of interest are also dumb, as the IRS is already the enforcer of taxation and participants have the option to dispute the information the IRS has. None of this makes sense…
…until you view it as a gift to the tax industry that has been lobbying against this program for decades before its creation. That’s all this is, a gift to the companies that lobbied for a favor.
And while Intuit exited the Free File program years ago, I’d be willing to bet my next tax return that they jump right back in now that they know the grift is back on.
Filed Under: billy long, direct file, donald trump, free file, irs, taxes
Companies: intuit
