IRS Introduces Free Tax-Filing Platform in Select U.S. States
The Internal Revenue Service (IRS) announced on Tuesday its plans to pilot a free electronic tax-filing system in 13 states early next year. This initiative is expected to attract hundreds of thousands of taxpayers during its initial phase.
Earlier this year, the IRS disclosed its intentions to create a free tax-filing tool, aiming to alleviate the financial burden on Americans who annually spend approximately $11 billion on tax-preparation services, including hiring accountants and other professionals to assist with their tax returns.
The first states selected for the rollout of the IRS's direct-filing platform include:
- Arizona
- California
- Massachusetts
- New York
Furthermore, residents from nine states that do not impose an income tax might also have the opportunity to join the pilot program. These states are:
- Alaska
- Florida
- New Hampshire
- Nevada
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
This initiative by the IRS is a result of the Inflation Reduction Act from the previous year. This act allocated $80 billion to the IRS and instructed the agency to explore the possibility of offering a free tax-filing system.
IRS Commissioner Daniel Werfel, while discussing the project's progress with reporters, mentioned the agency's strategy to gradually expand the program, mirroring the typical rollout approach seen in the private sector. He emphasized the pilot's design, stating, "We want to make sure it is an easy to understand pilot."
To identify eligible taxpayers for the pilot program, the IRS intends to collaborate with nonprofit organizations, congressional offices, states, and other entities. The criteria for eligibility will be based on the types of income, tax credits, and deductions claimed by taxpayers.
Werfel highlighted that this trial is intended to provide taxpayers with an additional option for filing their taxes. He remarked, “Our work to evaluate the feasibility of direct file is just one of many examples of how we're working to transform the IRS.”
