WASHINGTON — Many U.S. taxpayers in a dozen states for the first time can electronically file their federal returns directly to the Internal Revenue Service for free — but critics insist the new federal benefit is not needed and will even harm both users and states.
More than 50,000 taxpayers in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming have so far used the new online IRS Direct File program this tax season, according to the agency.
The free alternative to potentially costly private tax filing software rolled out in mid-March for the 2023 filing season. It is only available for those with W-2 income or simple credits and deductions, like the child tax credit or student loan interest.
The IRS estimates that 19 million taxpayers are eligible to use the new program in advance of the April 15 tax filing deadline.
But opponents argue the government Direct File program is a waste of resources and will snag business from professional tax preparers. They say it will confuse taxpayers who are accustomed to automatically filing their federal and state returns together through private software.
Some states also claim it will cost them revenue and increase what they have to spend on collections from taxpayers who owe money to their states.
The IRS program is purposefully small for now. The agency said in a launch-day release that it’s following “best practices for launching a new technology platform by starting small, making sure it works and then building from there.”
The pilot program “is almost tailor-made for students and young people with simple tax situations,” IRS Commissioner Danny Werfel said in late March, encouraging people to visit the new directfile.irs.gov.
The White House is celebrating the launch as a win for President Joe Biden, who in 2022 along with a Democratic-led Congress authorized its funding to jumpstart the…
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