×

Direct File advocacy has merit

During one of his past campaigns for the U.S. presidency, Donald Trump introduced the idea of simplifying federal income tax filing to the point where, for many taxpayers, filing could be accomplished by way of a postcard.

Probably to most taxpayers, that prospect seemed euphoric.

However, a simplification of that scope never came about although, during the Trump administration, some tax forms and publications were reworked with the goal of making filing easier for average and not-so-average taxpayers.

If the success of those changes ever was analyzed and graded, results of that evaluation never were accorded the degree of discussion that should have filtered down to the federal tax-paying public of all income levels. Therefore, all that taxpayers really know for sure now is that a postcard filing option never materialized.

Meanwhile, the Internal Revenue Service continues to be saddled with a heavy load of unprocessed amended tax returns going back to at least 2020 and, who knows, perhaps much farther.

But another change on the regular tax front was implemented for Tax Year 2023 returns — a very limited tax-filing change but an interesting one nonetheless, although it has been met with Republican opposition that is reasonable but perhaps premature.

What will happen regarding that change if Trump is elected to a second term in November must remain a matter of speculation for now, but it seems certain Democrats for now will be moving forward on behalf of the new filing option, based on the change’s Tax Year 2023 experience.

That experience is connected to the Direct File website, what the Wall Street Journal in late April characterized as the IRS’ “foray into online tax preparation.”

The IRS has declared the experiment a success, but agency officials have yet to indicate whether and/or how to expand Direct File for next year’s tax-filing season.

Taxpayers should pay attention to what might be forthcoming.

According to the April 27-28 Journal, the Direct File website processed more than 140,000 returns in the 12 states to which the website was limited — returns from taxpayers filing relatively simple returns.

Direct File was free for users and used a Q&A format like Intuit’s TurboTax and other private tax-software programs.

Of course, that 140,000-taxpayers figure was a pittance when stacked against the 19 million eligible taxpayers and the nation’s entire population. Still, it was a reasonable start to modernizing a government service, despite its shaky reception on the political front and its uncertain future.

The tax-preparation industry and Republicans in Congress contend that Direct File is unnecessary and duplicative of free public and private tax-preparation assistance and, thus, a waste of federal revenue. Still, an opinion expressed by Deputy Treasury Secretary Wally Adeyemo deserves to be heard.

“Direct File not only saved people money, saved people time, but helped people have a good experience with the IRS,” Adeyemo said.

IRS and related officials contend Direct File now has a good foundation and its designers understand how to add new forms and schedules.

The only certainty at this stage, though, is that Direct File filing won’t consist of a postcard alone, if it in fact survives the opposition that already is in place.

Starting at $2.99/week.

Subscribe Today Template