IRS plans rollout of free e-file tax returns

WASHINGTON — The IRS plans to invite select taxpayers across 13 states to try out the agency’s pilot electronic free file tax return system beginning in January.

The agency estimates that hundreds of thousands of taxpayers will participate in the limited rollout of the program for the 2024 filing season.

The IRS faces intense blowback from private tax preparation companies that have made billions from charging people to use their software. The introduction of a government-run option could upend the industry and fundamentally change the way taxpayers interact with IRS.

All eyes are on the agency to get it right — and avoid a roll-out reminiscent of the disastrous healthcare.gov website rollout a decade ago, when many users encountered challenges accessing and using the website.

“The plan is to roll it out in increments that get larger and larger, consistent with how products like this are rolled out in the private sector,” IRS Commissioner Daniel Werfel said on a call with reporters previewing the latest details of the program.

“We want to make sure it is an easy to understand pilot” Werfel said. He added that the data pulled from the pilot will be “imperative” in determining the usefulness of the program.

The agency plans to work with nonprofits, congressional offices, states and others to identify taxpayers who are eligible for the pilot program, based on the types of income, tax credits and deductions that they claim.

Werfel said the pilot is meant to be “just another choice taxpayers have” to file their taxes. “Our work

to evaluate the feasibility of direct file is just one of many examples of how we’re working to transform the IRS.”

Derrick Plummer, an Intuit spokesman, said the program is “a solution in search of a problem, and that half-baked solution now has the potential to become a financial nightmare for tens of millions of Americans while unnecessarily costing billions of dollars for something free of charge today.”