Iterative Improvement

As noted earlier, the Direct File team took an iterative approach to delivering Direct File and

continue to deploy updates to the product throughout the filing season. These updates

included additional functionality and enhancements based on pilot data as well as feedback

received from customer support and users. One of the best examples of this can be seen in

the use of last year’s adjusted gross income (AGI). To sign e-filed returns, MeF requires

taxpayers to verify their identity using either last year’s AGI or a five-digit “self-select PIN”

chosen when e-filing the prior year, as well as their date of birth. Filing options that have been

available for multiple years can persist information between years, but as a first-year product,

every taxpayer was using Direct File for the first time; Direct File had no prior-year information.

After early data revealed baseline reject rates

Figure 10. Percentage of submissions rejected for

incorrect last-year AGI or in excess of 18% for last-year AGI or self

incorrect last-year AGI or

self-select PIN select PIN, the Direct File user experience

design (UX) team began to look for

opportunities to better guide taxpayers to the

correct information, including by showing

information earlier in the flow, by improving

explanatory text, and by elevating the

prominence of links to the IRS Individual

Online Account (IOLA), which shows last

year’s AGI on the Tax Records tab. These

enhancements lowered the reject rate to

16.4%, a 10% improvement (see Figure 10).

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Late in the pilot, a small team embarked on a two-week sprint to see if this experience could

be further improved. As Direct File taxpayers are already authenticated into their IRS account,

they have access to all of the information in that account. Instead of asking taxpayers to visit

their account to copy and paste information into Direct File, could Direct File bring the

information in their IRS account to them? The results are shown in Figure 12, and this

improvement resulted in a further 25% improvement, a more

than one-third reduction in rejections from the baseline.

Notable also is how quickly this feature was implemented; it

was conceived on Monday, March 25 and shipped on Friday,

April 5, with all engineering, design, content, translation,

testing, and approvals occurring in that time, including close

collaboration between the Direct File and Online Account

teams. This approach to giving taxpayers access to the

information that the IRS knows about them and allowing them

to use that information to make it easier to file their returns is in

line with larger IRS strategic objectives. ¹⁵

Figure 11. A screen was updated to show last year’s

AGI if available in your IRS account and enable you

to copy that informaƟon to Direct File in one click.

Direct File could implement this improvement in less than two weeks because it already uses

the same IRS account as IOLA. But other filing options, including those provided by industry

partners, could also take advantage of these approaches in the future.

Opportunity: Sign returns without last year’s AGI

While the ability to access data from IOLA is a notable experience improvement, were Direct

File to continue in the future, it could take this experience one step further. Direct File is

assessed as an Identity Assurance Level 2 (IAL2) system under standards from the National

Institute of Standards and Technology (NIST). ¹⁶ This level of identity assurance is sufficient to

support current IRS e-Signature policy as specified in IRM 10.10.1. ¹⁷ Direct File could

leverage its existing identity assurances, and the Electronic Signature Storage and Retrieval

system (ESSAR), to completely deprecate knowledge-based authentication (KBA) on Direct

15 IRS. InflaƟon ReducƟon Act Strategic OperaƟng Plan. Page 30. htps://www.irs.gov/pub/irs-pdf/p3744.pdf

16 Grassi et al. NIST Special PublicaƟon 800-63-3: Digital IdenƟty Guidelines. htps://nvlpubs.nist.gov/nistpubs/SpecialPublicaƟons/NIST.SP.800-63-3.pdf

17 IRS. Internal Revenue Manual 10.10.1. IRS Electronic Signature (e-Signature) Program. htps://www.irs.gov/irm/part10/irm_10-010-001

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File. This would mean that taxpayers would no longer need to provide last year’s AGI or self select PIN to sign their return.

Some challenges remain to be solved, including how to avoid degrading the experience for

joint returns, which would need to authenticate both filers on the return, whereas today Direct

File only requires one filer to have an IRS Account. But there would be significant benefits,

including not only lowering the reject rate but also the information security benefits of an

approach to digital identity that is fully compliant with latest government-wide standards and

IRS policy.