Message from the Commissioner of the IRS

The conclusion of the 2024 tax filing season marks the closure of the Direct File pilot, a year long effort to study the interest in — and feasibility of — creating a direct e-filing system as a

new option for taxpayers to file federal income tax returns. Direct File is an important part of

our effort to meet taxpayers where they are, give them choices as to what best meets their

needs when interacting with the IRS, or otherwise meet their tax obligations as easily and

quickly as possible. And it is a key component of our modernization efforts, which were

detailed in our recently released annual update to our Strategic Operating Plan.

Here’s how we got to this point. As mandated by the Inflation Reduction Act, the IRS delivered

a Direct File Report to Congress in May 2023 that found broad interest in a tool to

electronically file taxes directly with the IRS.

Shortly after that report, as directed by the Treasury Department, we worked to answer

whether a direct e-filing option is feasible. We assembled a team of some of the smartest and

most experienced tax experts, digital product specialists, engineers, pilot strategists, and data

scientists from across the federal government. They studied the challenges, met with tax

officials from dozens of states, and designed a pilot for a system that is secure, accurate, easy

to use — and free. The Direct File platform used this filing season contained more than 350

screens. Under the hood were more than 1,000 “facts” representing information about the

filer’s tax situation.

By design, the Direct File Pilot started out gradually to allow the team to test the new system.

In February, we began testing Direct File with a handful of volunteer federal and state

government employees. The team continuously refined and strengthened the system based

on its technical performance and feedback from its first users. Over several weeks, we

incrementally opened the system to new users in short availability windows before fully

launching Direct File on March 8 ^th .

Throughout this filing season, we saw strong interest in Direct File from taxpayers throughout

the country. Millions of people – including many from outside of the 12 pilot states – visited the

Direct File website to learn about the new system. Over the course of the pilot, more than 3.3

million taxpayers started the Eligibility Checker to see if they could use Direct File; 423,450

taxpayers logged into Direct File; and 140,803 taxpayers submitted accepted returns. In cases

where a user’s tax situation was out of scope for the pilot, they were directed to other options

to complete their tax returns. Direct File issued more than $90 million in tax refunds and

collected $35 million in tax balances due.

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Overall, usage was in line with our expectations for the limited pilot, and it far exceeded what

was necessary to provide sufficient data to evaluate. In the filing season’s final weeks, the

percent growth in accepted returns submitted through the Direct File system outpaced the

growth in total returns accepted by the IRS across all platforms. During the final week, more

than 5,000 taxpayers submitted returns each day using Direct File, and the system stood up

well under the high-volume push of the tax season’s final days.

A key aspect of the pilot was learning more about what taxpayers expect from this kind of

system. More than 15,000 Direct File users participated in the General Services

Administration’s Touchpoints survey, which collects comprehensive user feedback about

government systems. In the GSA Touchpoints survey about Direct File:

• 90% of respondents ranked their experience as Excellent or Above Average.

• When asked what they particularly liked, respondents most commonly cited Direct

File’s ease of use, trustworthiness, and that it was free.

• Additionally, 86% of respondents said that their experience with Direct File increased

their trust in the IRS.

• 90% of survey respondents who used customer support rated that experience as

Excellent or Above Average.

Direct File’s users told us that the system saved them time — filing their taxes with Direct File

generally took less than an hour, and many reported filing in as little as 30 minutes. One

taxpayer even said it was fun. Nearly half of Direct File users reported paying for tax

preparation last year, and the Treasury Department estimates that Direct File users saved $5.6

million in tax preparation fees. More than 4% of Direct File users report filing on paper last

year; one lesson we will focus on is how to ease the transition from paper to electronic filing.

The cost to develop the Direct File pilot came in much lower than initial estimates. Through the

end of the pilot, the total amount spent by IRS was $24.6 million, including the Report to

Congress. Direct File’s operational costs — including customer service, cloud computing and

user authentication — were just $2.4 million. To build and run the pilot, the IRS also engaged

the U.S. Digital Service (USDS). The IRS’s agreement with the U.S. Digital Service does not

involve costs to IRS.

The IRS has already learned a lot from the Direct File experience. The first big decision we

made was to start small and get it right, focusing on what I call executional certainty. We found

the right first step to test the demand and the user experience and make a strong product. By

sizing this correctly, we were able to be more agile and launch something that we can all learn

from.

The second big decision we made was to take the time to get it right. The filing season started

on January 29 ^th, but we waited to test the product thoroughly and incrementally roll it out to

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more users to focus on the taxpayer experience. As I noted in a recent hearing in the U.S.

Senate, our goal above all was not to maximize the number of users, but to engage enough

users to test the product thoroughly. The results demonstrate that not only is a high performing

Direct File option feasible, but that a critical success factor for when the government rolls out

new technology is to start small and scale from there.

This report examines the Direct File pilot in greater detail: the pilot itself, the technology and

taxpayer experience, Direct File’s innovative customer support system, integration with state

tax systems, and the cost and benefits of the pilot. While the IRS has not made a decision

about the future of Direct File, this report captures lessons from our initial analysis of the pilot’s

data. We have labeled these lessons opportunities, because they will help to both improve the

tax filing ecosystem and inform the decision about Direct File’s future. We anticipate making a

decision about the future of Direct File later this Spring.

Finally, this effort was not done by the IRS alone. We worked closely with partners from the

U.S. Digital Service and GSA’s 18F, as well as private sector partners, who all brought critical

agile technology expertise. They worked side by side in a team room at IRS headquarters,

which was inspiring to visit and see the energy, excitement, and different parts of the

government working closely together.

I want to thank everyone who worked incredibly hard over the past year to design, build, and

operate Direct File. I especially want to thank the taxpayers who took a chance to try a new

system and give us critical feedback that will — regardless of any future decisions — help us

better serve taxpayers in the years ahead.

Daniel I. Werfel

Commissioner of Internal Revenue

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