The Direct File Act would reverse Trump Administration decision to cancel Direct File, which was very successful when introduced
WASHINGTON — Today, U.S. Senators John Hickenlooper and Michael Bennet, along with 153 of their colleagues, introduced the Direct File Act. This legislation would reverse the Trump Administration’s decision to end the highly successful Direct File program. Before being canceled, the program allowed taxpayers to file their taxes online, for free, and directly with the government. This bill would resume the Direct File program and make it permanent.
“Returning to Direct File will make filing taxes free and easy for millions of Americans,” said Hickenlooper. “Getting rid of Direct File puts working people last.”
“The Direct File Act will ensure easy, quick, and free tax filing services remain available to Coloradans,” said Bennet. “President Trump’s decision to end this critical program comes at the expense of taxpayers across the country and only succeeds in increasing costs for Americans. Coloradans deserve a modern tax filing experience, and this legislation will ensure that this program is made permanent.”
The average American taxpayer spends eight hours and $160 each year filing their taxes with tax prep companies. In 2024, the IRS launched Direct File to save families time and money. 94% of users described their experience as “excellent” or “above average,” and more than 70% of taxpayers said they would use Direct File if they were eligible. If fully implemented, Direct File was expected to save families up to $23 billion annually in fees, time, and tax credits.
However, the Trump Administration ended the program after extensive lobbying efforts by tax companies. This decision contradicts recommendations from the independent Government Accountability Office and Treasury Inspector General for Tax Administration. By ending this program, the Trump Administration raises costs for Americans and makes the tax filing experience even more challenging.
This bill would direct the IRS to establish and operate a free online tax preparation and filing program, the Direct File Act would also :
- Prohibit the IRS from entering into agreements that restrict its ability to provide free online tax preparation or filing services.
- Direct the IRS to publish an annual report on use levels, patterns of usage, and ways to improve access to Direct File.
- Direct the IRS to enable seamless integration between state tax filing systems and Direct File, including through information sharing and a new grant program for states.
- Reduce tax fraud by getting third-party income information to the IRS earlier in the tax season, allowing the agency to verify this information before issuing refunds.
“A free, direct e-filing tax return system is a fundamental taxpayer right,” said Nina Olson, Executive Director of the Center for Taxpayer Rights and former National Taxpayer Advocate. “Just as the government designs and printed paper tax forms for years, so should it design and maintain a user-friendly electronic filing option for individual taxpayers.”
“Americans across the country are struggling with high costs and having trouble making ends meet, so it’s especially frustrating that we no longer have the option to use the free Direct File online filing software developed by the IRS,” said Susan Harley, managing director of Public Citizen’s Congress Watch division. “The Direct File Act would put back in place this commonsense cost saving option for filers and once and for all ensure that corporations aren’t allowed to keep their stranglehold on tax filing. Public Citizen and our partners applaud Senator Warren, Representative Sherman, and their colleagues for their leadership on this critical issue.”
The bill is endorsed by 115 unions, advocacy groups, and national organizations, including Public Citizen, Americans for Tax Fairness, Economic Security Project Action, Groundwork Collaborative, AFL-CIO, American Federation of Teachers (AFT), American Federation of State, County and Municipal Employees (AFSCME), Service Employees International Union (SEIU), Communications Workers of America, Americans for Financial Reform, National Consumer Law Center (on behalf of its low-income clients), Center for Law and Social Policy (CLASP), Main Street Alliance, Institute on Taxation and Economic Policy, P Street, Patriotic Millionaires, Institute for Policy Studies – Program on Inequality, MoveOn, UnidosUS, 20/20 Vision, Advancing CT Together, Alliance for Retired Americans, Allons Babies, Americans for Democratic Action (ADA), Colorado Consumer Health Initiative, Colorado Fiscal Institute, Community Change Action, Demand Progress, Fair Share America, Financial Empowerment Network, Futures Without Violence, In the Public Interest, Income Movement, Jobs with Justice, LIFT Inc, MakingChange, Inc, Meals4Families, Mothers Outreach Network, My Money Story, National Association of Social Workers, National Coalition for Asian Pacific American Community Development, National Committee to Preserve Social Security and Medicare, National Organization for Women, National Rural Social Work Caucus, NETWORK Lobby for Catholic Social Justice, Oxfam America, Public Good Law Center, RootsAction, SiX Action, Social Work Grand Challenge to Reduce Extreme Economic Inequality, State Innovation Exchange, Strong Economy For All Coalition, The Arc of the United States, Touch Stones Financial Wellness Services, Unitarian Universalists for Social Justice, United for a Fair Economy, United for Respect, = Vesta Prosperity, Voices for Progress, Women Employed, and Young Invincibles.
In addition to Bennet, Hickenlooper, Warren, Coons, and Wyden, 36 Senators cosponsored the legislation, including: Minority Leader Chuck Schumer (D-N.Y.), Senators Angela Alsobrooks (D-Md.), Tammy Baldwin (D-Wis.), Richard Blumenthal (D-Conn.), Lisa Blunt Rochester (D-Del.), Cory Booker (D-N.J.), Maria Cantwell (D-Wash.), Tammy Duckworth (D-Ill.), Dick Durbin (D-Ill.), John Fetterman (D-Pa.), Ruben Gallego (D-Ariz.), Kirsten Gillibrand (D-N.Y.), Maggie Hassan (D-N.H.), Martin Heinrich (D-N.M.), Mazie Hirono (D-Hawaii), Tim Kaine (D-Va.), Mark Kelly (D-Ariz.), Andy Kim (D-N.J.), Angus King (I-Maine), Amy Klobuchar (D-Minn.), Ben Ray Luján (D-N.M.), Ed Markey (D-Mass.), Jeff Merkley (D-Ore.), Chris Murphy (D-Conn.), Patty Murray (D-Wash.), Alex Padilla (D-Calif.), Jack Reed (D-R.I.), Bernie Sanders (I-Vt.), Brian Schatz (D-Hawaii), Adam Schiff (D-Calif.), Jeanne Shaheen (D-N.H.), Tina Smith (D-Minn.), Chris Van Hollen (D-Md.), Mark Warner (D-Va.), Peter Welch (D-Vt.), and Sheldon Whitehouse (D-R.I.)
The text of the bill is available HERE. A summary of the bill is available HERE.
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