Elizabeth Warren
04/16/2024 | Press release | Distributed by Public on 04/16/2024 17:50
Following Tax Day, Warren Applauds Successful IRS Direct File Pilot, Pushes Back on Baseless Attacks to Program’s Legality at Hearing
April 16, 2024
Following Tax Day, Warren Applauds Successful IRS Direct File Pilot, Pushes Back on Baseless Attacks to Program's Legality at Hearing
IRS Commissioner Werfel: "taxpayers told us - in almost unanimity - that [Direct File] was easy to use, fast, secure, and, of course, free."
Washington, D.C. -The day after the tax filing deadline, at a hearing of the U.S. Senate Committee on Finance, U.S. Senator Elizabeth Warren (D-Mass.) questioned Internal Revenue Service (IRS) Commissioner Daniel I. Werfel, on the IRS's use of Inflation Reduction Act funds to successfully pilot a Direct File program, a first-of-its-kind option for Americans in twelve states to be able to file their taxes online directly with the IRS, easily and for free. In response, Commissioner Werfel highlighted the "very encouraging" feedback on the program, noting it was "tremendously positive" and that "taxpayers told [the IRS] - in almost unanimity - that it was easy to use, fast, secure, and, of course, free."
Senator Warren also countered politically-motivated, nonsensical attacks on the program - specifically, that the IRS does not have legal authority to offer a 21st century tax form. In response to Senator Warren's questioning, Commissioner Werfel confirmed that the IRS does indeed have broad authority to provide taxpayers with multiple ways to file, including Direct File, and that no one has challenged the IRS's legal authority to provide e-filing starting in 1986 or provide fillable PDFs starting in 2008.
Transcript: Hearing on The President's Fiscal Year 2025 IRS Budget and the IRS 2024 Filing Season
U.S. Senate Committee on Finance
Tuesday, April 16, 2024
Senator Warren: Thank you, Mr. Chairman.
So, it wasn't long ago that the one-two punch of the pandemic and nearly 20 years of underfunding brought the IRS to its knees.
We all remember the phones that weren't answered, the stacks of unprocessed returns sitting in boxes, but Democrats secured billions of dollars in long term funding for the IRS, so that you could do your jobs. And the turnaround has been truly remarkable.
Yesterday was the tax filing deadline. And I want to congratulate you, Commissioner Werfel, and all of the hard working folks at the IRS for a smooth tax filing system and season.
So, this year, the IRS launched a pilot program called Direct File, a first-of-its-kind option for Americans in twelve states to be able to file their taxes online directly with the IRS. It's easy, and it's free. And that means instead of the $150, on average, and nine hours that taxpayers typically spend for the privilege of filing their taxes, they can do it for free with the IRS.
So, Commissioner Werfel, I'm sure your team is still going through all of the data from the filing season, but what is the feedback that you've seen so far on Direct File?
Commissioner Werfel: It's been tremendously positive. The results of the pilot have been super encouraging for a couple of different reasons.
One, the product worked.
Second, our partnership with the states, like Massachusetts, the state's product that we handed it off to, because once you do your federal taxes on Direct File, if you have a state income tax, then you have to do the handshake, like we did with the state of Massachusetts and the state of New York and others. that worked as well.
Taxpayers told us - in almost unanimity - that it was easy to use, fast, secure, and, and of course free, which was, which was the bottom line that people wanted to emphasize.
So very, very encouraging results.
But as we sit here, and you know this better than anyone, Massachusetts is still filing.
Senator Warren: Yeah.
Commissioner Werfel: And the pilot isn't done. And I know there's a lot of people that want to know, okay, what was the cost? What are the final numbers?
Senator Warren: So, we're not there yet.
Commissioner Werfel: We're days away.
Senator Warren: You're days away, days away.
But I do want to start with the fact that Direct File is getting five-star reviews, I take it.
Commissioner Werfel: It is.
Senator Warren: So, taxpayers are raving - the phrase I've heard is "so darn easy," that they filed on their lunch break. And best of all, as you say, didn't have to worry about fees, didn't have to worry about ads, and didn't have to worry about upsells. You know, the way that giant tax prep companies like TurboTax make their profits.
So, of course, these tax prep companies are kicking and screaming and trying to shut the program down, and their lobbyist friends claimed that it is somehow illegal for the IRS to provide a 21st century online tax form.
This argument is laughable.
The IRS, like every other government agency, is supposed to modernize and upgrade services over time. But let's dig in a little more.
Commissioner Werfel, decades ago, the IRS mailed out tax filing forms and the post office stocked the paper forms, and that was it. But in 1986, the IRS piloted electronic filing. Back then, that meant plugging in phones into modems, transferring data by tapes, it was real cutting-edge stuff in 1986.
To your knowledge, did anyone suggest that the IRS did not have legal authority to do that?
Commissioner Werfel: No.
Senator Warren: All right.
Decades ago, a tax refund was a paper check. But in 1987, the IRS expanded the pilot and added electronic direct deposit to put refunds directly into people's bank accounts. Did anyone, to your knowledge, say that the IRS couldn't do that because direct deposit wasn't specifically referenced in the statute?
Commissioner Werfel: No.
Senator Warren: And in 2008, the IRS created PDF forms that taxpayers online could fill out and file electronically. Did anyone suggest that service was somehow beyond the reach of the IRS?
Commissioner Werfel: No.
Senator Warren: You know, there was a time when the only way to ask the IRS a question was to mail them a letter or to show up in person. But, at some point, the IRS started using the phone and then email and whoa, be still my beating heart, the IRS now uses texts.
In other words, the IRS is doing what all of government should be doing: modernizing and making it work better for ordinary people.
And there is a big return on the investment here.
The Economic Security Project studied the full costs and benefits of a full fledged Direct File program and determined that nationwide Direct File will save taxpayers $23 billion a year, including tax prep fees that they won't have to pay and tax refunds that people currently miss out on. I did the math. That's about $100 to individual taxpayers for every $1 invested in Direct File.
It is a great investment. Thank you for the program.
Thank you, Mr. Chairman.
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