By Kenneth Corbin
As tax season shifts into high gear, Americans with relatively simple financial pictures will find one less filing option on the menu. For the last two years, the IRS has offered a free in-house filing service called Direct File, which the Trump administration discontinued, citing cost overruns and limited usage.
That leaves filers with the IRS' Free File, a partnership with private tax-preparation and filing services that dates to 2003, but that has itself seen usage decline and come under fire for data security concerns and other issues.
The latest broadside comes from several Democrats and one independent in Congress, who signed a letter asking the Treasury Department and IRS for answers about plans for Free File and raising concerns about the demise of Direct File.
"We are concerned that Free File will not be sufficient to address taxpayers' needs for free tax filing options considering its history of ineffectiveness," the lawmakers, led by Sen. Elizabeth Warren (D., Mass.), wrote.
The Treasury Department and IRS didn't immediately respond to requests for comment.
Direct File and Free File were conceived with the same goal -- government-led programs to offer taxpayers with modest incomes and relatively uncomplicated finances a simple, free way to submit their taxes. Direct File was an in-house software development project supported by funds the IRS received through the 2022 Inflation Reduction Act.
Free File is a public-private partnership in which taxpayers can select free tax-filing services from a menu of providers at IRS.gov.
Direct File began in 2003 as a limited pilot program available to taxpayers with relatively basic returns in 12 states that offered a comparable filing service for payers' state returns. The IRS expanded Direct File for the 2024 tax year to twice the number of states and to cover more complex filing situations.
Critics of that program always raised doubts about the propriety of the IRS preparing, filing, and auditing returns. "I think where you might get resistance is I don't know how many people trust the government with filing their income tax, frankly," says Anthony Sandomierski, a CPA and wealth advisor with Oujo Wealth Strategies, a New Jersey wealth management firm affiliated with Avantax, a tax-focused network of firms within Cetera Financial Group.
Critics also objected to the development and operational costs of Direct File, and cited limited usage -- fewer than 300,000 filers submitted returns through the program for the 2024 tax year.
Supporters, on the other hand, branded Direct File an early success story, a promising program that showed impressive momentum that would continue if the IRS committed to promoting and expanding the service.
The lawmakers' letter noted signs of declining interest in Free File, which they said peaked in 2004 with about five million filers submitting their returns through the program. The Treasury Department has said that about 2.7 million returns were submitted through Free File for the 2024 tax year.
The number of commercial tax-prep services participating in Free File has dwindled, as well. The lawmakers noted that in the service's early days, 17 companies were on board. Now the IRS has eight listed partners. A Government Accountability report noted that five companies left the program between 2016 and 2021, including Intuit's TurboTax and H&R Block, which together handled about 70% of the Free File returns for the 2019 tax year.
Warren and her colleagues warn that Free File is an inadequate substitute for Direct File, charging the IRS with "a nearly two-decade long record of underperformance and lack of oversight" of the program.
Among their concerns are complaints that the commercial tax providers attempt to upcharge taxpayers referred to them by Free File, and reports that the Free File partners have shared taxpayer data with tech companies to target ads to taxpayers.
The lawmakers are asking the Treasury Department and IRS about how it is considering supporting and improving Free File, including how much it spent promoting the program last year and how much it is planning to spend this year. They also asked about the promotional expenditures for Direct File in 2024 and 2025.
They further inquired about how the IRS plans to act on the recommendations of a government watchdog report about Free File that criticized the agency for lax oversight of its partner firms, including their data-security practices, and its lackluster promotional efforts. The 2024 report concluded that "the IRS has not implemented any effective solutions to increase taxpayer participation in the Free File program."
The lawmakers are requesting responses by Thursday.
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February 25, 2026 11:30 ET (16:30 GMT)
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