The IRS is about to begin its trial program for free tax filing

As the tax filing season commences on January 29, select taxpayers will be presented with a new government-operated system for filing their 2023 federal tax returns.

Dubbed Direct File, this no-cost program will have limited availability initially, catering primarily to federal and state government employees residing in 12 specific states with specific tax circumstances.

The Internal Revenue Service (IRS) intends to gradually expand the program throughout February and March to encompass certain private sector employees within these 12 states.

Developed internally by the IRS, the guided filing system received substantial funding from the Democrat-supported Inflation Reduction Act, which Congress passed in 2022. This legislation mandated the IRS to conduct a comprehensive assessment of the costs and feasibility associated with establishing a free, electronic tax filing system, a report that was released in May. Subsequently, the agency opted to proceed with a pilot initiative.

Should the pilot program prove successful, Direct File may eventually emerge as a contender to competing private market services.

IRS Commissioner Danny Werfel clarified during a conference call with reporters on Wednesday that the IRS tool is intended to supplement existing options for filing tax returns and will not serve as a replacement for them.