Title page

Contents

Highlights 2

Letter 5

Background 7

IRS Successfully Piloted Its Direct File System and Taxpayers Reported Generally Positive Experiences 10

Cost 13

Integrating State Returns 14

IRS Followed Leading Practices for Pilot Design while Continuing to Integrate Direct File with Related Taxpayer Services 18

RS Applied Several Leading Practices to Evaluate the Initial Performance of Direct File 18

IRS Efforts to Expand Direct File Could Face Challenges Related to Customer Support and Serving Additional Taxpayers 25

IRS May Be Underprepared for Surges in Taxpayer Demand for Direct File because of Hiring Delays 25

IRS's Approach for Expanding Direct File Could Limit Its Availability to Taxpayers in Certain States 28

IRS Has Not Fully Leveraged Research to Prioritize Supporting Taxpayers with More Complex Tax Situations 31

Selected Revenue Agencies Do More to Leverage Government Information to Save Taxpayers Time and Reduce Errors 34

Conclusions 40

Recommendations for Executive Action 40

Agency Comments and our Evaluation 41

Appendix I: Online Filing in Other Jurisdictions 45

Appendix II: Comments from the Internal Revenue Service 59

Appendix III: GAO Contact and Staff Acknowledgments 64

Table 1. Implementation Decisions of States Participating in the IRS's 2024 Direct File Pilot 17

Figure 1. Direct File Returns Accepted during IRS's 2024 Filing Season Pilot 11

Figure 2. Demographics of Direct File Taxpayers during the 2024 Filing Season 12

Figure 3. Taxpayers Participating in the Limited 2024 Federal Direct File Pilot by State and Participation Rate 16

Figure 4. Alignment of IRS Direct File Pilot with GAO Leading Practices for Pilot Program Design 18

Figure 5. How IRS's Direct File Explains Refundable and Nonrefundable Tax Credits 23

Figure 6. Planned Availability of Federal Direct File by State in 2025 (as of October 2024) 29

Figure 7. Prepopulation of Tax Information in Selected Jurisdictions as of 2024 34

Figure 8. Timelines for Tax Filing and Certain Information Reporting in Australia and the United States 38