Update
Congressional Republicans Can’t Get Their Story Straight When It Comes to America’s Broken Tax Filing System
05. 16. 2025
Republicans want to study how to fix tax filing—by ensuring the IRS keeps doing what’s failed taxpayers for 25 years.
In the middle of their sprawling reconciliation bill to effect a massive upward redistribution of wealth, Republicans on the Ways and Means Committee included language this week to end the popular IRS Direct File program.
That the bill officially kills Direct File — a program Republicans in Washington have been itching to kill since it was first announced, sabotaging since taking over the government, and already administratively canceled — should surprise no one. What’s galling is what the Committee proposes next. They appropriate $15 million for a study that finally acknowledges the existing tax filing system has failed, while simultaneously predetermining that study’s conclusion: that the IRS not change the system at all.
Since Direct File was first announced two years ago, Republicans and their allies in the tax prep industry have had one principal attack on it. They claim there already was a way for taxpayers to file for free thanks to the existence of the Free File Alliance (FFA).
The idea that FFA had solved the problem of free tax filing was always absurd. Under FFA, the leading private tax prep companies agreed to provide limited free filing to some taxpayers, as long as the IRS promised not to build a public filing solution, thus letting the companies continue charging the rest. This worked for the companies as long as only a few taxpayers used the free services, and the companies knew it. It’s well known how they ensured 97% of eligible taxpayers didn’t use these services — by hiding free options, blocking the creation of public tools, and illegally marketing their paid options as free.
As the malfeasance began attracting attention, the IRS revoked its promise not to compete with the private companies. In response, the two largest companies (which have concentrated control of well over half of the market) gave up the charade and left FFA entirely, essentially admitting the jig was up. Moreover, these private, third-party solutions were inherently never able to create the easy, streamlined filing process that taxpayers deserve. Taxpayers don’t want to have to report to the IRS data the agency already has; and the difficulty of doing so is a big reason millions of taxpayers fail to claim their refunds every year. Third parties, without access to IRS data, could never comprehensively pre-populate taxpayers’ returns and create the streamlined tax filing system enjoyed by other peer countries. Only the IRS can do that.
Conveniently, in this week’s bill, Congressional Republicans admit they didn’t believe their talking points about FFA, either. They appropriate $15 million for the IRS to study a new free tax filing option, to ostensibly “replace free file and any IRS-run direct file programs.” It is heartening to see Congressional Republicans finally acknowledge that FFA has failed to provide taxpayers free, online, easy, reliable tax filing.
Direct File was the much-needed, high-quality solution to this badly broken system. A wholly-public, always-free tax filing service built by the IRS and launched in 2024, it had 90% approval from taxpayers who used it. In only its second year, it allowed taxpayers to pre-populate their returns with income and account data the IRS had on file, creating a product easier than the private sector ever could. In the words of one 2025 user, “This is by far the best experience ever! … This is where I had hoped the United States, in the 21st century, would be.”
Republicans’ proposed $15 million study won’t build on Direct File; it simply re-enshrines FFA, leaving taxpayers again at the mercy of the private tax industry. The bill requires the IRS to study a “public-private partnership” that covers “70 percent of all taxpayers calculated by adjusted gross income,” with a group of “participating providers” providing a range of different tax filing “options,” and with the IRS left to puzzle out “how to make the options consistent and simple for taxpayers.” All of this describes today’s Free File system, to a T. The bill’s authors admit the current tax filing system has failed everyday Americans; but, to fix the problem, they would like the IRS to keep doing exactly what it has been doing for the last 25 years.
This bit of predetermination is especially rich coming from the same people who repeatedly tried to argue that the Biden Administration had “cooked the books” on their own tax filing report simply by hiring people with expertise in public tax administration. For Congressional Republicans, apparently, hiring on merit is duplicitous, but pre-baking research conclusions into statute is just another day at the office. There’s no through-line, no philosophy beyond the deeply-held belief that, no matter what happens, the private tax prep industry should always be able to profit at the expense of everyday Americans.
Adding insult to injury, it was reported this week that key Treasury decisionmakers are personally invested in these profits.
Meanwhile, Congressional Republicans’ bad faith and inconsistency on the question of Direct File in particular is just a synecdoche for their bad faith about the operations of the IRS in general. For years, they have argued Direct File would distract the IRS from its other functions. Given the levers of power, rather than building a modern IRS equipped to handle those functions, they have blithely decimated the agency’s ability to function. At the same time, the reconciliation package contains dozens of complex new programs for the agency to administer. Exempting huge poorly-defined swaths of income from taxation, starting a new child savings account program, and restricting access to the country’s largest anti-poverty program would be a tall order in the best of times. The idea of successfully implementing it now, with a shell of the former IRS, is laughable.
The generous interpretation is that Congressional Republicans simply can’t decide between letting rich tax cheats off the hook, on one hand, and delivering on the president’s various other campaign promises, on the other. The darker interpretation is that, as with the question of tax filing in particular, they want the IRS to fail. Direct File — and the broader investments of the last years — threatened to prove to everyday Americans that government can deliver value and be a force for good in their lives. With this bill, Congressional Republicans are doing everything they can to ensure it doesn’t.