Pennsylvania has officially joined the list of states participating in the IRS Direct File program in 2025. This move was confirmed by Secretary of Treasury Janet Yellen during a visit to Philadelphia, where she met with Pennsylvania Governor Josh Shapiro. The Direct File program allows eligible taxpayers to file their federal tax returns for free directly with the IRS, simplifying the filing process and potentially saving taxpayers money. Pennsylvania will be joining Oregon and New Jersey in this program, with a total of 15 states participating starting in 2025.
The Direct File program was initially launched as a pilot program in 2024 in 12 states, including Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. During the pilot program, several hundred thousand taxpayers across the 12 states signed up for Direct File accounts, and 140,803 taxpayers successfully filed their federal tax returns using the new service. The IRS has reported that taxpayers who used Direct File in these 12 states obtained over $90 million in refunds and saved an estimated $5.6 million in filing costs. The program was well-received, with users reporting high satisfaction and quick answers to filing questions.
The Inflation Reduction Act (IRA) mandated the IRS to explore the feasibility of a free direct e-file tax return system, including multi-lingual and mobile-friendly features, as well as data safeguards. The IRS released a report to Congress outlining the potential benefits of such a system, which led to the launch of the Direct File pilot program in January 2024. The success of the pilot program prompted Treasury Secretary Yellen to agree to make Direct File a permanent offering, citing the positive feedback from taxpayers and the goal of reducing costs for Americans.
Apart from the Direct File program, funds from the Inflation Reduction Act have enabled the IRS to implement various projects aimed at improving taxpayer services. These projects include expanding online platforms to provide more features to taxpayers, such as the Individual Online Account tool, which allows taxpayers to manage their tax information more efficiently. Additionally, the IRS has enhanced its in-person services, particularly in underserved and rural communities, through Community Assistance Visits where taxpayers can meet with IRS representatives for assistance. The IRS has also focused on enforcement efforts, targeting high-income and high-wealth individuals who have not filed their taxes or failed to pay recognized tax debt.
The IRS’s enforcement efforts have yielded significant results, with over $520 million collected from high-income earners who owe tax debt. Compliance letters have been sent out to more than 125,000 cases where tax returns have not been filed since 2017, with a focus on individuals with high incomes. Overall, the IRS has collected over $1 billion from high-wealth taxpayers as of April 2024, demonstrating the agency’s commitment to enforcing tax compliance among those with significant income and assets. The success of these initiatives has underscored the importance of funding and implementing programs like Direct File to make tax filing more accessible and efficient for all taxpayers.
