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Government The Almighty Buck

The IRS's New Tax Software: Rave Reviews, But Low Turnout (washingtonpost.com) 90

An anonymous reader quotes a report from the Washington Post: The Biden administration marked the close of tax season Monday by announcing it had met a modest goal of getting at least 100,000 taxpayers to file through the Internal Revenue Service's new tax software, Direct File -- an alternative to commercial tax preparers. Although the government had billed Direct File as a small-scale pilot, it still represents one of the most significant experiments in tax filing in decades -- a free platform letting Americans file online directly to the government. Monday's announcement aside, though, Direct File's success has proven highly subjective.

By and large, people who tried the Direct File software -- which looks a lot like TurboTax or other commercial tax software, with its question-and-answer format -- gave it rave reviews. "Against all odds, the government has created an actually good piece of technology," a writer for the Atlantic marveled, describing himself as "giddy" as he used the website to chat live with a helpful IRS employee. The Post's Tech Friend columnist Shira Ovide called it "visible proof that government websites don't have to stink." Online, people tweeted praise after filing their taxes, like the user who called it the "easiest tax experience of my life."

While the users might be a happy group, however, there weren't many of them compared to other tax filing options -- and their positive reviews likely won't budge the opposition that Direct File has faced from tax software companies and Republicans from the outset. These headwinds will likely continue if the IRS wants to renew it for another tax season. The program opened to the public midway through tax season, when many low-income filers had already claimed their refunds -- and was restricted to taxpayers in 12 states, with only four types of income (wages, interest, Social Security and unemployment). But it gained popularity as tax season went on: The Treasury Department said more than half of the total users of Direct File completed their returns during the last week.

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The IRS's New Tax Software: Rave Reviews, But Low Turnout

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  • Finally (Score:5, Insightful)

    by Anonymous Coward on Monday April 15, 2024 @06:44PM (#64396858)

    I'm a Republican who likes free enterprise, but it is outrageous that this is taking so long.
    30 years after the World Wide Web went mainstream, a tiny portion of federal tax filers can file online directly with the IRS.
    There is no justification for crippling the ability of federal agencies to do their business online.

    • Re:Finally (Score:4, Insightful)

      by blahbooboo2 ( 602610 ) on Monday April 15, 2024 @07:13PM (#64396922)

      Solution, stop voting republican, they're the ones repeatedly blocking the IRS from providing this ervice.

    • by Anonymous Coward

      I'm a Republican who likes free enterprise, but it is outrageous that this is taking so long.

      I'm not a Republican and I'm wondering who I sue when the IRS online tax software suffers a data breach and my personal information is made public?

      I'm good with free filing (with businesses). I'm not good with deceptively false free filing (it's free unless you need to do one of a dozen common things). I'm not good with government run online services where you provide personal information. Especially if there's little to no accountability.

      • Re:Finally (Score:5, Informative)

        by CaptQuark ( 2706165 ) on Tuesday April 16, 2024 @12:38AM (#64397292)

        I'm good with free filing (with businesses). I'm not good with deceptively false free filing (it's free unless you need to do one of a dozen common things). I'm not good with government run online services where you provide personal information. Especially if there's little to no accountability.

        The IRS Direct File pilot program is targeted to a small group of tax payers in a select number of states. They are not ready for ALL the different types of incomes so they limit the wage income to less than $200K for married filing jointly, no retirement payments, no unreported tips, no rent income, no lottery or gambling winnings, etc. After this pilot program is evaluated, more people will qualify for the Direct File. I look forward to when I can log into the IRS website, verify my information for that year, and click "Submit".

        Speaking of deceptively false filings, if you want to file for free with TurboTax, how many read the EULA and TOS to notice that creating an Intuit account gives them permission to pull your credit rating and share it with their "partners". That little nugget of profiting from my personal information is pretty well buried in their licensing fine print and remains profitable throughout the year and perpetually until I cancel my account on their website.

        You understand that your instructions authorize Intuit and its affiliated companies to obtain such information now and periodically in the future for as long as you have a registered Intuit account. We will stop refreshing your credit information when you cancel your account through your account settings.
        https://turbotax.intuit.com/co... [intuit.com]

      • Re:Finally (Score:5, Insightful)

        by necro81 ( 917438 ) on Tuesday April 16, 2024 @07:48AM (#64397852) Journal

        I'm not a Republican and I'm wondering who I sue when the IRS online tax software suffers a data breach and my personal information is made public?

        You do realize the IRS already has vast motherlodes of data on you and everyone else in the country? Anyone with a SSN, bank account, employer...the IRS receives and keeps records of all of that. They seem to do a much better job safeguarding it than just about anyone else.

      • Fortunately, it's just these 100,000 people. The government has no data about the rest of us.
    • I'm in Canada and we've had a very gradual digitization of taxes. It's not as complete as some other countries, but I was really impressed at how it progressed.

      It started many years ago where your work would 'upload' your tax slips to the government website. It was very basic. But functional.

      Then tax software, like TurboTax gained the ability to connect to the government website and download all your tax forms. More and more stuff started to be upload to the government site. Today, even my stock trades are

    • There is no justification for crippling the ability of federal agencies to do their business online.

      There is also no justification for making everyone file a tax return. The IRS already knows. You should only need to file if you have additional income to report or deductions to make.

    • I'm a Republican who likes free enterprise, but it is outrageous that this is taking so long. 30 years after the World Wide Web went mainstream, a tiny portion of federal tax filers can file online directly with the IRS. There is no justification for crippling the ability of federal agencies to do their business online.

      The Republican party's made mode of operation has been to prove that government doesn't work for about as long as I've been paying attention. Thus far, they're doing a bang-up job of it. And getting better every election cycle.

      • How I wish it was hard to "prove government doesn't work", but, man, this thing just proves itself, it needs no help from us.

        Name me a government-run anything that is being done better than the private sector could have done it -- to say nothing of how much it costs, which would be in the territory of a joke by way of comparison.

        We don't have a government because it works better, we have a government because we want it to have monopoly power over certain things such as police, military, infrastructure, etc.

    • Unless filing taxes online with the IRS results in everything that is reported to them outside of charitable donations for 1040A itemized deductions, then the only thing you should be seeing is how much you owe or get back. That's it. They already know how much you've made legally. So why the Kabuki theater every year?
    • Why should the IRs have it easy? Screw them.
  • by awwshit ( 6214476 ) on Monday April 15, 2024 @06:56PM (#64396886)

    These free alternatives all seem to lack an ability to import a return from last year. One compelling thing about TurboTax is that it already has most of the details I need from when I used it last year. Free platforms could do everyone a great service by being able to import returns from other programs, provides an easy eligibility check too.

    • These free alternatives all seem to lack an ability to import a return from last year.

      DirectFile has run for one year. What are you complaining about? That they can't import data from software which never existed, or that they can't import data from competitors?

      Also what do you mean "import". If you are "importing" anything in this process you're doing it wrong. The IRS has your tax return from last year, the info should be pre-filled next year if there is anyone with a single functioning braincell working on this software. I've never needed to "import" any information, present or past. It's

      • I'm not complaining, I'm suggesting an improvement. In most cases, you can print/save your return, as forms, in PDF format. Since the forms are standardized, it should be possible to import them (sure with a human double-check that the import worked as expected and the data is correct.

        TurboTax has like 80% market share, tone of people have TurboTax files they'd like to import.

        The company I work for uses an Intuit payroll product, this allows TurboTax to import my W2 and I don't have to type in the details -

    • by dirk ( 87083 )

      How do you suggest they do this? All the systems are web based now. Do you think Intuit is going to allow the government access to it's DB to export last years tax data? Not a chance (and really, it would be terribly dangerous to allow a third party access to that info anyway). But not all free alternatives lack this. CashApp Taxes keeps your data from year to year and imports it and is free.

      • How do you suggest they do this? All the systems are web based now. Do you think Intuit is going to allow the government access to it's DB to export last years tax data?

        Just like the major tax software programs do today: import a PDF file.

    • You're basically crowing about 1) Vendor lock in, and 2) That you're too lazy to consider other options because you'd had to re-input your personal details and W-2 / 1099 information.

      These aren't compelling data points.

  • and we will have better service.

  • the Fed return was already free, the state was $15 bucks. I need to be able to file my state return for free, otherwise it's kinda silly.
    • by Anonymous Coward

      My (very red) state has had a free-filing website for over 20 years.

    • by DarkOx ( 621550 )

      I guess sure if you are like mentally handicapped that makes sense.

      I have filed taxes in at five different states. After you have handful of numbers from the federal form like AGI the state tax forms are mostly a handful of pages and few numbers to copy. There maybe a few additional questions about education expense and certain investments like muni-bonds which might be tax exempt at the state level, plus the usual 'do you owe us any extra sales tax'; and all that assumes you can't file the -EZ version. Whi

  • by 93 Escort Wagon ( 326346 ) on Monday April 15, 2024 @07:10PM (#64396916)

    In past years I'd used the freefillable forms option, and before that TaxAct (back when it wasn't constantly nagging you to buy much more expensive options). Our taxes are pretty straightforward nowadays, since our house is paid off and the "kid" is an adult. We were under the earnings limit they've placed on the new system, and we live in Washington state - so I figured I'd give it a try.

    This is much more user-friendly than freefillableforms, and is superior in usability even to TaxAct.... but not being able to handle itemized deductions (at least not yet) will make it a non-starter for many people. But all in all they did a good job. Filing is free, and there was no fee for paying what we owed via our bank account (unlike, say, with TaxAct). I definitely will use it again next year, if the Publicans don't manage to kill it.

    • Very limited state filing partners dissuades me. I don't want to have to do my taxes twice. Every year I just go to the DOR page for my state and find who files both federal/state for free.
      • Oh yeah I totally get that. If I had to file a state return, I'd feel the same way.

        The US tax system is a mess. And it never gets fixed because no one in power is actually interested in just fixing it - they're only interested if they can also push their own agenda as part of the "fix" (true for both the Dems and the GOP).

    • by necro81 ( 917438 )

      but not being able to handle itemized deductions (at least not yet) will make it a non-starter for many people

      I guess it depends on what you consider "many people". Only about 10-12% of filers itemize; the vast majority use the standard deduction. ([1 [taxpolicycenter.org]], [2 [taxfoundation.org]], [3 [smartasset.com]]). Most of those who itemized are the highest earners. Granted: 10% of filers is still millions of people. But as a share of taxpayers, it's still small.

      This doesn't have to be a 100% solution for it to still be a tremendous public benefit.

    • According to the most recent IRS numbers, since the 2018 tax law changes only about 10 percent of all filers itemize their deductions. The inability to handle itemized deductions really won't matter to the vast majority.

  • Seriously... this is the first I've heard of it. At 9:22 pm on 4/15/22.

  • just look at how popular TurboTax is!

  • While I'm sure the new tax software is wonderful, I don't particularly want the IRS to see any of my numbers until I'm *done* calculating them. With tax regulations as complex as they are, I don't trust my intermediate work to be correct. And I definitely don't trust the IRS to not hold that against me.

  • There is a significant number of people who are refusing to file, or have filed and owe, but are refusing to pay. Yes, I know how it will work out, but word of this is not being intentionally spread by mainstream sources because government is well aware how close the country is to a large scale tax boycott.

    • The government is not too concerned about people returning scraps of paper or digits, "tax" is just a show, imagine the Matrix sequel where Neo tries to be free....by not paying tax.
  • What purpose does it serve to make it hard and expensive for people to file taxes? Regardless of politics, governments should make it straightforward and convenient for people to pay taxes because otherwise they take a hit on revenues and spend inordinate amounts of money chasing people who fail to file correctly.

    Having decent software is one part of this, but quite honestly the US should do what other countries do and collect the tax at source wherever possible, including payslips.

    • by necro81 ( 917438 )

      What purpose does it serve to make it hard and expensive for people to file taxes?

      Republicans have made it a matter of cultural identify to hate and distrust the government, and the IRS is one of their favorite whipping boys. Keeping it hard and expensive to file taxes is kind of the point - people will like their government less because of it.

      otherwise they take a hit on revenues

      That's all part of their strategy to "starve the beast", so as to justify cutting social programs or other things they don't

      • by DrXym ( 126579 )

        Still doesn't make sense to do this. If the IRS is some lumbering behemoth (as I'm sure it is), then the way to shrink it is to automate and normalize tax collection so less staff are required for submissions, auditing, late filings, prosecution etc.

        I read only this morning that some tax preparer in New York nicknamed the "The Magician" filed 90,000 fraudulent claims potentially losing $100 million in revenue. Imagine the effort of prosecuting that one guy and telling 90,000 people to re-file. That guy got

  • Sounds great, BUT limited income sources income knocks me out of it plus my state is NOT included ! Dead end for me.
  • "While the users might be a happy group, however, there weren't many of them compared to other tax filing options -- and their positive reviews likely won't budge the opposition that Direct File has faced from tax software companies and Republicans from the outset."

    Businesses who make money fleecing people for a "service" and their owned representatives in Congress will never like competitors or "free" alternatives.
    Film at 11.

  • "Against all odds, the government has created an actually good piece of technology," a writer for the Atlantic marveled, What an asshole. The government does a lot well actually and this stupid ass backhanded compliment really downplays people who put good work into things for the government. Does this moron know that a TON of private companies also put out complete garbage? We should stop with the "government bad" bullshit and judge things based on their merits without preconceived notions.
  • According to WSJ I believe it was, the feature was used by 0.3% of eligible taxpayers. Whoopdedoo.

  • I've used the IRS Free Fillable Forms [irs.gov] for several years now once I discovered it. It's a little more complicated than using TurboTax, but for people like myself with very simple tax needs (i.e. I don't itemize, run an LLC, or have any income outside my job), it's more than adequate.

    I used to waste money every year on TurboTax until I stumbled on this site. TurboTax NEVER found any deductions I didn't know about and created more work than necessary, even for my simple needs.

    I filed about a month ago,

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