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Adrian Smith Leads Letter Demanding Answers from IRS Commissioner on Direct File Program

Adrian Smith 3rd Dist

Washington, D.C. – Today, Rep. Adrian Smith (R-NE), along with Ways and Means Committee Chairman Jason Smith (R-MO), led their Ways and Means Committee Republican colleagues in sending a letter to the Commissioner of the Internal Revenue Service Daniel Werfel. In the letter, the members raised concerns about expansion of the IRS' Direct File program and asked Commissioner Werfel to respond to questions regarding statutory authority and the origin of funds allocated for development and advertisement of the program.

Key excerpts:

We write to you now that this year’s tax filing season has come to a close to reiterate our objections to the Internal Revenue Service’s (“IRS”) Direct File pilot program and inquire about the program’s cost, operation, and future.

The IRS’s decision to establish Direct File appears to have been “predetermined” from the outset, regardless of the need or desire for such a program. Democrats gave the IRS $15 million in the Inflation Reduction Act (“IRA”) to study and report to Congress on the feasibility, taxpayer interest, and cost of a direct e-file tax return system. The IRA’s explicit language that set out this limited purpose required the study to draw on the “opinions of an independent third party.” Disregarding Congress’ mandate, the Biden Administration “cooked the books to get exactly the outcome it wanted”—a Direct File program.

The IRS’s decision to unilaterally build a Direct File pilot program raises significant legal questions. In February 2024, we condemned the agency’s efforts to establish this program without authorization from Congress. The Attorneys General of 13 States joined this objection, calling Direct File “unnecessary and unconstitutional.”

The agency’s justifications to become tax preparer, filer, and auditor were deeply flawed. The Treasury Inspector General for Tax Administration (“TIGTA”), an independent watchdog, found in October 2023, that the IRS potentially overstated taxpayer interest and understated Direct File’s costs. TIGTA concluded that taxpayer interest in this tool may have been exaggerated due to the substandard survey design that the IRS employed to gauge interest. In the survey, which TIGTA criticized as possibly “overstat[ing]” taxpayer interest in Direct File, IRS touted how 72 percent of all taxpayers expressed interest in Direct File. A separate, independent report examining only tax filers with simple returns—the IRS’s target demographic for this year’s pilot program—showed that a mere 37 percent of these taxpayers would use an IRS-run system.

The end of the filing season raises critical questions about Direct File’s cost, operation, and future, even in the face of the agency’s premature decision to make it permanent. The program also raises concerns regarding the agency’s efforts to expand its power at the cost of taxpayer dollars, gain greater control over Americans’ taxes and confidential information, and redefine the agency’s obligations as a tax administrator. As the Committee with primary jurisdiction over tax administration issues, we are committed to fostering a tax system that serves the needs of the American people, but not at the expense of creating costly tools that are already available to taxpayers. 

The letter was also signed by Reps. Vern Buchanan (R-FL), Mike Kelly (R-PA), Darin LaHood (R-IL), Brad Wenstrup (R-OH), Jodey Arrington (R-TX), Drew Ferguson (R-GA), Ron Estes (R-KS), Lloyd Smucker (R-PA), Kevin Hern (R-OK), Carol Miller (R-WV), Greg Murphy (R-NC), David Kustoff (R-TN), Greg Steube (R-FL), Claudia Tenney (R-NY), Michelle Fischbach (R-MN), Blake Moore (R-UT), Michelle Steel (R-CA), Beth Van Duyne (R-TX), Randy Feenstra (R-IA), Nicole Malliotakis (R-NY), and Mike Carey (R-OH).