IRS Plans to Test Free Filing System

IRS Plans to Test Free Filing System

REUTERS/Shannon Stapleton

The IRS has developed a system that would allow Americans to file their taxes for free online and plans to start testing the system on a small number of people early next year, Jacob Bogage of The Washington Post reported Monday.

The tax-filing prototype was developed in conjunction with the U.S. Digital Service, a little-known unit of the executive branch created in 2014 that aims “to deliver better government services to the American people through technology and design,” according to its website.

Although the majority of Americans qualify to use a free-filing option provided by a consortium of for-profit firms, less than 3% actually do so. Not coincidentally, the tax-filing industry collects more than $14 billion a year in fees from tax filers. As Bogage notes, a free direct file system would threaten the industry, which has been resisting the development of a free alternative.