Filing taxes for free with IRS’ Direct File

Internal Revenue Service

Challenge

Individual taxpayers in the United States spend about nine hours and $150 preparing their taxes each year. Additionally, many federal aid programs, such as the Child Tax Credit and Earned Income Tax Credit, are distributed through the tax system, and one in five eligible taxpayers don’t claim these valuable credits. Although taxpayers have options for preparing their tax returns, there was previously no easy, free, online way to do so with the Internal Revenue Service (IRS), which shaped their opinions of the agency.

IRS began the Direct File launch with U.S. Digital Service (USDS) and expanded to include the General Service Administration (GSA) 18F and two small business vendors. It was introduced in 12 states, offering taxpayers a new option for filing taxes. Through the launch of Direct File, the IRS is demonstrating its commitment to improving public interactions and providing taxpayers with more choices.

Solution

The product and new ways of working

Starting in June 2023, USDS led the development of Direct File for the IRS, with a scheduled launch date of January 2024. USDS worked closely with the IRS, GSA’s 18F, and small business contractors to create blended teams. This approach allowed the Direct File team to demonstrate new design and agile development methods to the IRS, with small teams delivering iterative improvements to build the product.

The teams set standards and best practices from the start to ensure the Direct File pilot would be user-friendly and could be completed within the set timeline. The team focused on the following considerations to ensure that all taxpayers could accurately and confidently complete their taxes:

• The teams interviewed, observed, and usability tested the service with taxpayers with various attitudes, aptitudes, abilities, and access needs.
• Uses inclusive design and plain language best practices to help taxpayers understand complicated tax concepts, reduce anxiety, and establish trust.
• Available in Spanish and has undergone usability testing in Spanish.
• Accessible, 508 compliant, and user-friendly for taxpayers with disabilities.

Customer support: one team, one dream

During the tax filing season, USDS worked with the IRS to provide integrated customer support through live chat within the tax filing system. Trained representatives handled 38,600 taxpayer interactions and collaborated closely with the product team to implement over 1,000 changes and deploy new product versions weekly.

Starting small to get it right

The Direct File service was gradually introduced to taxpayers over several weeks, starting in January 2024. This approach allowed the team to thoroughly test the new service and continuously improve the taxpayer experience before making it available to larger audiences. USDS and the IRS partnered to drastically improve the tax filing experience by delivering this solution from design to product and customer support operations.

Impact

Over 140,000 people in the 12 pilot states filed their taxes for free directly with the IRS and received over $90 million in federal tax refunds. Those federal tax refunds provided access to the Earned Income Tax Credit and Child Tax Credit, two of the country’s largest and most effective antipoverty and anti-child-poverty programs.

In addition to refunding taxpayers, Direct File users who completed a post-submission survey said their experience with Direct File “increased their trust in the IRS” by 86%. Following a successful filing season pilot and feedback from various partners, the IRS announced on May 30, 2024, that it will make Direct File a permanent option for filing federal tax returns starting in the 2025 tax season.

Within the IRS, the Direct File team’s approach to design, blended teams, and agile development methods has drawn the attention of other departments. IRS Commissioner Werfel attributed agile methodology as the key to successfully deploying Direct File. USDS will continue to partner with its IRS IT partners to expand agile development at the agency.

Ultimately, and this is a little geeky… it was agile technology that was the eye-opener. There’s a whole discipline around how you move more quickly to deliver incremental functionality, strip through bureaucracy to make decisions more quickly and take calculated risks more regularly. Here, by sizing this [Direct File release] in an increment that had an impact, we could be more agile, have exceptional certainty, and launch something we can all learn from.

By the numbers