New FOIA Request Shows the IRS Downplayed Negative Taxpayer Feedback on the Direct File Pilot Program

For Immediate Release

Contact: Kara Zupkus (224) 456-0257

WASHINGTON, D.C. – The Taxpayers Protection Alliance (TPA) released findings from documents obtained through a Freedom of Information Act (FOIA) request revealing that the Internal Revenue Service (IRS) downplayed significant negative taxpayer feedback on its Direct File pilot program. Contrary to the agency’s public claims, TPA’s review of more than 450 pages of respondent-written comments uncovered serious taxpayer concerns, sharing their personal data with third-party website http://ID.me, frequent website crashes, lower refunds, and other technical difficulties.

“These documents paint a starkly different picture than what the IRS has been communicating to the public and is further evidence that Congress must conduct rigorous oversight of an unnecessary Direct File program,” said TPA President David Williams.

“Taxpayers are rightfully alarmed about how their data is being handled, and it’s deeply concerning that the IRS continues to downplay these legitimate concerns and continues to expand Direct File without Congressional approval.”

The IRS previously stated that 90% of users rated their experience as “excellent.” However, TPA’s analysis found that nearly 25% of respondents rated their experience negatively. Copied below is a sample of the negative feedback from taxpayers:

· Limited deductions – “I gave to charity in 2023 and was not able to add it as a deduction in the current system.”

· Lower returns – “I only received $3 return this year while last year I received a little over $200. I don’t understand the discrepancy since my income and circumstances did not change significantly. Idk if there is an issue with the calculations. But that is a big difference.”

· Privacy concerns about providing facial recognition to http://ID.me – “I felt that my privacy was somewhat violated in showing my face and surroundings to a third-party, non-government site.” “It was weird, dystopian, and privacy invasive.” “Using http://Id.me was a disgusting process and difficult to manage. I do not want to send my identification information through a private company to complete government forms.” “Biometric data harvesting sounds pretty dystopian, seems unnecessary.”

· Difficulty uploading W2s – “When filling out all the blanks on the w2 section, there is a lot of room for human error.”

· Lost progress and inability to save – “It crashed when I tried submitting my return, and then it lost the vast majority of my data. Chat was unable to assist in recovery. Where did my data go?”

These findings are released amid broader scrutiny of the IRS in recent months of the Direct File program. Additional concerns highlighted by TPA include:

· Inflated Costs: Taxpayers paid an average of $814 per return through Direct File—five times higher than the cost of commercial tax services, according to the Government Accountability Office (GAO).

· Low Participation: Despite projections that “several hundred thousand” taxpayers would use Direct File, only 140,000 returns—0.7% of those eligible—were filed through the program.

· Lack of Congressional Oversight: The IRS developed the Direct File pilot in 2023 without prior Congressional authorization, contrary to Commissioner Danny Werfel’s promises to work with Congress.

· Biased Survey Questions: The Treasury Inspector General for Tax Administration (TIGTA) found that IRS surveys overstated taxpayer interest in Direct File due to leading questions and misleading prompts.

TPA is calling on Congress to hold the IRS accountable for its handling of the Direct File pilot program – which proceeded without Congressional approval – and to ensure greater oversight of taxpayer-funded initiatives in the future.

Read the full FOIA response here.

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Taxpayers Protection Alliance (TPA) is a rapid response non-profit, non-partisan organization dedicated to educating the public through the research, analysis, and dissemination of information on the government’s effects on the economy.