WASHINGTON, D.C. – Americans will be powerless against an agency that is now going to be tax preparer, filer, and auditor as part of the IRS’s soon-to-be released e-file system, which is “virtually guaranteed to fail” according to former Obama-Biden Administration Chief Information Officer (CIO), Tony Scott, in an op-ed penned last week.

As Scott writes, the IRS’s proposed e-file system does not meet the needs of taxpayers:

“Based on what I have seen to date, it is clear to me that the ‘free’ tax-filing software project (so-called ‘IRS Direct File’) undertaken by the Department of the Treasury and the Internal Revenue Service is virtually guaranteed to fail…the proposed solution — tax prep software developed by the IRS for what seems to be federal tax returns only — will come up short, because it doesn’t address some of the most basic needs of the targeted taxpayers…These are important matters that the commercial tax prep companies have long ago learned and are missing from the proposed IRS approach on Direct File.”

Scott also raises suspicion that the IRS’s own internal cost estimates are far less than that of similar government software projects of this scale:

“The estimated costs of this project are very likely grossly understated, based on a sampling of other government software development projects. This is a pattern I’ve seen over and over, and it is not likely to change.”

This op-ed comes on the heels of an October 2 report by the Treasury Inspector General for Tax Administration (TIGTA) which found that the IRS overstated taxpayer interest in a government-run Direct File system and likely underestimated the cost to taxpayers.

Although the IRS stated in May 2023 that a Direct File system would cost American taxpayers $2.5 billion over ten years, according to TIGTA: “When we asked the IRS for documentation supporting how it arrived at these various cost estimates, it could not provide us with any.” For comparison, the Affordable Care Act website cost approximately $24 billion over ten years – nearly ten times more than the IRS estimates for a Direct File system – and services about ten to 15 million health insurance applicants each year. The IRS Direct File system would theoretically have to service 160 million taxpayers annually.

The TIGTA report also shows that IRS surveys sent to taxpayers to solicit input about the agency’s proposed e-file system may have been improperly designed to mislead Americans about their ability to file state taxes via direct e-file. The IRS surveys failed to provide a “neutral” option, instead putting survey participants in a forced-choice scenario where they were more likely to agree with the idea of establishing a direct e-file program.

Key Takeaways from the TIGTA Report: 

• The IRS study failed to provide a “neutral” option, putting survey participants in a forced- choice scenario where they were more likely to agree with the idea of establishing a direct e-file program.
• The survey prompt misled taxpayers by suggesting direct e-file would give them the ability to file both federal and state tax returns. An independent study shows 60 percent of taxpayers would stick with their current software if state returns were included.
• The IRS could not provide TIGTA with any documentation to support the agency’s cost estimates or its assertion that there would be at least 5 million

Background:

• The Inflation Reduction Act required an “independent third party” to report on “the overall feasibility, approach, schedule, cost, organization design, and Internal Revenue Service capacity to deliver such a direct efile tax return ”
• To produce that report, President Biden’s IRS hired New America – an organization populated by Democrat Party operatives and other left-leaning officials – which has already stated “the government…can and should build this tool in the coming ”
• The Biden Administration also appointed Professor Ariel Jurow-Kleiman to assist in the supposedly “independent” review of the e-file proposal – an individual that has previously been on the record openly championing the establishment of such a program at the
• An e-file program like that imagined in the IRA has been a long-time priority of Senator Bernie Sanders, Senator Elizabeth Warren, and Representative Alexandria Ocasio- Cortez to give the IRS control over both the filing and auditing of tax

READ: Watchdog: IRS Cooked the Books on Direct E-File Study, Misled American Taxpayers