Direct File will allow some 640,000 Oregonians to easily prepare and file their returns directly with the IRS — for free. (Getty Images)
For Oregonians, this tax season ushers in a profound change in how we file our taxes. Since the advent of electronic filing, we have needed to pay a middleman — usually a big corporation — just to carry out our civic duty to pay taxes. No longer.
This year, Oregonians will have access to Direct File. This online tool will allow some 640,000 Oregonians to easily prepare and file their returns directly with the IRS — for free. The launch of Direct File marks the start of a better way of doing taxes, one that cuts out the middleman.
The arrival of Direct File has been a long time coming, the culmination of more than two decades of efforts to put the public interest ahead of those of, mainly, one big corporation. In 2002, as more people opted to file taxes electronically, the Bush administration floated the idea of creating “an easy, no-cost option for taxpayers to file their tax return online.” But such talk from the White House triggered alarm bells at Intuit, maker of TurboTax.
The company, which reaps billions every year from tax filers, launched “a sophisticated, sometimes covert war to prevent the government” from creating its own tax filing software, ProPublica detailed in a lengthy investigation. Its tactics in this war have included aggressive lobbying and big campaign contributions. They have also included cutting a deal with the government to provide some tax filers a free filing option and then reneging on that deal.
But in a major win for ordinary folks, the IRS — equipped with new resources after years of shrinking budgets — finally developed its own tax filing tool. Last year the agency tested Direct File in 12 states. The reviews by users were overwhelmingly positive.
This tax filing season, Direct File has expanded to 13 more states, including Oregon. So beginning on Jan. 27, hundreds of thousands of Oregonians will be able to use this free IRS tool. Currently, Direct File does not work for those who itemize their tax deductions or who have business income to report. To see if you are eligible, you can visit directfile.irs.gov.
Once users submit their federal return using Direct File, the system will direct them to Oregon’s own Direct File system, launched last year. Because the two systems are synced, users won’t have to re-enter their information from the federal return.
Besides synching with Oregon Direct File, this year’s version of Direct File has additional functionality, compared to the initial product tested last year. This year, the tool will pre-populate personal information and certain figures from a filer’s W-2. These kinds of improvements point to a future where many more users are able to use Direct File, and where tax filing becomes easier and easier.
The benefits of Direct File go beyond sparing users from having to spend money just to pay their taxes. In eliminating the complexity and cost of filing taxes, Direct File removes a key obstacle preventing people from claiming tax credits designed to help families make ends meet. Tax credits like the Earned Income Tax Credit and the Child Tax Credit are an excellent way to make families more secure, but they only work if families actually claim the credit by filing a tax return.
Intuit has not taken Direct File lying down. It has been spending more money than ever lobbying Congress to kill the public tax filing tool. Doing Intuit’s bidding, a group of House Republicans issued a letter in December calling on the incoming Trump administration to pull the plug on Direct File.
Fortunately, it looks like Direct File will remain in place for the time being. That was the message from Trump’s nominee for Secretary of the Treasury, Scott Bessent, during his confirmation hearing before the Senate Finance Committee. Asked point-blank by Oregon Sen. Ron Wyden about the future of Direct File, Bessent said, “I will commit that for this tax season, Direct File will be operative.”
The threat to Direct File may have eased in the short term, but you can be sure that Intuit won’t stop trying to preserve its massive cash cow. One way to push back against efforts to derail Direct File would be to use the tool.
For too long, Oregonians have had to pay a middleman to file taxes. But now, Direct File has arrived, providing a better way to file taxes.