IRS open-sources Direct File tax software amid political and industry pushback – here's why

The Internal Revenue Service (IRS) moved toward government transparency by open-sourcing its Direct File software code. Direct File is a free, user-friendly tax filing tool developed in partnership with the U.S. Digital Service and 18F. So, who doesn’t like free services and open source? The current Trump administration and tax preparation powerhouses, Intuit and H&R Block. 

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Direct File was launched as a pilot program in 2024. It allowed eligible taxpayers in a limited number of states to file their federal returns directly with the IRS at no cost. The program was expanded in 2025 to more states and taxpayers. 

The pilot exceeded expectations: more than 140,000 taxpayers used Direct File in its first year, claiming over $90 million in refunds and saving an estimated $5.6 million in tax preparation fees. Users praised the tool for its ease of use, accuracy, and robust customer support, with 90% of surveyed participants rating their experience as “Excellent” or “Above Average.” How often do government services get that kind of praise? 

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Despite making users happy, Direct File has faced fierce opposition from the commercial tax preparation industry. In particular, Intuit, the maker of TurboTax, has long opposed the IRS offering free tax filing services. These companies do so because, as the National Taxpayers Union Foundation points out, “The average 1040 filer now faces $290 in out-of-pocket costs and spends 13 hours preparing a return. The compliance burden for Form 1040 for individual income taxes reached $144 billion, an all-time high.” For tax software companies and services, that’s a fortune. 

According to the Economy Security Project, had Direct File been allowed to continue, it would have saved “the average user $160 in filing fees and hours of their time each year, which saves Americans a total of $11 billion annually between filing fees and time costs.”

Nevertheless, on April 17, a few days after tax day, the government announced it would shut down Direct File. The administration gave no reason for this decision. However, Derrick Plummer, an Intuit representative, said in a statement at the time that “Direct File is and has been a solution in search of a problem, a drain on critical IRS resources and a waste of taxpayer dollars.” 

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In a statement, Senator Elizabeth Warren, D-Mass, a Direct File supporter, said on Facebook, “Donald Trump and Elon Musk are going after Direct File because it stops giant tax prep companies from ripping taxpayers off for services that should be free. Americans want a free and easy way to file their taxes — Trump and Musk want to take that away.”

While the IRS program has gone, the software is now open, and this has always been the goal. In 2024, the Direct File programmers said they’ve been given “the mandate to develop software that ensures every taxpayer receives the full benefit of any tax provisions for which they are eligible. Releasing components of Direct File as open-source software would enable the team to demonstrate this commitment.” 

This open-source move was also in accordance with the SHARE IT Act, which requires federal agencies to make custom-developed source code available to the public unless a specific exemption applies. It also enables future tax administrators to build upon the codebase, potentially making tax filing easier in the future. 

Direct File’s key developers have all left government service to join the Economic Security Project’s Future of Tax Filing Fellowship. There, alongside Gabriel Zucker of Code for America, they plan to continue their mission of making tax filing easier, cheaper, and more accessible for all Americans, leveraging the now-public Direct File codebase.

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With the code open-sourced, developers, nonprofits, and other governments can build on Direct File’s foundation to create new, compliant tax filing tools. Such implementations would still require integration with IRS systems and legal frameworks. 

Even with the death of the federal program, the project’s innovation and public benefit will persist. As Direct File developer Chris Given wrote on his blog, “Establishing trust with taxpayers was core to our approach for designing and building Direct File. By creating the most accurate option for filing, by making taxes accessible to all, by keeping taxpayer data secure, and now, by publicly sharing Direct File’s code, the Direct File team showed our dedication to earning taxpayers’ trust.”