Tax Return Update as IRS System Divides Users

A new poll has found people are less likely to use the new Internal Revenue Service (IRS) Direct File pilot to file their taxes in its first year than they are to use another tax preparation service.

Polling conducted exclusively for Newsweek by Redfield and Wilton Strategies on March 2, surveying 1,500 eligible voters across the U.S., found that 40 percent of respondents were not planning on using the new IRS Direct File service which offers a free way to submit federal taxes for U.S. workers.

However, the polling data does not indicate whether this is because they have taxes that are too complex to file using the new system, they are not in a pilot state, or because they have a preference for another tax preparing service.

Direct File is currently in its pilot stage and does not have the capability to deal with more complex tax returns, such as those with multiple income streams, like freelancers and business owners, at this stage. It is currently only available in 12 states: Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Despite those saying they would not be using it, 33 percent said prior to the program launching on March 12 that they would use it. U.S. taxpayers have until April 15 this year to complete and return their filings, regardless of which service they use.

Generation Z, those born between 1997 and 2012, were more likely to use Direct File than any other age group, with 56 percent saying they plan to use the IRS program. Millennials (46 percent) were more keen to try it than Generation X (24 percent), Baby Boomers and the Silent Generation (19 percent).

The poll found that those who live in the North East states are the most likely to use Direct File, with 42 percent saying they would try it, compared to 35 percent in the South, 32 percent in the West and 26 percent in the Mid West.

North easterners were the only group that indicated they were more likely to use Direct File than not, with 30 percent saying they wouldn’t, compared to percentages between 39 and 45 percent for the other three geographical areas.

Treasury spokesperson Ashley Schapitl said 19 million taxpayers will be eligible to use Direct File this tax season, with “at least several hundred thousand” expected to participate, according to a report by Vox.

A May 2023 feasibility report by the IRS found that three-quarters of taxpayers would be interested in a free tax filing system provided by the government agency. Newsweek has contacted the IRS via email for comment.