Sponsors (127)
The bill would create a free, government-run, accessible tax filing system that can save money and improve access for many taxpayers, but it concentrates sensitive data and raises significant privacy, cybersecurity, cost, and private-market competition risks.
Millions of taxpayers would be able to prepare and file federal (and integrated state) income tax returns for free via a government-run online/mobile system, reducing out-of-pocket filing costs.
People with disabilities and limited-English speakers would get better access because the service must meet Section 508 accessibility standards and provide plain-language, multilingual, user-tested interfaces.
Taxpayers could save time and make fewer errors because the system can provide prefilled returns using IRS records for taxpayers to review and file.
Taxpayers face increased privacy risks because broader prefill and required data sharing with state/local agencies expands how IRS data are used and shared.
Concentrating filing and prefilled taxpayer data on a federal platform increases the cyberattack and single-point-of-failure risk to IRS systems, potentially exposing many taxpayers to data breaches or service outages.
Taxpayers remain legally responsible for accuracy even when returns are prefilled, creating audit and penalty risk if prefilled data contain errors.
Based on analysis of 6 sections of legislative text.
Requires the IRS to create and operate a direct-file online tax preparation and filing system, bans Treasury agreements that restrict offering such services, and sets eligibility and reporting targets.
Official title: To amend the Internal Revenue Code of 1986 to codify the Direct File program.
Introduced March 4, 2026 by Brad Sherman · Last progress March 4, 2026
Creates a federally run online system that lets individuals prepare and electronically file their federal income tax returns directly with the IRS, including optional pre-filled returns using IRS records and built-in customer support. The bill also bars the Treasury from entering into contracts that limit the Secretary’s legal authority to provide tax preparation, software, or filing services and voids existing agreements that impose such limits. The new Internal Revenue Code provision requires the IRS to make the system accessible, mobile-friendly, multilingual, and prominently visible on the IRS website, and to report to Congress on usage and barriers starting August 31, 2027. It sets a target that for taxable years beginning after 2027 at least half of taxpayers in states that integrate state filing or have no state income tax be eligible to use the system, but does not appropriate funding or set detailed technical or timetable requirements.