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Taxpayers want Direct File, but relatively few have used it

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The Internal Revenue Service’s Direct File free tax prep program is attracting interest this tax season, according to a new report, but lack of familiarity and budget cuts at the IRS may doom it for next tax season.

For the report, released Wednesday by the Tax Policy Center at the Urban Institute and the Brookings Institution, researchers examined December 2024 data from Urban’s Wellbeing and Basic Needs Survey. They found that among those who filed a tax return last year, 73% reported they would be somewhat or very interested in using Direct File if they had access to it. 

Interest in Direct File was high both among those who had paid to file their taxes (69%) and those who filed their taxes for free (85%) in 2024. But around two-thirds of tax filers (68%) also agreed with the statement that they do not know enough about Direct File to feel comfortable using it, and 88 percent agreed with the statement that their most-recent filing method met their needs.

U.S. taxpayers who expressed interest in Direct File prioritize ease of use and cost when choosing how to file their tax returns. Those not interested in using Direct File were more likely to prioritize accuracy, including a reduced chance of being audited, followed by ease of use.

The Direct File program may be on the chopping block, however. The Elon Musk-led Department of Government Efficiency reportedly eliminated the 90 employees of the so-called 18F digital services team that helped develop the Direct File program, according to Reuters. A separate report released earlier this week by the Treasury Inspector General for Tax Administration found that IRS claims regarding the Direct File pilot program last tax season omitted more than a third of costs. TIGTA found that the $24.6 million the IRS reported as the cost to develop and operate the Direct File Pilot didn’t include all the costs incurred by the government. The IRS’s reported totals did not include an estimated $8.8 million for costs incurred by the Office of Management and Budget for employees detailed to the IRS to help develop and pilot Direct File and costs incurred to create or leverage existing accounts through the IRS’s Credential Service Provider. The IRS also did not include all the costs of IRS employees from other functions who collaborated to support Direct File. 

During the pilot, 423,450 taxpayers created or signed in to a Direct File account. However, only about one-third of these taxpayers (140,803 taxpayers) submitted a tax return that was accepted by the system through Direct File. The pilot program was available in 12 states last year and expanded to 25 this year. An estimated 30 million taxpayers across those 25 states can use Direct File in the ongoing 2025 tax filing season.

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Accounting

Accountants on IRS and PwC layoffs, accounting students and more

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Complimentary Access Pill

Enjoy complimentary access to top ideas and insights — selected by our editors.

This week’s stats focus in part on the job titles seeing the greatest losses at the IRS during layoffs; as well as the states that have proposed or passed alternatives to the 150-hour rule; the percentage of master’s in accounting program applicants since 2020; the number of PwC employees laid off in May; the projected size of Deloitte’s new New York City headquarters; and the amount of 2026 HSA annual contribution limits, depending on coverage.

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CrowdStrike says DOJ, SEC sent inquiries on firm accounting

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CrowdStrike Holdings Inc. said U.S. officials have asked for information related to the accounting of deals it’s made with some customers and said the cybersecurity firm is cooperating with the inquiry.

The Austin, Texas-based company said in a filing Wednesday that it has gotten “requests for information” from the U.S. Department of Justice and the Securities and Exchange Commission “relating to the company’s recognition of revenue and reporting of ARR for transactions with certain customers.” ARR refers to annual recurring revenue, a measure of earnings from subscriptions.

The company said the federal officials have also sought information related to a CrowdStrike update last year that crashed Windows operating systems around the world.

“The company is cooperating and providing information in response to these requests,” the filing states.

U.S. prosecutors and regulators have been investigating a $32 million deal between CrowdStrike and a technology distributor, Carahsoft Technology Corp., to provide cybersecurity tools to the Internal Revenue Service, Bloomberg News first reported in February. The IRS never purchased or received the products, Bloomberg News earlier reported.

The investigators are probing what senior CrowdStrike executives may have known about the $32 million deal and are examining other transactions made by the cybersecurity firm, Bloomberg News reported in May.

Asked for comment about the filing, CrowdStrike spokesperson Brian Merrill said, “As we have told Bloomberg repeatedly, this is old news and we stand by the accounting of the transaction.” 

A lawyer for Carahsoft previously declined to comment on the federal investigations, and representatives didn’t respond to subsequent requests for comment about them.

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Elon Musk urges Americans take action to ‘kill’ Trump tax cut bill

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Tech titan Elon Musk ratcheted up his offensive against Donald Trump’s signature tax bill on Wednesday, urging that Americans contact their lawmakers to “KILL” the legislation.

“Call your Senator, Call your Congressman,” Musk wrote in a social media post. “Bankrupting America is NOT ok!”

The post came one day after Musk lashed out at the tax bill, describing it as a budget-busting “disgusting abomination” as Republican fiscal hawks stepped up criticism of the massive fiscal package. 

Trump hasn’t publicly responded to Musk’s comments, but the White House put out a statement Wednesday saying the legislation “unleashes an era of unprecedented economic growth.” 

And House Speaker Mike Johnson told reporters that Musk is “dead wrong” about the bill and that the tax cuts will pay for themselves through economic growth.

Musk’s public condemnation pits him against the president at a critical time as Trump is personally lobbying holdouts on the bill. His campaign against the legislation threatens to stiffen resistance and delay enactment of the tax cuts and debt ceiling increase. 

Musk has attacked the legislation days after leaving a temporary assignment leading the administration’s Department of Government Efficiency initiative to cut federal spending. The Tesla Inc. chief executive officer’s high-profile role in the Trump administration eroded his business brand and sales of his company’s electric vehicles plunged. 

The House-passed version of the tax and spending bill would add $2.4 trillion to U.S. budget deficits over the next decade, according to an estimate released Wednesday from the nonpartisan Congressional Budget Office.

The CBO’s calculation reflects a $3.67 trillion decrease in expected revenues and a $1.25 trillion decline in spending over the decade through 2034, relative to baseline projections. The score doesn’t account for any potential boost to the economy from the bill, which Johnson and Trump argue would offset the revenue losses. 

Musk, the world’s richest man with a net worth of about $377 billion according to the Bloomberg Billionaires Index, has become a crucial financial backer of the Republican party. After making modest donations most years, Musk became the biggest U.S. political donor in 2024, giving more than $290 million.

Johnson said Musk had promised to help reelect Republicans just a day before savaging Trump’s bill. Musk did not respond to a request for comment. 

Most of Musk’s giving was aimed at electing Trump but he also supported congressional candidates. America PAC, the super political action committee that Musk largely funded, spent $18.5 million in 17 separate House races. Though that total pales in comparison to the roughly $255 million he spent backing Trump, the spending means a lot in a congressional election, where challengers on average raise less than $1 million.

Control of the House will likely be decided by the outcome of fewer than two dozen close races in the 2026 midterm elections. The GOP’s chances of holding their majority would suffer a major blow if Musk were to withdraw his financial support.

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