ARI SHAPIRO, HOST:
With Tax Day less than two weeks away, some people are getting help from an unexpected source - the IRS. The tax collector is testing a new service that lets people file digital returns directly with the government for free. NPR's Scott Horsley talked with taxpayers who've tried it.
SCOTT HORSLEY, BYLINE: So far, about 50,000 people have filed their taxes using the new Direct File system from the IRS. The early reviews are pretty good.
MARINA GARCIA: I mean, it's completely free - for me, also a top selling point.
DIANA CABA: Having that free option was very important to me.
DAVID RANSOM: To be clear, the Direct File program is not free. Only in Washington is a program that costs more than $100 million considered free.
HORSLEY: That last voice you heard represents the commercial tax preparation industry, which, as you might imagine, is strongly opposed to this new public option for taxpayers. Many of those experimenting with Direct File have used commercial tax prep services in the past. Marina Garcia, who lives in Georgetown, Texas, found the IRS system similar to H&R Block's tax software but without the repeated prompts to upgrade and pay more.
GARCIA: If it sticks around for the rest of my working life, I am doing business directly with the IRS. I don't have to go to a third party. I don't have to pay. It's straightforward. It's easy-peasy.
HORSLEY: On average, taxpayers who use commercial tax prep services pay about $140 a year. For now, the Direct File alternative is just a pilot program. It's only available in a dozen states and only for those with fairly simple tax situations - people like Diana Caba, who lives in New York City and takes the standard tax deduction.
CABA: I have one job. I don't have certain assets that I would have to report on. For me, as someone who has experience going online, I thought that it was a very smooth process.
HORSLEY: And, Caba says, she got her tax refund in about a week. Both Caba and Garcia say the system might be more intimidating for people who aren't used to doing their own taxes. IRS Commissioner Danny Werfel has stressed Direct File is just one of many options taxpayers can choose from.
(SOUNDBITE OF ARCHIVED RECORDING)
DANNY WERFEL: Some will hire an accountant. Some will go to the commercial software and pay. And what we heard from taxpayers - and we heard it pretty loudly - was that there was an interest in having an option where they could file directly with the IRS for free.
HORSLEY: The IRS is hoping 100,000 people will use Direct File this year. That hardly seems like a threat to the commercial tax prep business - TurboTax processed 45 million returns last year. Still, the industry is pushing back hard on the new IRS service.
RANSOM: We think Direct File is costly, confusing and unnecessary.
HORSLEY: David Ransom has represented paid tax preparers in Washington for more than a dozen years. He argues the money the government is devoting to Direct File would be better spent improving customer service at the IRS. He also raises a question that came up in the government's own surveys - will people trust the IRS to minimize their tax bill and find every break they're entitled to?
RANSOM: They are the nation's tax collector, and their job is to collect tax revenue.
HORSLEY: Marina Garcia isn't worried about that. She thinks about the hundreds of dollars her immigrant father shelled out every year at commercial tax prep offices that pop up next to Mexican grocery stores in Texas every spring.
GARCIA: I remember - because I was always the translator for my parents - going into a hole-in-the-wall tax office. How much did he spend filing taxes for the majority of his working life?
HORSLEY: The IRS will decide later this year whether to expand Direct File to more states and more complicated tax returns. Garcia thinks many people, like her dad, will welcome the free service - so long as it comes with enough hand-holding. Scott Horsley, NPR News, Washington.
(SOUNDBITE OF OL' DIRTY BASTARD SONG, "GOT YOUR MONEY (FEAT. KELIS)" Transcript provided by NPR, Copyright NPR.
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