A free IRS e-filing tax service could start rolling out next year

Rumors of a free national tax e-filing service have surfaced repeatedly over the past couple years, and it sounds like the US could be one step closer to making it a reality. As The Washington Post first reported on Monday, the IRS plans to test a digital tax filing prototype with a small group of Americans at the onset of the 2024 tax season—but just how much of your biometric data is needed to use the service remains to be seen.

Although the IRS offers a Free File system for people below a certain income level (roughly 70 percent of the population), the Government Accountability Office estimates less than three percent of US tax filers actually utilize the service. The vast majority of Americans instead rely on third-party filing programs, either in the form of online services like Intuit TurboTax and H&R Block, or via third-party CPAs. The $11 billion private tax filing industry has come under intense scrutiny and subsequent litigation in recent years for allegedly misleading consumers away from free filing options to premium services. Last November, an investigation into multiple major third-party tax filing services’ data privacy policies revealed the companies previously provided sensitive personal data to Facebook via its Meta Pixel tracking code.

[Related: Major tax-filing sites routinely shared users’ financial info with Facebook.]

According to The Washington Post’s interviews with anonymous sources familiar with the situation, the IRS is developing the program alongside the White House’s technology consulting agency, the US Digital Service. A dedicated universal free filing portal would add the US to the list of nations that already provide similar options, including Australia, Chile, and Estonia.

Last year, the IRS found itself facing a barrage of criticisms after announcing, then walking back, a new policy that would have required US citizens to submit a selfie via ID.me to access their tax information. ID.me is a third-party verification service used extensively by state and federal organizations, as well as private companies for proofing, authentication and group affiliations via a combination of photo uploads and video chat confirmations. Using ID.me is currently one of multiple verification options for the IRS. It is unclear if such a process will be mandatory within a future federal free filing portal. Both the IRS and the US Treasury Department have not responded to requests for clarification at the time of writing.