By Kenneth Corbin

Direct File, the IRS' free alternative to commercial tax-preparation services, is facing potential elimination as Congress works to finalize a massive tax and spending bill.

The House version of the so-called Big Beautiful Bill Act states plainly that no later than 30 days from the enactment of the legislation, "the Secretary of the Treasury shall ensure that the Internal Revenue Service Direct File program has been terminated."

The bill also calls for winding down the IRS' Free File program, which includes a network of authorized commercial tax-preparation partners such as TaxSlayer and TaxAct.

The bill instead calls for a task force to "design a better public-private partnership between the IRS and private-sector tax-preparation services" to replace Free File and Direct File.

The bill directs the Treasury Department to deliver a report to Congress within 90 days detailing the cost and feasibility of a new free-filing service that would cover up to 70% of U.S. taxpayers.

That could offer an opportunity for a company such as Intuit, which has been a consistent critic of Direct File, to reset its relationship with the IRS.

"Direct File is completely unnecessary, wasteful, failed to meet its objectives, and was never authorized by Congress," says Intuit spokeswoman Tania Mercado. "Americans already have access to free tax preparation at zero cost to the taxpayer and zero cost to the government -- this was true well before Direct File."

Intuit "will continue to advocate for free, innovative options and the importance of public-private partnership that is in the best interest of the American taxpayer," she adds.

A spokeswoman for the Republican majority on the Senate Finance Committee, which is involved in drafting the upper chamber's bill, wouldn't comment on whether the Direct File provision will be in the legislation or when its version will be released. The House passed the bill on May 22, but the Senate's version could be very different. Congressional Republicans have said they hope to have a final bill passed by July 4.

"We are not commenting on any specific provisions or potential policy changes while Senate negotiations are under way," she says.

There are many moving parts to the process. The Republican majority in both chambers is slim while Democratic opposition is uniform, and the policy provisions could change before a final vote. The bill has become more fraught since former Trump advisor Elon Musk began blasting the measure for its impact on the deficit.

Direct File has drawn support from Democratic lawmakers such as Sen. Elizabeth Warren (D., Mass.), and is generally opposed by Republicans, who have argued that it is costly, little used, and unnecessary given free commercial offerings that are available.

Supporters have objected to the upselling tactics of commercial tax products that offer a free service as an enticement but require a fee to complete the filing process for many returns.

Direct File first became available as a limited pilot program last year, when taxpayers in 12 states who had fairly basic returns could use the service. Under the Biden administration, the IRS heavily promoted the service and announced plans to expand the program to twice as many states for the tax season that just wrapped up.

The fate of Direct File had been in question since Trump's victory, particularly after he selected an opponent of the program, former Rep. Billy Long, to head the IRS. Long cleared a procedural vote in the Senate on Wednesday, bringing him closer to confirmation to the role in a vote that could come later this week.

Another scare for the program came when Musk's DOGE team targeted the government technology-development group that helped build Direct File. That group, called 18F, has indeed been eliminated, but the IRS program is still intact.

It remains to be seen if Direct File will survive the next threat to its existence in the form of the Big Beautiful Bill.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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June 11, 2025 16:07 ET (20:07 GMT)

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