This browser does not support the Video element.
IRS plans to cut as much as half of its workforce
The IRS is drafting plans to cut its workforce by as much as half. This is through a mix of layoffs, attrition and incentivized buyouts, according to two people familiar with the situation.
IRS Direct File – a new and seemingly popular service from the IRS that allows taxpayers to directly file their taxes using the IRS website instead of a commercial tax preparing service – could be on the chopping block.
As Elon Musk and his Department of Government Efficiency aggressively look for ways to slash the federal budget and its workforce, the fate of IRS Direct File remains unclear. It was already in the crosshairs of Republicans since it launched last year.
What is IRS Direct File?
The backstory:
Direct File launched as a pilot program in 2024 after the IRS was tasked with looking into how to create a "direct file" system as part of the money it received from the Inflation Reduction Act signed into law by President Joe Biden in 2022. Last May, the agency announced that the program would be made permanent.
What we know:
The IRS accepted 140,803 returns filed by taxpayers using Direct File in the 12 states where it was available last tax season. It’s been expanded to include half the country this year.
FILE - a 1040 U.S. Individual Income Tax Return document (Photo illustration by Michael Bocchieri/Getty Images)
What we don't know:
It’s unclear how many taxpayers have used Direct File this year.
What they're saying:
Merici Vinton, an original architect of Direct File from the U.S. Digital Service, noted the ease and accessibility of the program and called it "a great example of how people should interact with the government in the 21st century."
RELATED: IRS could cut up to half of its 90,000-person workforce: AP sources
"We effectively launched a startup in the IRS," she said. "It was built by an in-house product team, in an iterative manner, and we ship updates to the software to improve user experience in real time based on feedback. If we continue to invest in it, both taxpayers and the IRS can benefit."
Did DOGE delete IRS Direct File?
Dig deeper:
Musk posted last month on his social media site that he had "deleted" 18F, a government agency that worked on technology projects such as the IRS’ Direct File program. This led to some confusion about whether Direct File is still available to taxpayers. However, conversations inside the IRS indicate that no decision has been made on whether to cut the program, two people familiar with these conversations tell The Associated Press.
RELATED: DOGE accused of accessing Social Security data of millions of Americans
Musk and his cadre of computer programmers could decide to wield their tech skills to boost the program — or use the very same digital savvy to delete it. In November, before President Trump took office, Musk and Vivek Ramaswamy, who co-led DOGE before parting ways with Musk, were considering creating a separate mobile app for Americans to file their taxes. It’s unclear where that stands.
Why do Republicans want to get rid of IRS Direct File?
The other side:
Republicans and commercial tax preparation firms are targeting it for removal. They complain the program is a waste of money because free filing programs already exist, although they are hard to use.
Grover Norquist, president of Americans for Tax Reform, said the IRS never got explicit permission from Congress to create the Direct File system.
RELATED: Elon Musk says Postal Service, Amtrak should be privatized
"It really doesn’t matter if it’s a good idea. It was done illegally," he said, calling on Congress and the Justice Department to look into what he says is unauthorized spending that went into the creation of Direct File.
The Source: This report includes information from The Associated Press and previous LiveNow from FOX reporting.