The IRS’s Direct File pilot, launched in 2024 to offer free online filing for eligible taxpayers, came with a lower error rate than many commercial software options—but its reported costs missed the mark, according to a new audit by the Treasury Inspector General for Tax Administration (TIGTA).  

While the IRS cited $24.6 million as the total cost to develop and run the pilot, TIGTA found that number omitted over $8.8 million in additional government spending. Notably, this included $7.3 million for 29 U.S. Digital Service employees detailed to the IRS from the Office of Management and Budget (OMG), and $1.5 million related to account setup costs through the IRS’s credential service provider. TIGTA emphasized that actual costs could be even higher, as full OMB data was not made available.  

The pilot, which ran from February to April 2024, saw over 423,000 account logins but only 140,800 accepted returns. Common issues included eligibility confusion and return to rejections due to unexpected inputs. Still, the IRS found error rates comparable to other e-file platforms and plans to expand the program in 2025.  

However, TIGTA cautioned that continued expansion should include better tracking of shared costs and improved user guidance. As reported by Accounting Today, the future of Direct File depends not just on functionality, but transparency and fiscal accountability.