Nearly two dozen state officials are calling for the Biden administration to terminate a new free tax-filing program by the IRS.
is “a solution in search of a problem” and specifically raised concerns about its effects on state tax returns.
In the letter, the state financial officers contend that because the Direct File system only handles federal tax returns, residents might be unaware they also have to separately file state returns and could miss out on state tax refunds or face penalties for not filing at the state level. “Imagine the surprise to the taxpayer who becomes subject to audit by the IRS after having filed through Direct File and having felt assurances that the tax return was prepared properly through the IRS’s own system,” the officials added. for a free agency-run electronic filing system. After several weeks of testing, the pilot software is now available in 12 states, according to the Treasury Department.
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