Current Events
I’ve been deliberately steering clear of using this space to react to current events. My last few months in government were discombobulating and highly reactive, and I’ve been trying to get enough distance to be able to think again. So although I’m doing plenty of raging against the calamities of the present moment, I’m not in a place to channel that rage into writing anything of use.
However, I have accumulated a small set of “thing bad” IRS topics that are maybe worth putting down on paper, if for no other reason than to get them out of my brain.
Clue: Direct File Edition
Newly minted IRS Commissioner Billy Long made some off-the-cuff remarks at a conference for tax practitioners, and this kicked off, by my count, the fourth news cycle this year about the killing of Direct File. Don’t get me wrong, as someone who’s emotionally invested in Direct File, jacking into a feed of social media outrage on a regular basis is plenty cathartic in a probably-not-healthy way. And each time the news breaks, word reaches more newly outraged folks. But this is starting to get a little repetitive as someone who has a Google News alert set for Direct File.
It does point to a likely answer for one outstanding question: who’s going to be the one holding the knife? Both Secretary Bessent and DOGE sought to avoid getting their fingerprints on the decision. It looked like Plan A was for Congress to diffusely take the blame, but language terminating Direct File was stripped from OBBBA for parliamentary reasons. They’re currently trying again via a rider on next year’s IRS budget; it’d be nifty if an amendment to remove that provision got a vote and forced members to go on the record. But absent Congressional action, it looks like “Big Beautiful Billy” (his words) will be the fall guy.
OBBBA also included a new $15 million report requiring the IRS to propose a new “public-private partnership” to replace Direct File. I’d wager this presages the triumphant return of Intuit to the Free File game, giving them a chance to recover their past fumbles. I’m also watching for what happens to the $15 million. There’s no conceivable way to spend that amount of money on writing a report in 90 days (let alone a report whose conclusions are already specified by the legislation), so the best possible outcome is the money just doesn’t get spent. The worst outcome is that the administration awards a sweetheart sole-source procurement and wildly overpays someone for little real work.
As for Direct File itself, you can still use it to file your taxes if you haven’t filed yet or requested an extension. Direct File returns are processed the exact same way as any other return, so it’s perfectly safe to use. It’s not dead yet. (But it will most definitely be dead before next year.)
Everyone Saw This Coming
The IRS lives and dies by the filing season calendar, so the comment from the Commissioner that I was most struck by was not his dismissal of Direct File but rather a revealing statement he made about the IRS’s readiness for next year. While nominally projecting confidence about the state of preparations, he warned that filing season won’t start until mid-February, as compared to the usual January timeframe.
It’s only August, and if the IRS is already expecting to be late, things could get much worse before next year. The IRS doesn’t issue refunds until filing season opens, so taxpayers will be angered by not being able to get their money. Even if the schedule doesn’t slip further, with the IRS’s back against the wall, they could be under immense pressure to start filing season before their systems are truly ready, which could result in errors and further delays for some taxpayers.
All of this is the obvious consequence of cutting 25% of IRS employees right before passing a complex new tax law. Even worse than the topline numbers, the “put them in trauma” strategy drove out many of the IRS’s long-time MVPs, the folks who could be counted on to make it work year after year, come hell or high water. Some really great people are still there, but they’re now spread even more thin. I’m rooting for them, but I don’t envy their task.
The IRS knows how bad things could get. I was surprised when the administration appeared to reverse course on its hiring freeze, and posted job announcements for permanent customer support representatives, the folks who field taxpayer questions via phone. But those announcements were quickly canceled without explanation.
Salting the Earth
I’ve been following the administration’s efforts to extract IRS data for use by ICE. Even if the scheme isn’t illegal outright, it seems ripe for abuse.
Every IRS employee is drilled on the importance of protecting taxpayer data. The number 6103, the section of the Internal Revenue Code governing when and how the IRS can share data, is so well-known that it becomes a sort of shorthand, e.g. “I think that’s a 6103 issue.” The collective responsibility to respect taxpayer privacy is such a pervasive cultural ethos, it wasn’t remotely surprising that the Littlejohn data breach was the work of a contractor, not an employee. Stating the obvious, these are not values ICE employees share.
The thing I keep returning to is that, as a means of achieving its stated purpose, I don’t think the data sharing arrangement as it’s currently described will be all that effective. Maybe this isn’t understood by the folks in charge, a result of everyone with an ounce of professional ethics or legal self-preservation staying well clear of the project (or, you know, getting fired). But perhaps there’s another purpose that’s going unsaid.
I think the potential “value” of the effort is the deliberate destruction of trust in government, particularly among immigrant communities, the equivalent of salting the earth after conquest so nothing will grow again. Yeah, that will be effective. To recover from this destruction and someday recultivate trust, it won’t be sufficient to say, “Don’t worry, we’re running things now.”
We’ll need to rebuild in such a way that this isn’t possible. We need to protect privacy with more than just norms and good intentions. And, contra a lot of civic tech orthodoxy, that could mean more restrictions around data sharing, not less.