States should look beyond Direct File
With the federal government abandoning Direct File for now, many state leaders are, admirably, looking for ways to keep the party going. But as the field works to advance the cause of equitable tax system access, it’s important to remember that our goal isn’t just to keep Direct Filing. Our goal is to keep making the sort of transformative progress that Direct File showed was possible: delighted taxpayers, increased trust in government, efficiencies and cost savings, and improved access to tax credits for those who need them the most. In order to get these results without the IRS, states should look to replicate the mindset that brought Direct File to life, rather than simply looking to replicate Direct File itself.
Meeting this moment requires imagination, and as with Direct File, the courage to try something new. We believe this is a time for experimentation and innovation, and states can prove out ideas that the IRS could someday adopt and scale. And there are opportunities to improve state-specific processes and experiences, entirely independent of what the future holds for federal tax administration.
We’ll illustrate this mindset with three examples of experiences that states could create today. These ideas all leverage the unique position of states to craft moments of “wow” for taxpayers, and they could pave the way for Direct File to return better than ever. But these are just a few ideas. An empowered product team working closely with taxpayers, like the teams that designed and built Direct File, could invent many more ideas and far exceed our limited imagination.