S. 3948: Direct File Act of 2026
This bill, titled the Direct File Act of 2026, proposes several key changes to how individual income taxes are prepared and submitted in the United States. The main highlights of the bill are as follows:
Prohibition on Restrictive Agreements
The bill prohibits the U.S. Secretary of the Treasury from entering any agreements that limit the government's ability to provide tax return preparation and filing services. Agreements that would require the government to avoid offering these services will be voided 30 days after the bill's enactment.
Codification of Direct File Program
The bill establishes a Direct File program, in which taxpayers can prepare and file their federal income tax returns online directly with the government. The key components of the program include:
- The program will be owned and operated by the Federal Government.
- It will utilize existing IRS data to simplify the filing process, allowing taxpayers to import relevant data directly into their returns if they choose.
- The filing system will employ user-friendly interfaces, including an interview-based format that automatically inputs information based on taxpayer answers.
- The program will be available in multiple languages and optimized for mobile devices.
- It must follow accessibility guidelines to ensure it can be used by individuals with disabilities.
- It will be prominently featured on the IRS website and promoted through various media channels to inform taxpayers of its availability.
- Integrated customer support, including live chat options with IRS representatives, will be part of the program to assist taxpayers.
- Taxpayers may use this filing program even if they are not legally required to file a return for the taxable year.
Eligibility and Participation
Starting from tax years after 2027, the program will aim to ensure that at least 50% of taxpayers in participating states are eligible to use it. A participating state is defined as one that offers its own integrated tax filing options with the Direct File program or does not impose a state income tax.
Reporting and Evaluation
The Secretary of the Treasury will be required to report to Congress annually on the usage of the Direct File program, including taxpayer satisfaction and program effectiveness, starting no later than August 31, 2027.
Taxpayer Responsibility
The bill clarifies that taxpayers are still responsible for the accuracy of their tax returns, even when using the Direct File system.
No Fees for Use
No fees will be charged to taxpayers for using the Direct File program, making it a free service provided by the government.
State Income Tax Filing
The program will allow taxpayers in participating states to file their state income tax returns alongside their federal returns, with the IRS working to share tax information with state agencies to streamline the process. Participating states can receive grants to support the integration of their tax systems with the Direct File program.
Authorization and Appropriations
The bill includes provisions for the necessary funding to implement these changes, with appropriations authorized for fiscal years 2026 through 2035.
Effective Date
The provisions of this bill will take effect for taxable years beginning after December 31, 2025.
Relevant Companies
- INTU: Intuit Inc., which provides popular tax preparation software (TurboTax), may see a significant impact as the government offers its own tax filing services directly.
- HRB: H&R Block, a well-known tax preparation company, could face competition from the government-operated Direct File program, which may affect its customer base.
This is an AI-generated summary of the bill text. There may be mistakes.
Sponsors
41 bill sponsors
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TrackElizabeth Warren
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TrackAngela Alsobrooks
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TrackTammy Baldwin
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TrackMichael F. Bennet
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TrackRichard Blumenthal
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TrackLisa Blunt Rochester
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TrackCory A. Booker
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TrackMaria Cantwell
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TrackChristopher A. Coons
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TrackTammy Duckworth
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TrackRichard J. Durbin
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TrackJohn Fetterman
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TrackRuben Gallego
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TrackKirsten E. Gillibrand
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TrackMargaret Wood Hassan
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TrackMartin Heinrich
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TrackJohn W. Hickenlooper
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TrackMazie K. Hirono
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TrackTim Kaine
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TrackMark Kelly
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TrackAndy Kim
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TrackAngus S. King Jr.
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TrackAmy Klobuchar
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TrackBen Ray Lujan
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TrackEdward J. Markey
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TrackJeff Merkley
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TrackChristopher Murphy
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TrackPatty Murray
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TrackAlex Padilla
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TrackJack Reed
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TrackBernard Sanders
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TrackBrian Schatz
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TrackAdam B. Schiff
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TrackCharles E. Schumer
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TrackJeanne Shaheen
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TrackTina Smith
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TrackChris Van Hollen
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TrackMark R. Warner
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TrackPeter Welch
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TrackSheldon Whitehouse
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TrackRon Wyden
Co-Sponsor
Actions
2 actions
| Date | Action |
|---|---|
| Feb. 26, 2026 | Introduced in Senate |
| Feb. 26, 2026 | Read twice and referred to the Committee on Finance. |
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