Remarks by Secretary of the Treasury Janet L. Yellen on Pennsylvania Joining IRS Direct File

As Prepared for Delivery

I am very glad to be in Philadelphia today with Governor Shapiro, Congressman Boyle, and Congresswoman Scanlon. We are here to make the exciting announcement that Pennsylvania will offer Direct File to its residents, starting next filing season.

The U.S. economy today is strong; unemployment is near historic lows; and inflation has significantly declined. But many Americans are concerned with the high cost of living and are struggling to make ends meet. So, bringing down costs for American families is the Biden-Harris Administration’s top economic priority. This means doing everything we can to address the costs of health care, housing, and energy and tackling challenges that have been building for decades. It also means making it simpler and cheaper for Americans to pay their taxes and get back what they are owed. 

It should be easy to meet your tax obligations and claim the credits, deductions, and refunds for which you are eligible. Instead, the Internal Revenue Service has been underfunded, which means that taxpayers have not gotten the support they deserve. Taxpayers across the country have had to pay for-profit companies hundreds of dollars a year to file their taxes. And too many eligible taxpayers have missed out on tax credits that would give them crucial breathing room in their household budgets.

The Inflation Reduction Act has enabled us to change this. In the less than two years since it was passed, we have driven significant transformation at the IRS to drastically improve the taxpayer experience. We massively improved customer service, including through modernizing our call centers, dramatically reducing call wait times from 28 minutes to around just 3 minutes, and adding a new call-back option that saved taxpayers an estimated 1.4 million hours of waiting on hold. We have also been able to expand operations at Taxpayer Assistance Centers, serving almost 500,000 more taxpayers last year than in the year prior. We redesigned more than 100 notices and made them available online so that it is easy for taxpayers to understand what actions they need to take. And we enhanced popular tools such as Where’s My Refund, enabling taxpayers to better anticipate their refunds and plan their budgets.

We also piloted the program we are focused on today. Direct File allows eligible taxpayers to file their taxes online, for free, directly with the IRS. It saves taxpayers money upfront because they do not have to pay to prepare or file their returns and it saves them money on the backend by helping them get their refunds and claim the tax credits they deserve. It makes the whole process easier and more efficient. 

I am proud that the Direct File pilot during this past filing season was a significant success. To make sure the pilot went smoothly, we focused on taxpayers in 12 states and with simple returns. Over just five weeks, interest grew as we got the word out and taxpayers started using the product. By the final week, Direct File was processing more than 5,000 accepted returns each day. By the end of filing season, more than 140,000 taxpayers across all 12 of the pilot states filed through Direct File, far exceeding the 100,000 goal we had set. These taxpayers saved $5.6 million in federal filing fees and received $90 million in refunds. 

Taxpayers also liked the product and found it easy to use. 90 percent of survey respondents rated their experience with Direct File as “excellent” or “above average.” They appreciated that it saved them time filing, allowed them to quickly fix mistakes, provided customer support, and that there were no fees or upsells. And using Direct File increased public trust in the IRS.

This success fueled demand for Direct File from taxpayers across the country. We heard from over 200 organizations representing communities throughout the United States. And we also heard from over 100 members of Congress.

So in June, IRS Commissioner Werfel and I announced that we were making Direct File a permanent offering. We invited all 50 states to participate starting as soon as next filing season. 

Today, and thanks to Governor Shapiro, Pennsylvania joins the growing list of states that have committed to join Direct File, with plans to bring Direct File to more than 1.5 million Pennsylvania residents starting next January. Taxpayers deserve to see how our tax system should work. Thanks to the IRA, we are finally able to make that happen.  

Let me thank Congressman Boyle and Congresswoman Scanlon for their support of the investments we are making in the IRS. And let me congratulate Governor Shapiro on this additional step forward. I look forward to working with state and local leadership across the country to advance the Biden-Harris Administration’s agenda to lower costs for American families.

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