by Shaanth Nanguneri, Oregon Capital Chronicle
August 26, 2025
Oregon’s Department of Revenue is encouraging taxpayers to answer questions from the federal Internal Revenue Service about a Biden-era free, online tax filing program that could be on the chopping block.
Oregon is one of 25 states that partnered with the IRS to offer this year an online pilot allowing taxpayers to file their federal income taxes directly with the agency. The state has since 2024 provided a free direct-file system for state income tax filings. In 2025, more than 13,000 Oregonians took advantage of the state’s Direct File Oregon system, including 4,700 who took advantage of the federal e-filing pilot, according to state revenue department data.
For decades Americans, unlike taxpayers in many countries, have paid billions of dollars annually to private, for-profit tax prep companies in the absence of a free government program for filing.
The IRS historically partnered with private companies to offer free or subsidized filing services for low- and middle-income taxpayers with its “Free File” program, but it was long criticized for continuing to charge some user fees. In 2022, following reporting from ProPublica that found private tax prep services tricked customers into paying for free services and lobbied Congress for years to stop a free tax filing system, Congress gave the IRS $15 million to study its options for creating a free system. By 2023, the agency produced a report that led to the 2024 direct, e-filing pilot.
But the program’s survival is facing uncertainty following the recent passage of the Republican budget bill, which directs IRS officials to report by Oct. 2 on the costs of “enhancing and establishing public-private partnerships,” and the costs of replacing “any direct e-file programs run by the Internal Revenue Service.” A previous version of the legislation proposed axing the program altogether.
That requirement led the IRS to announce its anonymous survey on Thursday, asking taxpayers for feedback about their interest in e-filing programs. It includes questions such as: “What features do you expect a free online tax preparation program to have?” with a potential answer being: “It has a low cost to the federal government.“
Oregon leaders quickly took notice, encouraging taxpayers to take the survey.
“It’s important for Oregon taxpayers to take this opportunity to provide their valuable feedback to the IRS on free tax filing options,” said David Gerstenfeld, director of the Oregon Department of Revenue, in a statement Friday. “Oregon counts on us to create a clear and easy experience for our customers and free tax filing options help us meet that mission.”
IRS officials have described the e-filing program as a tool that “walks the taxpayer through the complexities of the nation’s tax code.” The system promises accurate estimates of refunds or taxes owed, as well as transparency for how it made calculations.
The IRS suggests that direct filing is a good fit for Oregonians who have lived in the state for all of 2024, earned all of their income in the state during the year, and planned to use the same status for their federal and state tax returns.
YOU MAKE OUR WORK POSSIBLE.
Oregon Capital Chronicle is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Oregon Capital Chronicle maintains editorial independence. Contact Editor Julia Shumway for questions: [email protected].