Direct File Act of 2026
- Bill Number
- S. 3948
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-02-26: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-04-01T20:08:58Z
AI-Generated Summary
Direct File Act of 2026
Purpose
The legislation aims to establish a permanent, government-operated online system for individuals to prepare and file federal income tax returns at no cost, while removing barriers that could limit such services.
Key Provisions
- Prohibition on restrictive agreements: The Treasury Secretary cannot enter new contracts that limit the government's ability to offer tax preparation or filing services. Existing agreements with such restrictions become void after 30 days.
- Codification of the online program: A new section (7531) is added to the Internal Revenue Code requiring the Secretary to create and run a free online tax preparation and filing system with specific features, including:
- Use of IRS data to pre-fill returns where possible.
- Interview-style questions, plain language, multiple languages, and mobile access.
- Compliance with accessibility standards.
- Prominent placement on the IRS website, marketing efforts, and customer support.
- Option for taxpayers to file even if not required to do so.
- Eligibility expansion: Starting after 2027, at least 50% of taxpayers in participating states (those integrating state returns or without state income tax) must be eligible, with ongoing expansion.
- State integration: The program allows seamless filing of state returns in participating states, supported by a $1 million grant for states meeting similar standards.
- No fees and taxpayer responsibility: The service must remain free; taxpayers retain full responsibility for return accuracy.
- Reporting requirement: Annual reports to Congress on usage, satisfaction, and barriers.
- Changes to information return deadlines: Adjusts filing dates for certain information returns to align with related statements or set a March 31 deadline for electronic filings.
- Funding: Authorizes appropriations for fiscal years 2026 through 2035.
- Effective date: Applies to tax years beginning after December 31, 2025.
Significant Changes to Existing Law
- Creates a statutory requirement for the IRS to operate a free online filing program, shifting it from potential administrative discretion to mandatory law.
- Voids or blocks agreements that previously restricted government tax services.
- Modifies deadlines under section 6071 for certain information returns.
Potential Impacts
- Government agencies: Requires the IRS to build, maintain, and promote the system, including data integration and support services.
- Citizens: Provides a no-cost option for preparing and filing returns, potentially simplifying the process for eligible users.
- State governments: Enables integrated filing for state taxes in participating states and offers grants for compliance.
- No direct effects on international relations are addressed.
Main Stakeholders Affected
- Individual taxpayers eligible for the program.
- The Internal Revenue Service and Treasury Department.
- State tax agencies in participating states.
- Taxpayers in states without income taxes or those electing integration.
Notable Legal, Constitutional, or Political Implications
- Establishes a federal mandate for a government-owned tax filing tool, potentially affecting private tax preparation markets by prohibiting restrictive contracts.
- Emphasizes taxpayer accountability for accuracy while expanding access options.
- Includes accessibility and language requirements to broaden reach.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (40)
Sen. Coons, Christopher A. [D-DE], Sen. Wyden, Ron [D-OR], Sen. Alsobrooks, Angela D. [D-MD], Sen. Baldwin, Tammy [D-WI], Sen. Bennet, Michael F. [D-CO], Sen. Blumenthal, Richard [D-CT], Sen. Blunt Rochester, Lisa [D-DE], Sen. Booker, Cory A. [D-NJ], Sen. Cantwell, Maria [D-WA], Sen. Duckworth, Tammy [D-IL], Sen. Durbin, Richard J. [D-IL], Sen. Fetterman, John [D-PA], Sen. Gallego, Ruben [D-AZ], Sen. Gillibrand, Kirsten E. [D-NY], Sen. Hassan, Margaret Wood [D-NH], Sen. Heinrich, Martin [D-NM], Sen. Hickenlooper, John W. [D-CO], Sen. Hirono, Mazie K. [D-HI], Sen. Kaine, Tim [D-VA], Sen. Kelly, Mark [D-AZ], Sen. Kim, Andy [D-NJ], Sen. King, Angus S., Jr. [I-ME], Sen. Klobuchar, Amy [D-MN], Sen. Luján, Ben Ray [D-NM], Sen. Markey, Edward J. [D-MA], Sen. Merkley, Jeff [D-OR], Sen. Murphy, Christopher [D-CT], Sen. Murray, Patty [D-WA], Sen. Padilla, Alex [D-CA], Sen. Reed, Jack [D-RI], Sen. Sanders, Bernard [I-VT], Sen. Schatz, Brian [D-HI], Sen. Schiff, Adam B. [D-CA], Sen. Schumer, Charles E. [D-NY], Sen. Shaheen, Jeanne [D-NH], Sen. Smith, Tina [D-MN], Sen. Van Hollen, Chris [D-MD], Sen. Warner, Mark R. [D-VA], Sen. Welch, Peter [D-VT], Sen. Whitehouse, Sheldon [D-RI]
Recent Actions
- 2026-02-26: Read twice and referred to the Committee on Finance.
- 2026-02-26: Introduced in Senate
Bill Versions
- Direct File Act of 2026 — issued 2026-02-26 — PDF (8 pages)