S. 3948

119 S3948 IS: Direct File Act of 2026
 U.S. Senate
 2026-02-26
 text/xml
 EN
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 II  119th CONGRESS  2d Session  S. 3948  IN THE SENATE OF THE UNITED STATES   February 26, 2026   Ms. Warren  (for herself,  Mr. Coons ,  Mr. Wyden ,  Ms. Alsobrooks ,  Ms. Baldwin ,  Mr. Bennet ,  Mr. Blumenthal ,  Ms. Blunt Rochester ,  Mr. Booker ,  Ms. Cantwell ,  Ms. Duckworth ,  Mr. Durbin ,  Mr. Fetterman ,  Mr. Gallego ,  Mrs. Gillibrand ,  Ms. Hassan ,  Mr. Heinrich ,  Mr. Hickenlooper ,  Ms. Hirono ,  Mr. Kaine ,  Mr. Kelly ,  Mr. Kim ,  Mr. King ,  Ms. Klobuchar ,  Mr. Luján ,  Mr. Markey ,  Mr. Merkley ,  Mr. Murphy ,  Mrs. Murray ,  Mr. Padilla ,  Mr. Reed ,  Mr. Sanders ,  Mr. Schatz ,  Mr. Schiff ,  Mr. Schumer ,  Mrs. Shaheen ,  Ms. Smith ,  Mr. Van Hollen ,  Mr. Warner ,  Mr. Welch , and  Mr. Whitehouse ) introduced the following bill; which was read twice and referred to the  Committee on Finance    A BILL
To amend the Internal Revenue Code of 1986 to codify the Direct File program.
1.
Short title
This Act may be cited as the   Direct File Act of 2026  .
2.
Prohibition on agreements restricting Government tax preparation and filing services
(a)
In general
The Secretary may not enter into any agreement after the date of the enactment of this Act which—
(1)
restricts the Secretary's legal right to provide tax return preparation services or software or to provide tax return filing services,
(2)
requires the Secretary to not provide such services or software for any period of time, or
(3)
conditions any provision of such agreement on the Secretary not providing such services or software.
(b)
Existing agreements voided
Any agreement described in subsection (a) which was entered into on or before the date of enactment of this Act shall be void as of the date which is 30 days after the date of enactment of this Act.
(c)
Definition
For purposes of this section, the term  Secretary  means the Secretary of the Treasury or the Secretary's delegate.
3.
Codification of Direct File
(a)
In general
 Chapter 77  of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
7531.
Online tax preparation and filing program
(a)
Establishment of programs
The Secretary shall establish and operate a program under which taxpayers may prepare and file individual income tax returns online.
(b)
Requirements for online tax preparation and filing program
(1)
In general
The program described in subsection (a) shall—
(A)
be owned by the Federal Government,
(B)
use data contained in the records of the Internal Revenue Service to simplify the preparation and filing process whenever possible, including by seamlessly importing such data into a taxpayer's income tax return at the election of the taxpayer,
(C)
be user-tested and employ an interview-based filing system through which the taxpayer answers applicable questions and the relevant information is automatically input into their income tax return,
(D)
use plain language and be made available in multiple languages,
(E)
be accessible on mobile devices,
(F)
conform to all guidelines under section 508 of the Rehabilitation Act of 1973 ( 29 U.S.C. 794d ),
(G)
be displayed in a prominent position on the website of the Internal Revenue Service,
(H)
be promoted through a comprehensive mass marketing campaign, including engagements with mass media such as television, radio, and social media,
(I)
be promoted to taxpayers who are likely to be eligible to use such program,
(J)
provide integrated customer support, including live chat services, to allow taxpayers to receive direct and immediate help from the Internal Revenue Service regarding their returns, and
(K)
allow a taxpayer to file a return regardless of whether such taxpayer is required to file a return for the taxable year.
(2)
Eligibility
(A)
In general
For any taxable years beginning after 2027, not less than 50 percent of taxpayers residing in participating States shall be eligible to use the program described in subsection (a), and the Secretary shall continue to expand eligibility for such program to the maximum extent possible.
(B)
Participating State
For purpose of this section, the term  participating State  means any State which—
(i)
elects to provide State tax return filing functionality that is integrated with the program described in subsection (a), or
(ii)
does not impose a State income tax.
(C)
Secretarial discretion
For purposes of subparagraph (A) and complying with the requirements under such subparagraph, the Secretary may determine, in such manner as the Secretary deems appropriate, which taxpayers residing in participating States are eligible to use the program described in subsection (a).
(3)
Report
No later than August 31, 2027, and annually thereafter, the Secretary shall report to Congress on use levels and patterns of usage of the program described in subsection (a), including—
(A)
data reporting taxpayers' satisfaction levels and impressions of the program and plans for how the Secretary will improve satisfaction with the program, and
(B)
barriers to use and plans for how the Secretary will address such barriers.
(c)
Taxpayer responsibility
Nothing in this section shall be construed to absolve the taxpayer from full responsibility for the accuracy or completeness of their return of tax.
(d)
Prohibition on fees
No fee may be imposed on any taxpayer for the use of any program established under subsection (a).
(e)
State income tax returns
(1)
In general
Subject to any applicable requirements under section 6103, as part of the program described in subsection (a), the Secretary shall enable taxpayers residing in a participating State described in subsection (b)(2)(B)(i) to file, in as seamless a manner as possible, any State or local income tax returns in conjunction with the filing of their Federal income tax return, including through methods such as—
(A)
sharing tax return information with State and local tax agencies, and
(B)
the establishment of a grant program to provide funding to each such participating State for the purposes described in paragraph (2).
(2)
Eligibility
A participating State described in subsection (b)(2)(B)(i) shall be eligible to receive $1,000,000 under the grant program described in paragraph (1)(B) if such participating State can demonstrate to the Secretary (pursuant to such criteria as the Secretary determines appropriate) that the State tax return filing functionality satisfies standards which are similar to the standards established for the program described in subsection (a).
 .
(b)
Filing deadline for information returns
Section 6071(b) of such Code is amended—
(1)
by striking subsection (b),
(2)
by redesignating subsections (c) and (d) as subsections (b) and (e), respectively, and
(3)
by inserting after subsection (b) (as so redesignated) the following new subsections:
(c)
Information returns accompanied by written statement
Returns made under any section of subpart B of part III of this subchapter for which a corresponding written statement is required (other than returns required to be filed with respect to nonemployee compensation) shall be filed on or before the date by which such written statement is required to be furnished.
(d)
All other electronically filed information returns
Returns made under subpart B of part III of this subchapter which are filed electronically and for which no deadline is established under subsection (b) or (c) shall be filed on or before March 31 of the year following the calendar year to which such returns relate.
 .
(c)
Clerical amendment
The table of sections for chapter 77 of such Code is amended by adding at the end the following new item:
Sec. 7531. Online tax preparation and filing program.
  .
(d)
Authorization of appropriations
There is authorized to be appropriated to carry out the amendments made by this section such sums as may be necessary for the period of fiscal years 2026 through 2035.
(e)
Effective date
The amendments made by this section shall apply to returns for taxable years beginning after December 31, 2025.