Sec. David Casey on IRS Direct File Expanding to Wisconsin

Frederica Freyberg:
After a trial run in 12 states was deemed a success, the IRS is launching Direct File nationwide in 2025, including in Wisconsin. The free electronic filing system will allow people to complete their federal returns online, and then taxpayers will be taken to the Wisconsin tax filing site. The hope that taxpayers will save time and money because according to the U.S. Department of Treasury, the average taxpayer spends approximately 13 hours and $270 to prepare their taxes each year. Here to detail Direct File is Wisconsin Secretary of Revenue David Casey. And thanks very much for being here.

David Casey:
Thank you for having me. I appreciate the opportunity.

Frederica Freyberg:
So why did the government decide to go with this Direct File?

David Casey:
Well, I think, thanks to Senator Baldwin and Governor Evers here in Wisconsin, we had the investment or, sorry, the Inflation Reduction Act passed that funded some of the activity at the IRS and technology advancements. So Direct File was a direct result of that. We here at the Department of Revenue actually started a program a couple of years ago. We had some foresight on this and created Wiztax, an online filing tool. Primary, you know, motivation for this was to provide another tool for our taxpayers to use. You know, right now they can use a third-party vendor for the pay as you file type software approach where they can also use our community of tax preparers, which are very helpful. But we saw that there was a niche of taxpayers who were spending too much time and too much money and thought that Direct File would be a good solution for them.

Frederica Freyberg:
So how many Wisconsin taxpayers will be eligible to use it?

David Casey:
Right now, we’re estimating about 600,000 taxpayers will be eligible. For the eligibility, you really just need to be a wage earner with less complicated income. So no interest income or for example, no real estate income. So the majority of Wisconsinites have a particular wage income and that’s it. And then also some limited credits that you can apply for. We’ll have the earned income tax credit and some others, but it’s fairly limited at this point.

Frederica Freyberg:
So how does it compare or compete with, say, TurboTax?

David Casey:
You know, from a comparison or it’s not really a competition. It’s filling a void that we’ve had. You know, the pay-as-you-file tax preparers offer an excellent service and they provide a service to what we think is just the more, the more complicated tax returns. If you’ve got more complex financial background and tax obligations, they’re a great solution. What we found, however, was that a number of taxpayers with what we call just the simplified, though the wage earner approach, were paying $100, if not hundreds of dollars to file when we could offer that same product for free.

Frederica Freyberg:
So we know it’s free. But is it easy to use? I mean, people won’t get all balled up in the online confusion of it.

David Casey:
It’s — well, we hope it’s very easy to use. We know our Wixtax solution, when we piloted that over the last couple of years, grew from a few hundred users the first year to tens of thousands of users the second year. So it was very popular. We’ve also heard from those 12 states that piloted Direct File last year that it’s averaging 15 to 20 minutes for a user to complete both their federal and their state return. One of the ways that we achieve that is that once you file your federal return, you go to the state site. It’s pre-populated with all of the tax information from your federal return, which is the basis of the Wisconsin return. So we get all of that demographic, financial information is all pre-populated. So it’s — essentially when you get to the state return, it’s a review. You review what you have. You apply for any additional credits that the state may, may offer. And then you submit it. It’s as easy as that.

Frederica Freyberg:
And so if people have trouble, for whatever reason, are they able to reach out to the Wisconsin Department of Revenue for help?

David Casey:
Absolutely. We have an excellent customer service team that we are training up on Direct File. It will be a new application for us to administer. They’ll be ready and waiting for the calls, though frankly, the Direct File solution is so user friendly, we don’t anticipate a lot of need from our customer service agents.

Frederica Freyberg:
Good news. Secretary Casey, thanks very much.

David Casey:
Absolutely. My pleasure.