How Screwed is the IRS?

Things don’t look good

[Important note: Yesterday, while this column was in edits, Elon Musk, DOGE Commissar (or whatever his title is supposed to be) announced on the warped husk of Twitter that he had “deleted” the office responsible for Direct File. At this time, the extent to which this is true is still unclear. However, Direct File itself is still up and running and any return submitted through the portal is valid and must be processed by the IRS. Some additional details below, and we’ll continue following the story as it develops. If you want to stay up to speed, I highly suggest you follow the wonderful folks over at the Economic Security Project on Bluesky or the aforementioned charred corpse of Twitter.]

Hi folks, welcome back to Hackwatch! It’s been a minute. As I’m sure is the case for many, we’ve been busy keeping track of the new administration’s policy hurricane. Towards that end, my colleagues launched a new weekly newsletter, the “Corruption Calendar,” which you should absolutely check out here (and subscribe to our Substack to get it delivered straight to your inbox).

Also, if you haven’t seen it, my colleague Henry put together a list of media watchdogs we’re grateful for last Thanksgiving. Now is a great time to revisit that, as legacy media flounders in its responsibility to hold the powerful to account. But that’s enough programmatic talk.

One glaring commonality between the first and second Trump terms is the obvious effort to hollow out whole chunks of the federal government by executive fiat. Perhaps the greatest example of the first take was eviscerating the Environmental Protection Agency—a move that the Biden administration was far too slow to reverse. This time, there has been rapid erosion of numerous agencies, including the Federal Aviation Administration, the Federal Emergency Management Agency, and the Internal Revenue Service.

I wrote about FEMA in a blog last week and there’s plenty being said about the FAA in the wake of the first fatal plane passenger plane crash in the United States in well over a decade. So for right now, let’s talk internal revenue shop.

(Ed. note: If you want some music to listen to this week, I’d suggest “Linger” by The Cranberries or “Sit Down You’re Rocking the Boat” by James Taylor.)

On January 21, Danny Werfel, Biden’s IRS commissioner, announced that he was resigning, despite his term running until November 2027. This came after Donald Trump had already announced Billy Long as his pick to take over the agency. The commissioner is meant to be somewhat insulated from presidential politics (hence 5 year terms, making it inevitably overlap with two presidential terms), but the president does have the power to fire them at will, making Werfel’s departure feel less like an abdication of duty than, say, Michael Barr. (For what it’s worth, even champions of the revolving door and milquetoast centrism are with us on this front.)

Even so, every high ranking Democratic appointee who left without being fired has eschewed the public interest they took an oath to defend. The Consumer Financial Protection Bureau’s Rohit Chopra was also expected to be fired on the first day of the Trump administration. But he kept doing his job for another two work weeks, continuing to enact important policy, slowing the takeover of Trumpian administration priorities, and creating a cost to remove him.

While Chopra is the most prominent example, other dedicated civil servants continued to crew their posts until removed, including National Labor Relations Board General Counsel Jennifer Abruzzo, who held out for a week, and her deputy, Jessica Rutter, who valiantly took over as acting counsel for another work week. And NLRB board member Gwynne Wilcox (the first Black Woman to serve on the board) promised legal action in opposition to her firing rather than meekly accepting the outcome (unlike the GC, board members can only be removed for cause; Wilcox argues that Trump did not demonstrate an appropriate pretense).

Particularly given Long as his replacement, Werfel should have stayed and buttressed the institution he led until removed from office. Billy Long has publicly opposed the very existence of the IRS (he cosponsored the euphemistic “Fair Tax Act”). To steal a quip from Trevor Noah (about Scott Pruitt’s appointment as EPA administrator 8 years ago), that’s a bit like appointing an Amish NASA head.

All of this is worsened by an impending Republican effort to permanently rescind $20 billion in modernization funds from the IRS.

While Democrats have been caught embarrassingly, disastrously flat-footed to the administration’s “flood the zone” strategy, its major strength is also a huge vulnerability; doing so much all at once leads to a propensity to miss crucial details. That’s probably why it took so long to give Chopra the boot. And Chopra’s removal was a bigger prize than Werfel’s would have been—there’s at least another couple of weeks left until the fight over IRS resources reenters the spotlight.

One of the biggest wins of the Biden IRS was the rollout of the Direct File tool, an entirely free public option to file simple tax returns directly to the federal government. I wrote about using it last year; it's a good tool. But the program is in Republicans’ crosshairs, and given Long’s prima facie hostility to tax collection (and inevitable opposition from the likes of Intuit), he probably won’t work too hard to defend it.

However, on Monday January 27 Direct File opened for residents in 25 states with tens of millions of people eligible to use it. I’ve been told by an ally who’s worked a lot on defending the program that the tool could save filers over $10 billion in costs this tax season. That’s probably why TurboTax has ramped up their advertising, particularly promising free filing for anyone who didn’t use their service last year.

Visual from Economic Security Project.

The morass that we’re expected to wade through in order to file our taxes in this country is inane. I plan on using Direct File again this year. If you can, you should give it a try too. The best way to protect these kinds of wins for good, accessible government is to make them popular. Last year the tool wasn’t perfect, but it sure beat getting pitched the premium upgrade from TurboTax about a billion times while I’m just trying to import a W2.

More importantly, it did the job well enough that states from ruby red Idaho to plum purple Pennsylvania to the dazzlingly Democratic Massachusetts all joined the tool since last year. There’s a real path to popularity.

On Monday, Elon Musk created mass confusion when he claimed that 18F, a government division that helped to create the Direct File tool, was “deleted.” 18F is dedicated to helping other parts of the government with software development and, currently, their website remains up. However, given the context of the comment, the remark launched widespread confusion about whether Direct File was in jeopardy. This is an evolving story, but here are the key points as they currently stand:

1. It is unclear if 18F has been shuttered at all. Talk of “deleting” parts of the government is relatively new and comes mostly from Musk-adjacent tech staff with little understanding of how the government works. How this kind of deletion could unfold is an open question, but for now it seems like bluster.

2. 18F helped develop Direct File, but is not responsible for administering it. That is internal to the IRS.

3. Newly-minted Treasury Secretary Scott Bessent committed to retaining Direct File, at least through the 2025 tax season.

4. The tool has already launched for the 2025 tax season and remains available.

5. A completed return done through the Direct File tool is a valid tax return and legally must be processed.

If you can, file your taxes with Direct File. Tell all of your friends, rave about it every chance you get, and make it obvious that you don’t want to go back to being left at Intuit’s mercy. (For what it’s worth, I would also recommend filing early; despite this scare being mostly nonsense, confusing shenanigans are part of that flood-the-zone strategy and will only increase as we get closer to Republican efforts to further eviscerate the IRS.)

If there’s one take away from this, it should be that even when things seem hopeless, even when loss seems predetermined, our actions still matter for changing the momentum of policy change. Think about how much has happened in the past two weeks. Every little roadblock that adds hours or days to the teardown of the civil service matters tangibly. How much harm did Chopra staying for 2 weeks prevent? Think about how quickly things are moving. That time matters. Delay actions are worthwhile; they might be the best tactic available, especially with Democratic electeds capitulating.

If you’re a Democratic appointed official, that means staying in your job. For the rest of us, that means building support for important programs like Direct File. Because while the process is horrendous and laws being broken clearly merit resistance, the best way to get people to understand the stakes of what is happening in the government is to elevate how people are being harmed day in and day out by rich people destroying tangible public goods and services.