[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3948 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 3948
To amend the Internal Revenue Code of 1986 to codify the Direct File
program.
_______________________________________________________________________
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.
Lujan, 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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Direct File Act of 2026''.
SEC. 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.
SEC. 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:
``SEC. 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.
<all>