00:00:10
Speaker 1: Have you seen the tax time meme?
00:00:12
Speaker 2: Yes, it's so great.
00:00:15
Speaker 3: Next time?
00:00:16
Speaker 1: How much? Why six hundred dollars jail?
00:00:21
Speaker 2: And it's so true, it's so frustrating.
00:00:28
Speaker 1: I don't always start off my interviews with a meme, but this was a special case and it'll make sense in a second. Maurice Vinton is a senior advisor at the Federation of American Scientists, but before that, she worked at the IRS, helping them build a tool called direct files.
00:00:44
Speaker 2: So direct file is a free, easy, secure, and accurate way for people to fill their taxes online. With the IRS, it was a hugely popular program with the people I got to use it. I'll never forget. A person from Taxes started their timer on their iPhone when they started filing their taxes and took a screenshot of how long it took, and it was something ridiculous like twenty five minutes. It was so quick.
00:01:15
Speaker 1: It is now tax season here in America, and if you live here, you know exactly how stressful this time is interdirect file a tax filing service not only easy to use and not only free, but the people who use it have a better opinion of the government.
00:01:31
Speaker 2: Direct File increased trust in the irs by eighty six percent, and it really showed that government could actually build things well and things that people loved.
00:01:43
Speaker 1: All right, great, so you probably want to know where the link is so you can use this awesome service. Well, unfortunately there is no link because direct file is dead. So who killed it? Well, the short answer is Doge. But that's not the whole story. From Kaleidoscope and iHeart Podcast. This is kill Switch.
00:02:09
Speaker 3: Connect.
00:02:11
Speaker 1: I'm Dexter Thomas. Let's get into it.
00:02:15
Speaker 3: I'm sorry, I'm sorry, goodbye.
00:02:56
Speaker 1: The idea for direct file is pretty simple. I mean going back to that, if the government knows how much I owe, why don't they just tell me take their money and let me get all of my life. And Maurice knew that the process could be better, less stressful, and less expensive. She already had years of experience working inside the US government, but she got a whole new perspective when she moved to the UK. For nine years, she experienced a very different tax system in the UK.
00:03:23
Speaker 2: It was pretty easy to interact with government. The things that you had to do were all pretty straightforward, and especially filing your taxes. You don't actually have to file your taxes if you're just a normal person with one job. It happens automatically. I'd moved back to the United States and that's when I discovered that the majority of Americans file their taxes using private, third party software. Oftentimes that costs a lot of money to use that software. You can also go to a CPA an accountant help you file. There are ways to do it free. It's pretty convoluted, it's hard to find. It feels a bit scammy when you do find it, and I was just stunned.
00:04:08
Speaker 1: Just to be clear, the UK is not special here. It's the United States that's weird. And a lot of other countries the tax system is way simpler.
00:04:17
Speaker 2: Smaller countries like a Stony are purely online. Sweden you can do it via text, so there are examples all over the world.
00:04:24
Speaker 1: Sweden you can do it via text.
00:04:26
Speaker 2: Yeah, yeah, great.
00:04:28
Speaker 1: You just send it a text and that's how you handle your taxes.
00:04:30
Speaker 2: I think it's more that you confirm it's right.
00:04:32
Speaker 1: They just send you a text and say Ao, here's a taxer. This look okay, and you just say yes and then you're good.
00:04:38
Speaker 2: Yeah. And in Australia recently they've done it on a postcard and so you can just confirm that it's accurate. So there's a lot of models that exist that government is helping support move the whole sector forward. I think it's important for government to have a role to play in moving the sector forward, not just keeping it its status, which is where we've been.
00:05:02
Speaker 1: So in twenty twenty one, Maurice joined a small team inside the government with a mission to improve the experience of paying taxes.
00:05:10
Speaker 2: My first project was child tax credit expansion. So during the American Rescue Plan, families who had kids suddenly got this huge benefit in like a bigger tax credit. And the way I worked for the child tax credit expansion is, for the first time ever, you didn't have to make a certain amount of money to qualify for that tax credit, and it was a significant amount of money. We wanted as many people to get this additional child tax credit benefit as possible, and we were running into a ton of barriers, and that's because people didn't realize that if they filed their taxes they would actually receive a significant amount of money, at least during that period of time.
00:05:52
Speaker 1: So when Maurice says a significant amount of money, we're talking thousands of dollars per child.
00:05:58
Speaker 3: Here.
00:05:58
Speaker 1: This was a tax credit in twenty twenty one that was designed to help families in the beginning of the COVID nineteen pandemic, but the system was so convoluted that some of the families who needed it the most never got it.
00:06:12
Speaker 2: If you made less than twelve thousand dollars, you didn't have to file your taxes, so you just didn't file your taxes, but for that year you would get this additional benefit. That's when it became clear that a huge obstacle for people, especially people who are low income, having to pay a lot of money and some instances to file their taxes was a huge barrier for them to get their child tax credit. It was really complicated for people to file their taxes, and so we wanted to make it easier and free.
00:06:42
Speaker 1: So Maurici enter team got to work to build something something easy, free and available to anyone with a simple return. It's called direct file. Whose idea was direct file?
00:06:54
Speaker 2: I mean, I think free tax filling is you know, you could say it's TikTok's idea, because I hear people storm social media and they're like, why do I have to follow my taxes? There already has this data. Why can't they just tell me how much I owe Hi?
00:07:07
Speaker 1: It's time for me to pay my taxes. So if you could just let me know how much I owe you, I'd be happy to pay. No, what do you mean? No, Like you don't know how much I owe you? Oh, we know exactly how much you It's down to the penny. But that's for you to figure out.
00:07:21
Speaker 3: If I'm off by a little bit, will you at least give me some leniency?
00:07:24
Speaker 1: No, that's the best part. We're gonna send you to federal prison if you're off. What yep, Sorry, couldn't help it. There are so many memes exactly like this because everyone knows the system is just comically broken.
00:07:38
Speaker 2: It's an idea that's been around. Senator Elizabeth Warren. She has introduced legislation multiple times to try to make this happen. President Obama campaigned on it in the Biden administration. It took the child tax credit experience and that frustration and how hard it was that one of their signature policies wasn't getting the uptake that that it should have because of how hard it was for people to file their taxes, and so that was how we got enough attention from the right people to say this is a thing that needs to happen.
00:08:14
Speaker 1: So, yeah, there's a lot of support, but they knew it wasn't going to be easy because I mean, first off, come on, we're talking about the government making an app here. Does that sound like it's going to be promising to you.
00:08:27
Speaker 2: We took a really slow, iterative approach to how we built it. The way that it works in most states in the United States is that you file your federal taxes and then you have to file your state taxes, and so what we didn't want to have happened is a situation where direct value users would file their federal and then forget their state, and so we wanted to have a partnership with those states in this software that made it easier for users. So it was a lot of things that were done for the first time by the IRS in a really short period of time, and we didn't want to get into situation where we had a big bang rollout similar to healthcare dot gov that didn't work.
00:09:05
Speaker 1: Ah, yes, healthcare dot gov. Where do we even start? So, in case you don't remember, this was a site that launched in twenty thirteen, which would let you sign up for health insurance under the Affordable Care Act. When the site went live, the servers overloaded and immediately crashed.
00:09:22
Speaker 4: It was supposed to be an easy way for Americans to sign up for healthcare online. But this morning the Department of Health and Human Services, which spent five hundred million dollars to build the site, is admitting it's a bus.
00:09:35
Speaker 1: On day one, only six people enrolled.
00:09:38
Speaker 4: By day two, two hundred and forty eight, tens of thousands idling in a virtual waiting room.
00:09:44
Speaker 1: The site was supposed to handle traffic from thirty million people in thirty six states.
00:09:50
Speaker 2: And it took I think six weeks for a team of engineers to come in and stabilize it and effectively to rebuild it. It really shook not just the Presidency itself, but also users trust in the product. You know. By now, fortunately, I think a lot of people have forgotten about it. But in my sector, it actually stopped a lot of progress. It really held a lot of our political leaders back from achieving or dreaming big about the big government tech projects because they were so afraid of a similar rollout. We didn't want a situation like that.
00:10:26
Speaker 1: The thing is this wasn't just a website crashing Politicians who hated the Affordable Care Act use the opportunity to attack the law.
00:10:35
Speaker 2: I like many Americans, We've got a lot of questions about this website.
00:10:38
Speaker 5: But I think what's becoming clear is the flaw is not simply the website.
00:10:42
Speaker 6: The flaw is the law itself. The problems go far beyond an unworkable website. Obamacare has failed to give the American people what they were promised. It's time to repeal and shred this broken law into ribbons.
00:10:59
Speaker 1: So it wasn't just about taxes or even about technology. Marisi and our team knew that if they didn't get this right, they will be tearing down the public's trust in the government. Even more so, no pressure right.
00:11:13
Speaker 2: A lot of people told us that we couldn't do it because people wouldn't want it. You know, government doesn't design good experiences. People wouldn't want to use that. So one of the first things that we did was create a very early, just prototype demo. We had to show people what it would look and feel like for them to believe that government could do it and that we could do it.
00:11:37
Speaker 1: After the break direct file is officially launched and people really like it. It gets higher satisfaction scores than Apple and Netflix, but some very specific companies hate it and it ends up with some powerful enemies. See if you can guess who. Before we get back from the break. In twenty twenty four, direct File officially launched as a pilot program, and it started small with one single user.
00:12:11
Speaker 2: Our very first user was a single mom from Texas. She had three kids. She paid in prior years over four hundred dollars a year to file her taxes. She hits submit, everyone starts crying. She didn't know she was the first ever filer. She starts crying, and then our engineers are monitoring it and the tax return was not received. We had an issue, so they started digging into it. It was actually a pretty minor fix, but we were in a pretty complex government environment, and it took about six hours and a phone call with one hundred and thirty people at ten o'clock at night. After that, the tax return went through and it worked. Thank goodness we did a single user, because that would have been catastrophic. But that stuff happens. So we continued to roll out from there to a handful of users, and then we've continue to add more and more people and more and more users until it was open all the time for anybody in an eligible state.
00:13:14
Speaker 1: Direct files soon rolled out to twelve states and it was a massive success. But what do we mean by success here, Well, first they saw people who'd used it posting on social media, and they were all talking about how much they loved it, which is nice, but it's not concrete. But then the team saw hard numbers. They would consume a goods metric called the net promoter score or the NPS.
00:13:36
Speaker 2: And basically what NPS is is how likely are you to recommend this to a friend or a family member. And direct File's net promoter score was plus seventy four, and that was higher than Starbucks and Apple's, way higher than other tax providers. And so that's when we kind of knew that quantifiably that we built something that people.
00:14:01
Speaker 1: I cannot overstate how big a deal this was. About a third of Americans admit to procrastinating doing taxes, and in one survey from last year in twenty twenty five, some people actually admitted to considering just not doing their taxes that year and just hoping they wouldn't get caught, which I hope you did not do this for obvious reasons, jail, But now there was some hope. That same year, twenty twenty five, Direct Files Pilot program had expanded to more states and roughly thirty million taxpayers would be eligible to file their federal taxes for free. It was starting to look like we were finally going to get a tax filing experience that actually worked for people. And pretty soon that meme was going to be outdated.
00:14:46
Speaker 2: When the meme says how much do you own, it goes gas like. We actually started to pull in some information that the IRS has for our tax filers so that way he didn't have to guess. You were asked to double check, but he didn't have to guess, And that is a mature tax billance system that I think America deserves. You know, the irs is incentive is not to monetize your data. The IRS cannot do that. The IRS IS incentive is to make sure that you have an accurate return. And what that means is that we will accurately support you in filing your taxes so that way you get all the tax credits and refunds that you deserve. The IRS wants the accuracy and the security and the protection of your data, and that's what incentivizes the government.
00:15:35
Speaker 1: Sounds good to me, probably sounds good to you, but apparently this did not sound good to some very powerful corporations like into It, the maker of TurboTax. Since nineteen ninety eight, into It has spent nearly forty five million dollars lobbying against a free tax filing system, and in twenty twenty two, as direct File was actively being built, into It spent over three point five million dollars in lobbying funds, more than they'd spent in any previous year. Into It specifically seemed pretty nervous about your work. And I want to quote from their quarterly financial statement to their investors. So under their risk factors, they list quote increasing competition from the public sector, and they specifically mentioned direct File, and they say quote government funded services that curtail or eliminate the role of taxpayers and preparing their own taxes could potentially have material and adverse revenue implications on us end quote. So essentially that from the end to it side, direct File is going to take money out of our pockets.
00:16:42
Speaker 2: There's a lot to unpack in that quote, please unpack it. So there's one side, which is the direct file side, right, which is the software, and direct file is just another piece of software that people can choose to use. So if they like it, they can come back. If they don't, they can walk with their feet and go somewhere else. That's how capitalism works. The other part about that is when they talk about curtailing people preparing their own taxes, Actually, if you take a bigger step back, what that's also getting at is that the IRS shouldn't be simplifying the experience of how people file their taxes. They shouldn't be providing the data to users that they already have, because they might view that as their job. And so I actually read that it's not just attack on direct file, but it's a pro kind of status quo statement, which is, we shouldn't simplify this process. We shouldn't actually move to a place where you can just look at a postcard to see if all the math is right and then hit submit at the end on a government portal like That's how I kind of view that is progress should stop and should stay the same, and that government doesn't have a role in the overall tax payer experience. All they are is just so recipient. You know, they shouldn't make it easy for you to access your data to have a pre populated return. That's how I view that.
00:18:11
Speaker 1: So just to be clear here, Turbo tax offers different tiers of tax preparation, including free filing, but the free option only applies to very simple returns, which the majority of people do not qualify for.
00:18:25
Speaker 2: With direct file, your data was not locked in to our software. If you wanted to leave dragt file, that was great. It actually gives users more choice and more freedom as to where they want to fail their taxes the next year, versus kind of locking people in or upgrading to get out your data or to have different types of software. So for private software companies, something that comes in and has a good experience and people love it, that is a threat. But from the IRS perspective, there was never a tipping of the scale. Was always something that we wanted taxpayers to make their own decisions on. However they wanted to file their taxes including paper, which I think is nuts. They still offer people Redermans, but you know, good for them, that's what the IRIS wants. They want to make it so you can file your taxes, and so if that's through private industry, great, If it's through something they offer, that's great too.
00:19:23
Speaker 1: But this debate goes beyond cost and convenience. Taxpayers share highly sensitive personal and financial information when they file their taxes. In twenty twenty two, a congressional investigation found that major tax preparation companies were sharing this data with Meta and Google without clear consent.
00:19:42
Speaker 5: A group of Congressional Democrats say H and R Block, Tax Act and Tax Layer shared information like filing status, income, refined amounts, name of dependence, and even taxes.
00:19:55
Speaker 1: Old Direct File, the free and easy to use app that didn't try to upsell you, very quickly became a true competitor to intuits and H and R Blocks that dominate the tax prep industry. But that didn't last long.
00:20:10
Speaker 7: President Trump and advisor Elon Musk are targeting the IRS for their Department of Government efficiencies next round of layoffs. The administration told senior leaders to prepare for an eight percent budget cut.
00:20:22
Speaker 2: We're cutting spending with the advice of our IT consultant, Elon Musk.
00:20:28
Speaker 1: I know, maybe that's not a name you expect to hear when it comes to innovators in tax software. After the break, we hear how direct file died, but why Maurici thinks it can be brought back. Right after Trump took office in twenty twenty five, Elon Musk was put at the head of the Department of Government Efficiency or DOGE, and one of doge's early targets was the IRS. But to Maurici, at first, direct file felt safe.
00:21:05
Speaker 2: So when DOS came and initially we thought we had a chance, the conversations were, you know, pretty positive and positive in the sense that they wanted to understand more about how we built it. There's a bunch of engineers and they fashioned themselves as engineers. We talked to DOSE several times. We really tried to make a case because we again thought we had a chance. But then in February, kind of in the frenzy of cuts and declaring different things dead, Elon Musk sent a tweet that declared like a department called eighteen F dead, and the tweet was about direct file.
00:21:47
Speaker 1: On February third, twenty twenty five, Elon Musk quote tweeted a post about eighteen F, a small federal tech team that helped build services like direct file and added the line that group has been deleted. At the time time, some people took that to mean that direct file itself had been shut down, but nobody actually knew.
00:22:08
Speaker 2: And that was just a mess. It caused a lot of confusion for us, and people would come into our chat lines asking is it still alive? But beyond that, is the data safe? They'd read all the stories about Musk and Doge stealing data and they wanted to know is their data's still safe. So it really complicated things and really decreased I think a lot of interest and in trust in government services in general, but also specifically Direct File.
00:22:34
Speaker 1: About a month later, Maurici enterteam were told that the Direct File programs funding was being cut.
00:22:40
Speaker 2: There was no clear direction given to the team, so it continued to operate through filing season, which ends typically around April fifteenth, and then it continued to operate until the middle of October, which is when people have extended returns extensions can file, So they kept it running until basically the IRS stops accepting tax returns, and that's when they formally announced that they would be shutting direct file down.
00:23:08
Speaker 1: What did you think when you heard that?
00:23:09
Speaker 2: I wasn't surprised. It's just what did I think, hubris unnecessary waste, but nothing, you know, doesn't surprise you at that point. But it made me really sad. And there are states that are devastated by direct file being shut down. So Massachusetts was one of our first partner states and the head of the Department of Revenue, so like a career bureaucrat, she would talk about how for the first time in her career she started receiving thank you letters and a handwritten thank you note for making tax filling free and easy in Massachusetts. So it really changed the interactions that government had with people too. Right, Wow, a lot of the states really want to find a way to make it happen again.
00:23:55
Speaker 1: You know. I get to talk to a lot of software developers, hackers, people who make things, people who analyze things. And usually when I talk to say a software developer or something like that, and they have a product that just didn't work, they did something wrong, they can look back at it and they say, you know what, we had too much competition, we didn't provide a good enough product. It's something like that. Essentially, it's their fault. This doesn't sound like that, No, this.
00:24:23
Speaker 2: Isn't the team assault. The idea was the right idea at the right time. It's something that we're still proud of, and they can kill the product, but they can't kill the idea, and so hopefully it's something that has got a chance in the future.
00:24:38
Speaker 1: When direct File was officially announced, to me, this is over, this isn't available anymore, you start to see people speculate online or come up with okay, what is a takeaway here? And pretty quickly after direct file was shut down, I saw people online Basically, I hate to say it's call this a conspiracy theory, but basically, okay, here's what's happening here. One tax prep companies want to keep all the money from themselves, and there's a bunch of politicians who don't want tax preparation to be free and easy. That seems like a wild conspiracy theory. But I'm having trouble coming up with a better explanation for a lay person. How do you explain what happened?
00:25:18
Speaker 2: I think a lot of people really benefited from the status quo and not fundamentally reimagining or changing or updating the relationship between the taxpayer and government. And I think that when direct File came in and showed that oh gosh, this could be a great experience. Oh gosh, people like it. It's just a different way of interacting with government, and it's confident and it's competent. I think that was really threatening to a lot of organizations, a lot of people, and it was just a lot of change. When people ask why it died, it's to me, it's hard to separate it from like the other kind of destruction in the federal government. The US Digital Service became the US Doage Service on an inauguration day, so my job changed overnight. I was interviewed and my teammates got fired. The IRS had to let go of like ten thousand people in the day. It's just there was so much upheaval. It's hard for me to separate out direct file. It just feels like another casualty, and it's a casualty that you know had. I'm sure a lot of lobbying, a lot of different relationships there, but that's just speculation.
00:26:32
Speaker 1: But is there any chance that direct files could come back? Yes, from the government, and I don't mean really, Okay, yes you think it comes back.
00:26:40
Speaker 2: Yes, absolutely so. Direct file is fully open sourced the code, a lot of the content, I think, some of the design patterns. A lot of what made direct file work has been open sourced. But it's complicated though. So much of what we were trying to do is to prove that government can work, not a civic tech nonprofit on the outside. It's different. I know that people when it comes to filing their taxes, they trust a dot gov more than other things, and so we were trying to give them that option. I think it's something that you can only grow on. You've established a pattern of users that are passionate about it and love it. You've established a good data set to know where you need to grow. You've established a baseline and user experience, so you only know how to go up from there. So absolutely, I think it's something that comes back.
00:27:30
Speaker 1: Is there anything I can do to make this happen again? Like me personally? Like who do I got to call?
00:27:36
Speaker 2: One of the biggest issues that we had was awareness. So you'll definitely be enlisted in supporting awareness at all levels when it comes back. People just didn't know about it, and it's hard when you're a government because you don't run ads, you know. So that's the thing that I think we really need to help with is awareness and trust in accountability and reliability.
00:28:00
Speaker 1: Just full disclosure here. We recorded this interview a couple months ago, so I might not have sounded very upset during that interview, but let me be very clear now that now that I am doing my taxes and having to pay for the privilege, it all hits a little different. I am, at this moment, to put it lightly, very much annoyed that I am yet again being forced to live in the tax time meme when this could be so much simpler, and not to mention it could be free. I mean, imagine that somebody had made this cool new app that saved you time and money, and then Tim Cook walks along, puts his hand in your pocket, takes the iPhone out, deletes it off your phone, and says, now, bro, you can't have that. We would lose our minds. But some companies have essentially stolen an option from millions of people, and we're supposed to just take it. I'm not sure how to put it any other way. Happy taxis and everybody, all right, let me calm down. So thank you once again to Maurici for breaking all this down for us and thank you once again for listening to another episode the kill Switch. If you got something you want to say, you could email us at kill Switch at Kaleidoscope dot NYC or on Instagram. We're at killswitchpod. And if you found this one interesting and think somebody else might find it interesting too, you could send it to them. Or if you're still too shy to send this to your friends, maybe just write a review. It helps other people find the show, which helps us keep doing our thing. Killswitch is hosted by Me Dexter Thomas. It's produced by Shena Ozaki, Darla Potts, and Julian Nutter. Our theme song is by me and Kyle Murdoch and Kyle also mixed the show. From Kaleidoscope, our executive producers are Ozwaalahin, Mangesh Hatigadur, and Kate Osborne. From iHeart, our executive producers are Katrina Norville and Nikki Etor. Happy tax Season once again and catch on the next one.
Speaker 1: Have you seen the tax time meme?
00:00:12
Speaker 2: Yes, it's so great.
00:00:15
Speaker 3: Next time?
00:00:16
Speaker 1: How much? Why six hundred dollars jail?
00:00:21
Speaker 2: And it's so true, it's so frustrating.
00:00:28
Speaker 1: I don't always start off my interviews with a meme, but this was a special case and it'll make sense in a second. Maurice Vinton is a senior advisor at the Federation of American Scientists, but before that, she worked at the IRS, helping them build a tool called direct files.
00:00:44
Speaker 2: So direct file is a free, easy, secure, and accurate way for people to fill their taxes online. With the IRS, it was a hugely popular program with the people I got to use it. I'll never forget. A person from Taxes started their timer on their iPhone when they started filing their taxes and took a screenshot of how long it took, and it was something ridiculous like twenty five minutes. It was so quick.
00:01:15
Speaker 1: It is now tax season here in America, and if you live here, you know exactly how stressful this time is interdirect file a tax filing service not only easy to use and not only free, but the people who use it have a better opinion of the government.
00:01:31
Speaker 2: Direct File increased trust in the irs by eighty six percent, and it really showed that government could actually build things well and things that people loved.
00:01:43
Speaker 1: All right, great, so you probably want to know where the link is so you can use this awesome service. Well, unfortunately there is no link because direct file is dead. So who killed it? Well, the short answer is Doge. But that's not the whole story. From Kaleidoscope and iHeart Podcast. This is kill Switch.
00:02:09
Speaker 3: Connect.
00:02:11
Speaker 1: I'm Dexter Thomas. Let's get into it.
00:02:15
Speaker 3: I'm sorry, I'm sorry, goodbye.
00:02:56
Speaker 1: The idea for direct file is pretty simple. I mean going back to that, if the government knows how much I owe, why don't they just tell me take their money and let me get all of my life. And Maurice knew that the process could be better, less stressful, and less expensive. She already had years of experience working inside the US government, but she got a whole new perspective when she moved to the UK. For nine years, she experienced a very different tax system in the UK.
00:03:23
Speaker 2: It was pretty easy to interact with government. The things that you had to do were all pretty straightforward, and especially filing your taxes. You don't actually have to file your taxes if you're just a normal person with one job. It happens automatically. I'd moved back to the United States and that's when I discovered that the majority of Americans file their taxes using private, third party software. Oftentimes that costs a lot of money to use that software. You can also go to a CPA an accountant help you file. There are ways to do it free. It's pretty convoluted, it's hard to find. It feels a bit scammy when you do find it, and I was just stunned.
00:04:08
Speaker 1: Just to be clear, the UK is not special here. It's the United States that's weird. And a lot of other countries the tax system is way simpler.
00:04:17
Speaker 2: Smaller countries like a Stony are purely online. Sweden you can do it via text, so there are examples all over the world.
00:04:24
Speaker 1: Sweden you can do it via text.
00:04:26
Speaker 2: Yeah, yeah, great.
00:04:28
Speaker 1: You just send it a text and that's how you handle your taxes.
00:04:30
Speaker 2: I think it's more that you confirm it's right.
00:04:32
Speaker 1: They just send you a text and say Ao, here's a taxer. This look okay, and you just say yes and then you're good.
00:04:38
Speaker 2: Yeah. And in Australia recently they've done it on a postcard and so you can just confirm that it's accurate. So there's a lot of models that exist that government is helping support move the whole sector forward. I think it's important for government to have a role to play in moving the sector forward, not just keeping it its status, which is where we've been.
00:05:02
Speaker 1: So in twenty twenty one, Maurice joined a small team inside the government with a mission to improve the experience of paying taxes.
00:05:10
Speaker 2: My first project was child tax credit expansion. So during the American Rescue Plan, families who had kids suddenly got this huge benefit in like a bigger tax credit. And the way I worked for the child tax credit expansion is, for the first time ever, you didn't have to make a certain amount of money to qualify for that tax credit, and it was a significant amount of money. We wanted as many people to get this additional child tax credit benefit as possible, and we were running into a ton of barriers, and that's because people didn't realize that if they filed their taxes they would actually receive a significant amount of money, at least during that period of time.
00:05:52
Speaker 1: So when Maurice says a significant amount of money, we're talking thousands of dollars per child.
00:05:58
Speaker 3: Here.
00:05:58
Speaker 1: This was a tax credit in twenty twenty one that was designed to help families in the beginning of the COVID nineteen pandemic, but the system was so convoluted that some of the families who needed it the most never got it.
00:06:12
Speaker 2: If you made less than twelve thousand dollars, you didn't have to file your taxes, so you just didn't file your taxes, but for that year you would get this additional benefit. That's when it became clear that a huge obstacle for people, especially people who are low income, having to pay a lot of money and some instances to file their taxes was a huge barrier for them to get their child tax credit. It was really complicated for people to file their taxes, and so we wanted to make it easier and free.
00:06:42
Speaker 1: So Maurici enter team got to work to build something something easy, free and available to anyone with a simple return. It's called direct file. Whose idea was direct file?
00:06:54
Speaker 2: I mean, I think free tax filling is you know, you could say it's TikTok's idea, because I hear people storm social media and they're like, why do I have to follow my taxes? There already has this data. Why can't they just tell me how much I owe Hi?
00:07:07
Speaker 1: It's time for me to pay my taxes. So if you could just let me know how much I owe you, I'd be happy to pay. No, what do you mean? No, Like you don't know how much I owe you? Oh, we know exactly how much you It's down to the penny. But that's for you to figure out.
00:07:21
Speaker 3: If I'm off by a little bit, will you at least give me some leniency?
00:07:24
Speaker 1: No, that's the best part. We're gonna send you to federal prison if you're off. What yep, Sorry, couldn't help it. There are so many memes exactly like this because everyone knows the system is just comically broken.
00:07:38
Speaker 2: It's an idea that's been around. Senator Elizabeth Warren. She has introduced legislation multiple times to try to make this happen. President Obama campaigned on it in the Biden administration. It took the child tax credit experience and that frustration and how hard it was that one of their signature policies wasn't getting the uptake that that it should have because of how hard it was for people to file their taxes, and so that was how we got enough attention from the right people to say this is a thing that needs to happen.
00:08:14
Speaker 1: So, yeah, there's a lot of support, but they knew it wasn't going to be easy because I mean, first off, come on, we're talking about the government making an app here. Does that sound like it's going to be promising to you.
00:08:27
Speaker 2: We took a really slow, iterative approach to how we built it. The way that it works in most states in the United States is that you file your federal taxes and then you have to file your state taxes, and so what we didn't want to have happened is a situation where direct value users would file their federal and then forget their state, and so we wanted to have a partnership with those states in this software that made it easier for users. So it was a lot of things that were done for the first time by the IRS in a really short period of time, and we didn't want to get into situation where we had a big bang rollout similar to healthcare dot gov that didn't work.
00:09:05
Speaker 1: Ah, yes, healthcare dot gov. Where do we even start? So, in case you don't remember, this was a site that launched in twenty thirteen, which would let you sign up for health insurance under the Affordable Care Act. When the site went live, the servers overloaded and immediately crashed.
00:09:22
Speaker 4: It was supposed to be an easy way for Americans to sign up for healthcare online. But this morning the Department of Health and Human Services, which spent five hundred million dollars to build the site, is admitting it's a bus.
00:09:35
Speaker 1: On day one, only six people enrolled.
00:09:38
Speaker 4: By day two, two hundred and forty eight, tens of thousands idling in a virtual waiting room.
00:09:44
Speaker 1: The site was supposed to handle traffic from thirty million people in thirty six states.
00:09:50
Speaker 2: And it took I think six weeks for a team of engineers to come in and stabilize it and effectively to rebuild it. It really shook not just the Presidency itself, but also users trust in the product. You know. By now, fortunately, I think a lot of people have forgotten about it. But in my sector, it actually stopped a lot of progress. It really held a lot of our political leaders back from achieving or dreaming big about the big government tech projects because they were so afraid of a similar rollout. We didn't want a situation like that.
00:10:26
Speaker 1: The thing is this wasn't just a website crashing Politicians who hated the Affordable Care Act use the opportunity to attack the law.
00:10:35
Speaker 2: I like many Americans, We've got a lot of questions about this website.
00:10:38
Speaker 5: But I think what's becoming clear is the flaw is not simply the website.
00:10:42
Speaker 6: The flaw is the law itself. The problems go far beyond an unworkable website. Obamacare has failed to give the American people what they were promised. It's time to repeal and shred this broken law into ribbons.
00:10:59
Speaker 1: So it wasn't just about taxes or even about technology. Marisi and our team knew that if they didn't get this right, they will be tearing down the public's trust in the government. Even more so, no pressure right.
00:11:13
Speaker 2: A lot of people told us that we couldn't do it because people wouldn't want it. You know, government doesn't design good experiences. People wouldn't want to use that. So one of the first things that we did was create a very early, just prototype demo. We had to show people what it would look and feel like for them to believe that government could do it and that we could do it.
00:11:37
Speaker 1: After the break direct file is officially launched and people really like it. It gets higher satisfaction scores than Apple and Netflix, but some very specific companies hate it and it ends up with some powerful enemies. See if you can guess who. Before we get back from the break. In twenty twenty four, direct File officially launched as a pilot program, and it started small with one single user.
00:12:11
Speaker 2: Our very first user was a single mom from Texas. She had three kids. She paid in prior years over four hundred dollars a year to file her taxes. She hits submit, everyone starts crying. She didn't know she was the first ever filer. She starts crying, and then our engineers are monitoring it and the tax return was not received. We had an issue, so they started digging into it. It was actually a pretty minor fix, but we were in a pretty complex government environment, and it took about six hours and a phone call with one hundred and thirty people at ten o'clock at night. After that, the tax return went through and it worked. Thank goodness we did a single user, because that would have been catastrophic. But that stuff happens. So we continued to roll out from there to a handful of users, and then we've continue to add more and more people and more and more users until it was open all the time for anybody in an eligible state.
00:13:14
Speaker 1: Direct files soon rolled out to twelve states and it was a massive success. But what do we mean by success here, Well, first they saw people who'd used it posting on social media, and they were all talking about how much they loved it, which is nice, but it's not concrete. But then the team saw hard numbers. They would consume a goods metric called the net promoter score or the NPS.
00:13:36
Speaker 2: And basically what NPS is is how likely are you to recommend this to a friend or a family member. And direct File's net promoter score was plus seventy four, and that was higher than Starbucks and Apple's, way higher than other tax providers. And so that's when we kind of knew that quantifiably that we built something that people.
00:14:01
Speaker 1: I cannot overstate how big a deal this was. About a third of Americans admit to procrastinating doing taxes, and in one survey from last year in twenty twenty five, some people actually admitted to considering just not doing their taxes that year and just hoping they wouldn't get caught, which I hope you did not do this for obvious reasons, jail, But now there was some hope. That same year, twenty twenty five, Direct Files Pilot program had expanded to more states and roughly thirty million taxpayers would be eligible to file their federal taxes for free. It was starting to look like we were finally going to get a tax filing experience that actually worked for people. And pretty soon that meme was going to be outdated.
00:14:46
Speaker 2: When the meme says how much do you own, it goes gas like. We actually started to pull in some information that the IRS has for our tax filers so that way he didn't have to guess. You were asked to double check, but he didn't have to guess, And that is a mature tax billance system that I think America deserves. You know, the irs is incentive is not to monetize your data. The IRS cannot do that. The IRS IS incentive is to make sure that you have an accurate return. And what that means is that we will accurately support you in filing your taxes so that way you get all the tax credits and refunds that you deserve. The IRS wants the accuracy and the security and the protection of your data, and that's what incentivizes the government.
00:15:35
Speaker 1: Sounds good to me, probably sounds good to you, but apparently this did not sound good to some very powerful corporations like into It, the maker of TurboTax. Since nineteen ninety eight, into It has spent nearly forty five million dollars lobbying against a free tax filing system, and in twenty twenty two, as direct File was actively being built, into It spent over three point five million dollars in lobbying funds, more than they'd spent in any previous year. Into It specifically seemed pretty nervous about your work. And I want to quote from their quarterly financial statement to their investors. So under their risk factors, they list quote increasing competition from the public sector, and they specifically mentioned direct File, and they say quote government funded services that curtail or eliminate the role of taxpayers and preparing their own taxes could potentially have material and adverse revenue implications on us end quote. So essentially that from the end to it side, direct File is going to take money out of our pockets.
00:16:42
Speaker 2: There's a lot to unpack in that quote, please unpack it. So there's one side, which is the direct file side, right, which is the software, and direct file is just another piece of software that people can choose to use. So if they like it, they can come back. If they don't, they can walk with their feet and go somewhere else. That's how capitalism works. The other part about that is when they talk about curtailing people preparing their own taxes, Actually, if you take a bigger step back, what that's also getting at is that the IRS shouldn't be simplifying the experience of how people file their taxes. They shouldn't be providing the data to users that they already have, because they might view that as their job. And so I actually read that it's not just attack on direct file, but it's a pro kind of status quo statement, which is, we shouldn't simplify this process. We shouldn't actually move to a place where you can just look at a postcard to see if all the math is right and then hit submit at the end on a government portal like That's how I kind of view that is progress should stop and should stay the same, and that government doesn't have a role in the overall tax payer experience. All they are is just so recipient. You know, they shouldn't make it easy for you to access your data to have a pre populated return. That's how I view that.
00:18:11
Speaker 1: So just to be clear here, Turbo tax offers different tiers of tax preparation, including free filing, but the free option only applies to very simple returns, which the majority of people do not qualify for.
00:18:25
Speaker 2: With direct file, your data was not locked in to our software. If you wanted to leave dragt file, that was great. It actually gives users more choice and more freedom as to where they want to fail their taxes the next year, versus kind of locking people in or upgrading to get out your data or to have different types of software. So for private software companies, something that comes in and has a good experience and people love it, that is a threat. But from the IRS perspective, there was never a tipping of the scale. Was always something that we wanted taxpayers to make their own decisions on. However they wanted to file their taxes including paper, which I think is nuts. They still offer people Redermans, but you know, good for them, that's what the IRIS wants. They want to make it so you can file your taxes, and so if that's through private industry, great, If it's through something they offer, that's great too.
00:19:23
Speaker 1: But this debate goes beyond cost and convenience. Taxpayers share highly sensitive personal and financial information when they file their taxes. In twenty twenty two, a congressional investigation found that major tax preparation companies were sharing this data with Meta and Google without clear consent.
00:19:42
Speaker 5: A group of Congressional Democrats say H and R Block, Tax Act and Tax Layer shared information like filing status, income, refined amounts, name of dependence, and even taxes.
00:19:55
Speaker 1: Old Direct File, the free and easy to use app that didn't try to upsell you, very quickly became a true competitor to intuits and H and R Blocks that dominate the tax prep industry. But that didn't last long.
00:20:10
Speaker 7: President Trump and advisor Elon Musk are targeting the IRS for their Department of Government efficiencies next round of layoffs. The administration told senior leaders to prepare for an eight percent budget cut.
00:20:22
Speaker 2: We're cutting spending with the advice of our IT consultant, Elon Musk.
00:20:28
Speaker 1: I know, maybe that's not a name you expect to hear when it comes to innovators in tax software. After the break, we hear how direct file died, but why Maurici thinks it can be brought back. Right after Trump took office in twenty twenty five, Elon Musk was put at the head of the Department of Government Efficiency or DOGE, and one of doge's early targets was the IRS. But to Maurici, at first, direct file felt safe.
00:21:05
Speaker 2: So when DOS came and initially we thought we had a chance, the conversations were, you know, pretty positive and positive in the sense that they wanted to understand more about how we built it. There's a bunch of engineers and they fashioned themselves as engineers. We talked to DOSE several times. We really tried to make a case because we again thought we had a chance. But then in February, kind of in the frenzy of cuts and declaring different things dead, Elon Musk sent a tweet that declared like a department called eighteen F dead, and the tweet was about direct file.
00:21:47
Speaker 1: On February third, twenty twenty five, Elon Musk quote tweeted a post about eighteen F, a small federal tech team that helped build services like direct file and added the line that group has been deleted. At the time time, some people took that to mean that direct file itself had been shut down, but nobody actually knew.
00:22:08
Speaker 2: And that was just a mess. It caused a lot of confusion for us, and people would come into our chat lines asking is it still alive? But beyond that, is the data safe? They'd read all the stories about Musk and Doge stealing data and they wanted to know is their data's still safe. So it really complicated things and really decreased I think a lot of interest and in trust in government services in general, but also specifically Direct File.
00:22:34
Speaker 1: About a month later, Maurici enterteam were told that the Direct File programs funding was being cut.
00:22:40
Speaker 2: There was no clear direction given to the team, so it continued to operate through filing season, which ends typically around April fifteenth, and then it continued to operate until the middle of October, which is when people have extended returns extensions can file, So they kept it running until basically the IRS stops accepting tax returns, and that's when they formally announced that they would be shutting direct file down.
00:23:08
Speaker 1: What did you think when you heard that?
00:23:09
Speaker 2: I wasn't surprised. It's just what did I think, hubris unnecessary waste, but nothing, you know, doesn't surprise you at that point. But it made me really sad. And there are states that are devastated by direct file being shut down. So Massachusetts was one of our first partner states and the head of the Department of Revenue, so like a career bureaucrat, she would talk about how for the first time in her career she started receiving thank you letters and a handwritten thank you note for making tax filling free and easy in Massachusetts. So it really changed the interactions that government had with people too. Right, Wow, a lot of the states really want to find a way to make it happen again.
00:23:55
Speaker 1: You know. I get to talk to a lot of software developers, hackers, people who make things, people who analyze things. And usually when I talk to say a software developer or something like that, and they have a product that just didn't work, they did something wrong, they can look back at it and they say, you know what, we had too much competition, we didn't provide a good enough product. It's something like that. Essentially, it's their fault. This doesn't sound like that, No, this.
00:24:23
Speaker 2: Isn't the team assault. The idea was the right idea at the right time. It's something that we're still proud of, and they can kill the product, but they can't kill the idea, and so hopefully it's something that has got a chance in the future.
00:24:38
Speaker 1: When direct File was officially announced, to me, this is over, this isn't available anymore, you start to see people speculate online or come up with okay, what is a takeaway here? And pretty quickly after direct file was shut down, I saw people online Basically, I hate to say it's call this a conspiracy theory, but basically, okay, here's what's happening here. One tax prep companies want to keep all the money from themselves, and there's a bunch of politicians who don't want tax preparation to be free and easy. That seems like a wild conspiracy theory. But I'm having trouble coming up with a better explanation for a lay person. How do you explain what happened?
00:25:18
Speaker 2: I think a lot of people really benefited from the status quo and not fundamentally reimagining or changing or updating the relationship between the taxpayer and government. And I think that when direct File came in and showed that oh gosh, this could be a great experience. Oh gosh, people like it. It's just a different way of interacting with government, and it's confident and it's competent. I think that was really threatening to a lot of organizations, a lot of people, and it was just a lot of change. When people ask why it died, it's to me, it's hard to separate it from like the other kind of destruction in the federal government. The US Digital Service became the US Doage Service on an inauguration day, so my job changed overnight. I was interviewed and my teammates got fired. The IRS had to let go of like ten thousand people in the day. It's just there was so much upheaval. It's hard for me to separate out direct file. It just feels like another casualty, and it's a casualty that you know had. I'm sure a lot of lobbying, a lot of different relationships there, but that's just speculation.
00:26:32
Speaker 1: But is there any chance that direct files could come back? Yes, from the government, and I don't mean really, Okay, yes you think it comes back.
00:26:40
Speaker 2: Yes, absolutely so. Direct file is fully open sourced the code, a lot of the content, I think, some of the design patterns. A lot of what made direct file work has been open sourced. But it's complicated though. So much of what we were trying to do is to prove that government can work, not a civic tech nonprofit on the outside. It's different. I know that people when it comes to filing their taxes, they trust a dot gov more than other things, and so we were trying to give them that option. I think it's something that you can only grow on. You've established a pattern of users that are passionate about it and love it. You've established a good data set to know where you need to grow. You've established a baseline and user experience, so you only know how to go up from there. So absolutely, I think it's something that comes back.
00:27:30
Speaker 1: Is there anything I can do to make this happen again? Like me personally? Like who do I got to call?
00:27:36
Speaker 2: One of the biggest issues that we had was awareness. So you'll definitely be enlisted in supporting awareness at all levels when it comes back. People just didn't know about it, and it's hard when you're a government because you don't run ads, you know. So that's the thing that I think we really need to help with is awareness and trust in accountability and reliability.
00:28:00
Speaker 1: Just full disclosure here. We recorded this interview a couple months ago, so I might not have sounded very upset during that interview, but let me be very clear now that now that I am doing my taxes and having to pay for the privilege, it all hits a little different. I am, at this moment, to put it lightly, very much annoyed that I am yet again being forced to live in the tax time meme when this could be so much simpler, and not to mention it could be free. I mean, imagine that somebody had made this cool new app that saved you time and money, and then Tim Cook walks along, puts his hand in your pocket, takes the iPhone out, deletes it off your phone, and says, now, bro, you can't have that. We would lose our minds. But some companies have essentially stolen an option from millions of people, and we're supposed to just take it. I'm not sure how to put it any other way. Happy taxis and everybody, all right, let me calm down. So thank you once again to Maurici for breaking all this down for us and thank you once again for listening to another episode the kill Switch. If you got something you want to say, you could email us at kill Switch at Kaleidoscope dot NYC or on Instagram. We're at killswitchpod. And if you found this one interesting and think somebody else might find it interesting too, you could send it to them. Or if you're still too shy to send this to your friends, maybe just write a review. It helps other people find the show, which helps us keep doing our thing. Killswitch is hosted by Me Dexter Thomas. It's produced by Shena Ozaki, Darla Potts, and Julian Nutter. Our theme song is by me and Kyle Murdoch and Kyle also mixed the show. From Kaleidoscope, our executive producers are Ozwaalahin, Mangesh Hatigadur, and Kate Osborne. From iHeart, our executive producers are Katrina Norville and Nikki Etor. Happy tax Season once again and catch on the next one.
