At the beginning of 2025, the Internal Revenue Service welcomed a team from the Department of Government Efficiency (DOGE), a relatively new group assigned to evaluate and improve federal systems. Upon their arrival, members of the DOGE team praised the IRS’s free tax filing tool, Direct File, and assured staff that it would be protected.
Direct File had launched as a pilot program allowing taxpayers in 25 states to file their federal returns for free directly through the IRS. It quickly became popular among users for its straightforward process and relief from expensive tax software subscriptions.
But within weeks of offering those reassurances, things changed. Plans to potentially phase out the program began surfacing, and according to multiple people familiar with the matter, the timing coincided with meetings DOGE members held with tax preparation industry lobbyists. For those closely involved in Direct File’s development, the sudden shift raised concerns.
Who Sparked the Push to Eliminate Direct File?
Sources familiar with internal discussions say that the proposal to wind down Direct File originated with Sam Corcos, CEO of a health tech startup supported by venture capital firm Andreessen Horowitz. Corcos had recently taken on a senior advisory role at the Treasury Department.
Notably, in the days before suggesting the program be scrapped, Corcos had reportedly spoken positively about Direct File to IRS engineers. Yet shortly afterward, he presented the idea of cutting the program to Treasury Secretary Scott Bessent. The abrupt change in approach, observers say, came just days after Corcos met with representatives from Free File Inc.—a group of tax software companies that had long partnered with the IRS under an earlier agreement.
The Shadow of the Free File Alliance
Free File Inc., formerly known as the Free File Alliance, is a consortium formed over 20 years ago to offer free tax filing services to lower-income Americans. In return, the IRS agreed not to launch its own filing platform. The group was initially led by Intuit, the maker of TurboTax, which has since left the alliance, along with H&R Block.
Criticism of the alliance has grown over time, particularly after reports revealed that some companies had designed their platforms in ways that made free options harder to find online. While the alliance has shrunk, remaining members such as TaxSlayer and TaxHawk continue to oppose government-run alternatives.
Lobbyists representing these firms have voiced their desire for the IRS to shut down Direct File and redirect efforts toward other modernization priorities. Their message appears to have found a receptive audience among some within the Treasury.
Internal Friction and Conflicts of Interest
The DOGE team includes several notable figures from the tech world, including Steve Davis, former CEO of Elon Musk’s Boring Company, and Amy Gleason, a federal technology administrator. While Davis had initially supported Direct File, tensions reportedly emerged within DOGE leadership. Davis eventually stepped away from official duties but continued to be involved in decision-making, even attempting to sideline Corcos over disagreements.
At the Treasury, Corcos was initially overseen by Todd Newnam, a former tech executive who later became the department’s Chief Information Officer. Court documents show that Newnam and Corcos worked closely on IRS-related initiatives, including reviews of vendor contracts and discussions about broader digital infrastructure.
Newnam’s involvement raised ethical questions when financial disclosure forms revealed he owned stock in Intuit. He wasn’t alone—two other government officials at the Bureau of Fiscal Service also reported holding shares in the company. While legal, the ownership of stock in a firm that stood to benefit from ending Direct File raised eyebrows and fueled suspicions about the motives behind the shift in policy.
Growing Role of Private Tech Firms in Public Systems
Concerns over corporate influence within the IRS expanded further when Corcos led a multi-day workshop involving representatives from Palantir Technologies. The event explored the use of Palantir’s Foundry software to build a centralized platform for IRS data—potentially enabling third-party access to vast troves of sensitive taxpayer information. The idea was to create a “mega API” that would link internal IRS systems, but the involvement of a private company in such a core government function raised alarms among privacy advocates.
