IRS releases source code for Direct File

The Internal Revenue Service has released to the public the vast majority of the code used to develop its Direct File program, theoretically allowing anyone to build their own versions of the software (though they'd still need to become an approved e-file provider to actually file). The move comes shortly after the administration announced plans to shutter the program just one year after its launch. 

The release was not spontaneous, nor was it a leak, as the IRS had already been considering releasing the code as a way to demonstrate a commitment to public trust and enable independent assessment of its work. This idea became officially mandated with the passage last year of the SHARE IT Act, which required that all source code produced under an agency contract, funded exclusively by the federal government, or developed by federal employees as part of their official duties, be stored at no less than one public repository or private repository no later than 210 days after the bill became law. This release, in fact, comes three weeks before this deadline. 

"Establishing trust with taxpayers was core to our approach for designing and building Direct File," said Chris Given, who was the technology lead for the Direct File project, in a blog post explaining the release. "By creating the most accurate option for filing, by making taxes accessible to all, by keeping taxpayer data secure, and now, by publicly sharing Direct File's code, the Direct File team showed our dedication to earning taxpayers' trust."

Not all source code, documentation and metadata used in the development of Direct File was included in the release. Specifically, any code or data that is considered Personally Identifiable Information Federal Tax Information, Sensitive But Unclassified, or source code developed for National Security Systems, as defined in 40 U.S.C. Section 11103, is exempt. Due to these restrictions, certain pieces of functionality have been removed or rewritten.

Designed to provide a free alternative to commercial tax prep software, the Direct File system expanded from pilot tests in 12 states last year to 25 states this year, aided by the nonprofit group Code for America and its FileYourStateTaxes project. A survey of over 1,000 Direct File and FileYourStateTaxes users reportedly found that 98% of respondents said they were either satisfied or very satisfied with the programs, according to the Federal News Network. Last year, then-IRS Commissioner Danny Werfel announced plans to make the Direct File program permanent, but the program has been repeatedly attacked by Republican lawmakers in Congress and the tax prep industry.

However the American Coalition for Taxpayer Rights, a group representing the tax prep software industry, had said it would like to see Direct File terminated. "We would urge the administration to terminate Direct File because it's unnecessary, wasteful, unauthorized and clearly a failure," said spokesperson David Ransom. "The IRS should promote the public-private Free File partnership — which provided 10 times the number of returns as Direct File this year — and focus on taxpayer service and modernization efforts." 

The administration first fired 18F, the technology team behind Direct File, in February and then, in April, announced that it plans to shut the program down entirely. 

"I do mourn the fact that Direct File won't be available to taxpayers next year," said Given in another blog post. "But as I told the team as the end closed in, 'We took a pipedream, and made it a policy choice.' No one can claim with a straight face that Direct File is impossible anymore; bringing it back requires only that our elected leaders make a different choice. … Direct File is a policy choice, but the Direct File team was an orchard, just starting to produce a meaningful yield. Now it's been razed."

The code release comes shortly after the launch of the Future of Tax Filing Fellowship by the Economic Security Project, an advocacy organization aiming to address social and economic inequality rooted in outdated ideas. Included in the fellowship are the leaders behind the design, delivery and defense of IRS Direct File, including Given. They will document the legacy of Direct File to ensure institutional knowledge isn't lost and provide guidance for future initiatives in free and simplified tax filing; design new policy ideas to close the tax credit uptake gap that costs families over $12 billion each year; and run a design sprint with Direct File's original architects to explore new civic tech tools that center equity, accessibility and trust in government.

Donny Shimamoto, head of accounting tech advisory firm IntrapriseTechKnowlogies, noted that the release of the source code, in terms of security, could be a "double-edged sword" given the new knowledge that the public has about the code that the IRS runs.

"Putting the code out there does open up the risk that someone could figure out a way to exploit the source code or data submitted that is processed by the source code. This is a double-edged sword: (1) other software developers (including fraudulent actors) could leverage this to build their own tax engines, but (2) white-hat hackers can help to examine the source code to help look for exploits and help the IRS identify weaknesses and potential fixes," he said in an email.

He said it's very difficult to develop comprehensive tax return software that can handle federal and state returns, "so the likelihood of this driving additional tax software options seems small."

"But I do like that we are seeing more government transparency and sharing of IP when government funds were used to develop technology that could be useful for citizens benefit," he added.