Preparing For Tax Season: NY Testing IRS New Filing System

In the course of life, you are guaranteed very few things to be certain. Benjamin Franklin once said that those certainties are "death, taxes and learning new things." Based on the headline of this article, I'm quite certain we all know which one is the focus of today's story.

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Details on New Tax Filing System Test

It may only be October but we all know how fast time flies. Before we know it the holidays will be here and gone, the Winter season will do its yearly damage to the region and as we get ready to celebrate the Spring, we'll all be hit with the realization that it's Tax Season. This brings us to today where in preparation for the upcoming Tax Season, the IRS will soon begin testing a new type of filing system for New York residents.

According to the IRS website, the new filing system was born from the IRS Strategic Operating Plan which focuses on giving people a number of choices in how they prepare and file their taxes. This new Direct File program ideally will just become another option that citizens have like meeting with a tax professional or using commercial tax software.

This pilot of the new Direct File system will be intentionally limited in order to assess "customer support and technology needs as well as evaluate successful solutions to the potential operational challenges..." Limiting this system will currently only deal with certain income reporting, credits and deductions. The scope of what the pilot includes is also subject to change.

Where the Direct File Pilot Testing Will Be Available

This new Direct File testing will not only be available in New York but a number of other states as well. Currently, it is expected that the filing system will be available to eligible taxpayers in Alaska, Arizona, California, Florida, Massachusetts, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.

Each state will have some of its own nuances with the pilot, for instance, residents in New York, Massachusetts, Arizona and California currently would only be able to use the new system for federal tax returns. Residents in these states would be directed to another "state-supported tool" in order to handle their state tax returns.

While the pilot is technically open to any resident in participating states, it is essentially a trial run, meaning that the total number of participants will be limited in order for the IRS to run an effective test while also maintaining a "positive customer service experience". The pilot testing will begin when citizens are eligible to submit their tax returns in 2024 and as tax season progresses, more people will become eligible to file their taxes for 2023 through the system.

As the pilot is conducted, the IRS will be monitoring and making decisions about subsequent phases the pilot will see based upon how successful it runs as well making sure that any issues related to "customer support, state tax integration, fraud prevention, etc..." are addressed.