Virginia won’t be participating in IRS Direct File program, Youngkin says

RICHMOND, Va. (WRIC) — Virginia will not be participating in the Internal Revenue Service (IRS) Direct File program.

According to a letter obtained by 8News, Gov. Glenn Youngkin (R) says the Commonwealth will not be taking part in this tax-filing program.

Democratic lawmakers previously argued Direct File would make it both easier and more affordable for Virginians to file their taxes.

In the letter, the reasons given for Virginia not adopting the Direct File program include costs reportedly associated with adopting the system, in addition to Youngkin stating that authorizing Direct File would require a legislative act through the General Assembly.

Youngkin also cited “substantial legal questions about the new IRS program” reportedly raised by Virginia Attorney General Jason Miyares as another reason Virginia would not implement Direct File at this time.

Read the full letter below:

“Thank you for your letter regarding the Internal Revenue Service (“IRS”) Direct File program. The Virginia Department of Taxation (“TAX”) staff has and will continue to work closely with the IRS to ascertain the legal and technical steps which would be required if Virginia were to participate in this new program, as well as assess the financial resources needed to modify current tax collection systems to potentially provide this new filing option to Virginia taxpayers. While I am open to exploring additional tax filing options for Virginians, direct file through the IRS presents several issues that prevent Virginia from participating this tax filing season.

Importantly, TAX has counseled that current law does not authorize this approach and therefore a legislative change must be adopted by the General Assembly prior to participation in the new program. As you know, many Virginians can already avail themselves of free filing options through the Virginia Free File program, established by law in 2010 to coordinate with the longstanding IRS Free File program which offers free electronic tax preparation and filing with trusted partners through IRS.gov. This existing law effectively prohibits participation in the new program.

Furthermore, if eventually authorized by Virginia law, the Commonwealth’s aging tax processing system, the Integrated Revenue Management System (“IRMS”) needs replacement to meet the terms of the new program.

I introduced $150 million in funding for IRMS and other critical state government information technology systems in December of last year, but this necessary funding was not included by the General Assembly in the final budget returned to my desk. TAX estimates implementing these Direct File changes will cost an incremental $1.5 million. IRMS replacement has previously been estimated to cost $24 million per year over four years.

In addition, there are substantial legal questions about the new IRS program raised by state attorneys general that have yet to be resolved. Attorney General Miyares signed a letter to U.S. Treasury Secretary Janet Yellen in January outlining the concerns around the IRS’s authority to implement the Direct File program. These legal issues have been raised directly by constituents, along with other concerns about the IRS’s inability to deliver proper customer service and to give independent tax advice.

TAX has been in regular contact with the IRS and will meet with them again today to inform them that Virginia will be unable to participate in the program this filing season. However, subject to a legislative authorization after a robust process which includes meaningful constituent participation and appropriate funding, Virginia may be able to participate in IRS Direct File in the future.

I support our objective to appropriately reduce administrative burdens on Virginians. In addition, the most effective way for us to provide tax relief to Virginians is to reduce tax burdens. I look forward to working with the General Assembly to do just that in the next legislative session.”

Gov. Glenn Youngkin (R) in a letter obtained by 8News

The letter was addressed to several Senate Democrats, including senators Mark Warner and Tim Kaine, as well as representatives Bobby Scott (VA-3), Gerry Connolly (VA-11), Don Beyer (VA-8), Abigail Spanberger (VA-7), Jennifer Wexton (VA-10) and Jennifer McClellan (VA-4).

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