MICHAEL MARTZ, RICHMOND TIMES-DISPATCH

Democrats in Virginia’s congressional delegation urged Gov. Glenn Youngkin on Wednesday to give state taxpayers the option of filing their tax returns through a new “Direct File” program that the IRS offers to save them money.

Sen. Mark Warner and Sen. Tim Kaine joined with six Virginia Democrats in the U.S. House of Representatives in a letter to the Republican governor asking him to take actions with the General Assembly to make the new tax filing program a “permanent option” for state taxpayers with relatively simple tax returns.

The IRS conducted a pilot program of the option in 12 states for the 2023 tax year and reported that 140,803 taxpayers used it to save $5.6 million on preparing their tax returns, while receiving more than $90 million in refunds. The U.S. Department of the Treasury and the IRS announced in late May that they are extending the option to all states for this and future tax years, but states have to formally agree to participate.

“Virginia taxpayers deserve access to this free and simple filing option,” members of the delegation told Youngkin.

Rep. Don Beyer, D-8th, a member of the House Committee on Ways and Means, which handles tax policy, led the effort. The letter was signed by him, Warner, Kaine and Reps. Jennifer McClellan, D-4th; Abigail Spanberger, D-7th; Bobby Scott, D-3rd; Gerry Connolly, D-11th; and Jennifer Wexton, D-10th.

The Inflation Reduction Act, which President Joe Biden signed two years ago, is financing the program. The Treasury Department estimates that the average taxpayer spends $270 and 13 hours to file their tax returns. The law required the IRS to study the option of creating a direct file program, which it then piloted in Florida, Tennessee, Texas, Nevada, New Hampshire, South Dakota, Wyoming, Arizona, California, Massachusetts, New York and Washington.

“After a successful pilot, we are making Direct File permanent and inviting all 50 states to offer this free filing option to their residents,” Treasury Secretary Janet Yellen said on May 30.

The pilot program applied to eligible taxpayers in states that had entered into agreements with the IRS or, like Tennessee and Florida, don’t have a state income tax. States with their own income tax were allowed to guide taxpayers to state tools to help them file stand-alone state returns.

In opening the option to all states, “it is understood that states choosing not to participate will eliminate access to Direct File to their residents,” members of the Virginia congressional delegation told Youngkin.

They described it as an additional option for taxpayers to use, along with other free filing and tax assistance programs the IRS already offers.

“Virginians should have the same opportunity to access Direct File as they do any other taxpayer assistance program offered by the IRS,” they said.

Late Wednesday, Youngkin spokesperson Christian Martinez said, “we are closely following the implementation of the IRS Direct File program and looking into its legal and technological implications.”

Del. Joe McNamara, R-Roanoke County, who is a certified public accountant, is receptive to the concept, but said the details would matter to allow it in Virginia.

“I think if it makes it easier for people to pay their obligations without cost, then it’s something we should offer,” he said.

However, McNamara said he would insist on “a seamless interface” between the IRS and the state tax system “so it doesn’t create confusion for people who think they’ve paid their state tax when they only paid their federal.”

He also said the state should make the program “more limited,” so that taxpayers don’t try to use it for complicated tax returns.

“The main concern I would have is it should be a limited approach because I think there’s value that a (tax) preparer can bring to people of more modest means,” he said.