The New Jersey Senate is considering a bill, A1431, that would establish an “EasyFile” program, similar to the IRS Direct File pilot at the federal level, to provide a public option for state tax filing. The proposal aims to offer taxpayers a straightforward and cost-free alternative to for-profit tax preparation services.
The goal is a noble one, but the decision to brand this program differently from its federal counterpart already raises concerns about the potential user experience. For government-run tax preparation services to successfully compete with their for-profit counterparts, they will need to prioritize seamless and integrated processes that minimize user confusion and maximize taxpayer convenience.
The IRS Direct File program was a success because it proceeded from those twin goals, if the EasyFile program or other state initiatives are to match that success, they will need to mirror the simplicity and cohesiveness established by private sector solutions—without the upsell baggage.
Private Service Advantages
Despite shortcomings in terms of user privacy and upselling of additional services, for-profit tax preparation services such as TurboTax and H&R Block have set a high bar for user experience by offering a seamless integration between federal and state tax filing.
In user experience, their advantage is they offer the ability to handle both types of returns within a single platform—a unified process that eliminates the need to navigate multiple websites or manage different sets of credentials.
This streamlined approach not only saves time but also reduces the likelihood of confusion or failure to file, enhancing overall user satisfaction and reducing the entry points for humor error or bad actors.
In contrast, if the government-run public option programs like Direct File and EasyFile are going to exist as separate silos without a uniform platform sharing data between the two filing systems, they risk creating a fragmented experience that could deter taxpayers from using these public options.
The overarching goal should be to emulate the cohesive and efficiency of systems provided by private companies, with the added benefit of eliminating the for-profit motive, and ensuing that the transition from federal to state filing is a matter of checking check boxes and clicking a few buttons—not interfacing with a transparently separate system.
Proposed Solutions
In furtherance of a goal of seamless integration, both federal and state programs must adopt a collaborative approach. The first step will be for the Direct File program to create a formal application programming interface (API) that would allow state tax filing systems to entirely integrate with Direct File.
New Jersey’s proposed EasyFile, for instance, could then connect directly with the federal system and make use of data provided on federal returns. There should need be no duplication of data entry between the two systems and no visible transition from federal filing to state filing — taxpayers want to pay the taxes they owe, and are less interested in which sovereign they are owed to.
State programs must prioritize uniformity with the federal Direct File system rather than localized customization. While it may be tempting to add unique features or branding to state systems, including choosing a unique state-specific name, these differences will lead to confusion and inefficiencies. States should merely aim to mirror the Direct File experience and create a consistent look and feel between the two platforms.
Additionally, both systems should prioritize, as Direct File has to this point, mobile-first design elements and accessibility. Mobile-friendly versions of the tax filing systems will be key, as many users may prefer to complete their taxes on smartphones or tablets.
Conclusion
A unified tax filing system that integrates federal and state returns can offer significant benefits to taxpayers, reducing complexity and streamlining the overarching user experience—but only if the platforms are developed thoughtfully.
New Jersey’s proposed EasyFile program represents a crucial stem in this direction, but its success will turn on effective implementation and direct integration with the federal system. It also might need to be renamed.
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