Public Survey on Free Filing

Published August 22, 2025

On August 21, the Internal Revenue Service (IRS) launched a public survey about free filing options. The IRS is asking taxpayers to provide input on the options available for online filing, exploring interest in options involving a commercial company or a program sponsored by the IRS.

The One Big Beautiful Bill Act (OBBBA) requires the IRS to present a report to Congress by October 2. The report must evaluate "taxpayer opinions and preferences regarding a taxpayer-funded, government-run service or a free service provided by the private sector."

The report will evaluate both the Free File program that allows commercial companies to offer complementary tax-filing services and the IRS Direct File program that was available in 2024 and 2025. The Direct File program has been criticized by some members of Congress.

The IRS survey indicates there would be costs for a Direct File program. The IRS states that "setting up and running the program is expected to have an initial cost to the federal government of at least $10-$20 per return processed."

The members of Congress who criticized the Direct File program pointed to the cost. The Center for Taxpayer Rights obtained information and reported that the IRS spent $64 million on Direct File. However, the report also indicated there were high levels of user satisfaction with Direct File.

Commentators have noted that the Direct File program could be a welcome solution for taxpayers. Adam Ruben of the Economic Security Project told Tax Notes, "When the survey asks users about an IRS free filing option, it raises concerns about government costs. But when it asks about private free tax prep, it does not raise any concerns that multiple of these companies have been fined for scamming customers out of free tax prep."

All taxpayers are encouraged to participate in the free online survey. The survey is available at IRS.gov. Scroll down on the main page to the "Public survey on free filing" picture. Click on the link and take the brief survey. The survey is available until September 5, 2025.

Editor's Note: This is a short and convenient survey. It explores the public’s preferences for commercial Free File and Direct File options. The survey includes asking the user to report whether they filed a tax return last year and their tax preparation method. All data from the survey will remain confidential.

Opposing Briefs on Johnson Amendment

The Department of Justice (DOJ) and several nonprofits have been pursuing an agreement to lift restrictions on political activities for houses of worship. The proceedings are in the U.S. District Court for the Eastern District of Texas. This week, there were briefs filed both in support and in opposition to the proposed order by the court.

The DOJ brief stated that the Proposed Consent Judgment "reflects a reasonable settlement resolving Plaintiffs’ claims broadly challenging the Johnson Amendment through a narrow injunction based on the proper scope." The DOJ noted that this is a "conditional settlement" that solves the problem of the potential free speech challenges for religious nonprofits.

The goal is to allow free speech in a narrow category. This speech would be permitted for "a house of worship to its congregation in connection with religious services through its customary channels of communication on matters of faith, concerning electoral politics viewed through the lens of religious faith."

The DOJ contends that the proposed rule is not barred by the Anti-Injunction Act (AIA) on the grounds that the AIA is not applicable to a settlement by the government when it agrees with a plaintiff.

Plaintiffs in this case include two churches and two religious nonprofit organizations. Plaintiffs claimed that the AIA is not relevant to this case because there is no tax liability. They also claimed that they have standing to bring the case.

While the IRS has rarely attempted to enforce the Johnson Amendment, there have been some actions against specific churches. In addition, IRS official publications warn nonprofits that they may not support or oppose candidates.

Plaintiffs suggested that the Free Speech Clause, the Free Exercise Clause and the Religious Freedom Restoration Act support the change in the IRS position on the Johnson Amendment.

The Americans United for Separation of Church and State (AU) oppose the action by the District Court. The AU indicated that the action to change the Johnson Amendment should be handled by Congress. The AU also suggested that a nonprofit organization could appropriately challenge the Johnson Amendment after its tax exemption has been revoked.

The AU noted there has not been adverse action taken against Plaintiffs. Finally, the AU claimed that giving a specific exemption to religious organizations but not to secular nonprofits would violate equal protection rights and the Establishment Clause.

The DOJ responded that the Johnson Amendment may have a chilling effect on free speech by the religious nonprofits.

Editor's Note:  Your editor does not take a position on the viewpoints in the briefs. This information is offered as a service to our readers.

IRS Sunsets on Energy Credits

Under the new provisions of the One Big Beautiful Bill Act (OBBBA), there are sunsets of various energy credits. On August 21, the Internal Revenue Service (IRS) published a fact sheet (FS-2025-5) to provide guidance on these sunsets.

Most of these sunsets for consumers are effective in 2025. A few of the energy credit sunsets for commercial buildings may apply if construction begins by June 30, 2026.

There are four primary energy credits that benefit taxpayers. These include a new or used clean energy vehicle, improvements that make your home energy-efficient and the purchase of items that help with home energy production.

1. New Clean Energy Vehicles – There is a tax credit for up to $7,500 for most new clean energy vehicles (EVs). The vehicle must qualify based on the source of the battery and other components. There is a limit on income of $150,000 for single individuals, $225,000 for a head of household or $300,000 for couples who file a joint return. The price limit is generally $55,000 manufacturer’s suggested retail price (MSRP) for most cars and $80,000 MSRP for an SUV. The new EV credit sunsets on September 30, 2025. If the taxpayer makes payment before September 30 and takes possession after that date, the $7,500 credit is applicable.

2. Used Clean Energy Vehicles – There is a credit for the lesser of $4,000 or 30% of the sale price for a used clean vehicle. The income limit is $75,000 for single individuals, $112,500 for a head of household or $150,000 for a couple filing jointly. The used clean vehicle must qualify under the rules, and most of these are electric vehicles. The used EV credit sunsets on September 30. If the taxpayer makes payment before September 30 and takes possession after that date, the lesser of $4,000 or 30% of the sale price credit is applicable.

3. Energy Efficient Home Improvements – There is a credit for up to 30% of qualifying improvements that make your home more energy efficient. This includes ENERGY STAR windows, doors, insulation or similar items. The general limit is $1,200 for this credit. The energy efficient home improvements must be “placed in service” by December 31, 2025.

4. Residential Clean Energy – There is a 30% credit for solar panels, wind energy, geothermal heat pumps and battery storage. This credit does not have a limit, so a homeowner may install a substantial solar panel and battery system and still qualify. The solar, wind, geothermal or battery system must be “placed in service” by December 31, 2025.

Editor's Note: The time is short for many of these credits. It is helpful that the vehicle credits may qualify based on purchases made by September 30, 2025, even if delivery occurs later. However, any solar, wind, geothermal or battery system must be in operation by December 31, 2025. Because the permit and construction process may take time, it will be important for taxpayers to proceed promptly with energy projects if the credit is intended to be claimed.

Applicable Federal Rate of 4.8% for September: Rev. Rul. 2025-17; 2025-36 IRB 1 (17 August 2025)

The IRS has announced the Applicable Federal Rate (AFR) for September of 2025. The AFR under Sec. 7520 for the month of September is 4.8%. The rates for August of 4.8% or July of 5.0% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2025, pooled income funds in existence less than three tax years must use a 4.0% deemed rate of return. Charitable gift receipts should state, “No goods or services were provided in exchange for this gift and the nonprofit has exclusive legal control over the gift property.”