As the 2025 tax filing season continues, Elon Musk's influence over government systems and recent claims about "deleting" an agency are creating confusion and alarm about potential tax return disruptions.
The concerns come as the IRS is in flux. The agency lost its Commissioner, who resigned on Jan. 20 and awaits confirmation hearings for President Trump’s controversial pick for the role, who has limited experience with tax matters. Additionally, the tax agency faces an indefinite hiring freeze and a loss of billions in funding initially intended to modernize operations and improve customer service and tax enforcement.
It’s also worth mentioning that Musk, who has been deemed a “special government employee” tasked by Trump with cutting government spending through a Department of Government Efficiency (DOGE), heads Tesla, which paid zero income tax last year despite making billions.
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Wondering what this means for you? Here’s more to know.
Did Elon Musk delete the Direct File tax program?
On Monday, Musk declared on his social media platform X that he had "deleted" 18F, the digital services agency responsible for developing the IRS Direct File system.
Despite Musk's claim, the Direct File program remains operational and is accepting tax returns for the current tax season, which officially began on January 27, 2025. However, Musk's statement has confused people and raised concerns about the program's future.
- This free tax filing program, which expanded to 25 states for the 2025 tax season, allows eligible taxpayers to file their federal returns directly with the IRS at no cost.
- With an estimated 30 million taxpayers eligible for Direct File this year, any disruption to the service could have far-reaching consequences.
- The uncertainty surrounding the program comes at a critical time for people preparing their tax returns, adding extra stress to an already complex process.
During his confirmation hearing on January 16, Scott Bessent, who has since been sworn in as U.S. Treasury Secretary, committed to maintaining the IRS Direct File program for the 2025 tax season.
Though Bessent didn’t make any long-term commitment, saying, "If confirmed, I will consult and study the program and understand it better and make sure that it works to serve the IRS' three goals of collections, customer service and privacy."
Musk Treasury access unprecedented
Adding to the concerns, Musk's DOGE team gained unprecedented access to sensitive government payment systems earlier this week. That includes those controlling tax refunds and Social Security payments.
This access, reportedly granted by Secretary Bessent, has alarmed lawmakers who expressed concern over the security of taxpayer data and the potential for politically motivated interference in critical payment systems.
Sen. Ron Wyden of Oregon, ranking Democrat on the Senate Finance Committee, expressed worry that Musk-linked officials might attempt to unlawfully withhold payments for various government programs, including tax refunds. Congresswoman Madeleine Dean (D-Pa) echoed these concerns, calling Musk's access to sensitive data "an outrage" and a violation of Americans' privacy.
Sen. Chris Murphy (D-Conn.) told CNN’s Jake Tapper, “Every American needs to know that your information, your personal tax records, have been potentially compromised, that unelected billionaires and his Silicon Valley right-wing friends may have access to all of your personal information.”
Sen. Minority Leader Chuck Schumer (D-N.Y.) told reporters, “We must protect people’s Social Security payments, their Medicare payments, tax refunds, from any possible tampering by DOGE or any other unauthorized entities.”
The Trump administration responded by noting that Musk is a special government employee. Such employees typically work for the government temporarily, usually no more than 130 out of a given year. And Bessent reportedly told lawmakers that Musk doesn't control the Treasury system.
Trump defended the access, telling press reporters, “Elon can’t do and won’t do anything without our approval and we’ll give him the approval where appropriate. Where not appropriate, we won’t.”
Tesla income tax?
Musk has previously advocated simplifying the tax code, suggesting a federal flat tax. Critics argue that such changes could disproportionately affect individuals with lower incomes.
Note: Since taking office, Trump has called for abolishing income tax in favor of tariffs, and other lawmakers have reintroduced a bill to eliminate the IRS in favor of a national consumption tax.
Additionally, while Musk pushes for government cost-cutting and efficiency, his own company, Tesla, has largely avoided significant federal taxes.
- Tesla reported $2.3 billion of U.S. income in 2024 but paid zero federal income tax.
- Over three years, Tesla reported $10.8 billion in U.S. income while paying only $48 million in federal taxes, an effective tax rate of 0.4%.
- The company has reportedly benefited from various tax breaks, including accelerated depreciation and credits for executive stock options.
This contrast between Musk's crusade for government efficiency, his company's tax avoidance strategies, and his federal SpaceX contracts (billions of dollars worth) has led some to question the appropriateness of his role in shaping federal fiscal policy. Some argue further that Musk and his non-government staff operate without proper oversight and potentially violate laws.
In a release, Sen. Patty Murray (D-Wash.) said, “I’ve been hearing from people across my state who are truly alarmed about what Musk and his associates having access to this system could mean for their data—and for funding that they count on.”
Murray went on to describe Musk as "an unelected, unaccountable billionaire with extensive conflicts of interest."
So far, Republican lawmakers in Congress have been mostly silent or supportive of Elon Musk’s access to Treasury systems. Meanwhile, some federal employee unions have already filed a lawsuit to block Musk from accessing the system.
Bottom line: Trump, Elon, and your taxes
While IRS Direct File is operational for the 2025 tax season, and the agency had hoped to make it permanent, the program's long-term future remains uncertain.
In December, 29 Republican lawmakers called for the then-incoming Trump administration to end the program and have since introduced legislation proposing to do so. Industry giants like H&R Block and Inutit’s TurboTax have long opposed the IRS entering the tax preparation business.
As the 2025 tax season progresses, taxpayers are left to try to navigate this uncertain landscape. Hopefully, the confusion surrounding Elon Musk’s Treasury payment systems and shakeups at the IRS don’t disrupt the tax filing experience or tax refunds.
At this point, the impacts, if any, are unclear. So, stay tuned and consult a tax or financial professional with questions about your tax situation and liability.
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