Even the former head of Intuit thinks taxes in the U.S. are too complicated: The IRS’s new direct file tool could be ‘a great thing’

“The U.S. tax system is a remarkable abnormality. It is so, so complex,” says Bill Harris, the former CEO of PayPal and TurboTax parent company Intuit. “We could have a radical reformation of the tax laws in this country. We should.”

He’s rooting for the success of the IRS’s new direct filing software, which will enable many taxpayers to file their taxes online—for free. It’s in a pilot phase now, and an early look the agency provided to the media suggests it’s a relatively simple online form that’s significantly more user-friendly than, say, filing a paper return. And at no cost, it has the potential to give the TurboTaxes of the world a run for their money.

Many Americans have long called for a government-run alternative to private tax preparation software. But those advocating for a federal substitute shouldn’t celebrate the development just yet: The IRS is likely still years away, at least, from an effective tool that can handle more than the simplest tax situations and help most Americans pay less to file their tax returns.

Most taxpayers cannot use the current direct file tool; the IRS is inviting select filers to use it in an initial testing phase now before making it more widely available in 12 pilot states in March: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. People in those states interested in using it can sign up to be notified when it’s available.

Courtesy of the U.S. Treasury Department

There are other limitations. This year, the tool can only support W-2 income, meaning gig economy workers and others with 1099 income cannot use it. Those with capital gains income, insurance through statewide marketplaces, who itemize deductions, have…