It’s tax day in the U.S., and Americans are clawing their way through tedious tax filing systems and paying unnecessary fees (from sea to shining sea). We may be the “land of the free,” but we aren’t necessarily land of the free file. In 2003, the IRS introduced the Free File program along with a group of private tax prep companies. The reason the IRS didn’t just provide tax prep services directly is likely the result of heavy lobbying from companies like Intuit, the parent company of TurboTax (as well as QuickBooks, Mint, Credit Karma and Mailchimp).
The Free File system is supposed cover 70 percent of American taxpayers, but as of 2018, it’s used by just 3 percent of taxpayers each year. In 2021 filers with an adjusted gross income of $73,000 or less are eligible for the Free Filing services, which are listed on irs.gov, but many end up using costly services like TurboTax.
“As we noted in 2019, deceptive practices and outright sabotage from Free File companies have driven this under-utilization, and Intuit, with approximately 60 percent market share in consumer tax software, bears much of the blame for these practices,” wrote Senator Elizabeth Warren, Representative Katie Porter, and Representative Brad Sherman in a five-page letter they penned to Intuit CEO, Sasan K. Goodarzi.
According to Warren, Porter, and Sherman, Intuit’s “bad-faith participation in the Free File program has cost American taxpayers billions of dollars, including military members, students, and disabled Americans.” They propose the Tax Filing Simplification Act which would require simplified tax filing tools, including “a truly free Free File replacement.”
Almost two decades of BS — In the letter, the lawmakers cited a ProPublica report that TurboTax had deliberately buried the free versions of its software search results by adding code into the website to suppress results, leading taxpayers to its more expensive services. The group identified several prominent examples of revolving door hires and lobbying against automatic filing. The Federal Trade Commission (FTC) sued Intuit on March 29 for “deceiving consumers with bogus advertisements pitching ‘free’ tax filing that millions of consumers could not use.”
Taxes aren’t going anywhere, but lawmakers are interested in changing our current, convoluted tax system. Pope Francis himself called tax cuts for the rich and tax havens “structures of sin.” The supreme pontiff hasn’t specifically commented on TurboTax’s ongoing lobbying, deceptive marketing, and tireless efforts to get American taxpayers to pay for services that should be free. I’m no pope, but the tactics seem pretty evil to me.