TurboTax Fights Against Simplified, Free Tax Filing

Photo (cc) by MrGuilt

What if you could file your taxes in just minutes, without paying a dime? While that may sound great to you, it’s the last thing TurboTax owner Intuit wants to happen – and they’ll seemingly go to any length to try and stop it.

According to ProPublica, Intuit has spent $11.5 million on a federal lobbying effort in the last five years to fight against bipartisan legislation for a return-free filing option for taxpayers.

That return-free option looks like this: The IRS would prepare tax return forms using information the government already receives from banks and employers, and then the form would be sent to taxpayers for review and the option to file. That’s it. The return-free filing option would be free and entirely voluntary.

“This is not some pie-in-the-sky that’s never been done before,” said William Gale, co-director of the Urban-Brookings Tax Policy Center. “It’s doable, feasible, implementable, and at a relatively low cost.”

TurboTax, which helped roughly 25 million Americans file their taxes last year, is fighting tooth and nail to make sure that automatic tax filing doesn’t become a reality.

ProPublica said that in the past year a small-town mayor, a rabbi, and a state NAACP official, among others, have written op-eds or letters to Congress criticizing the prospect of giving taxpayers the option to use the return-free filing system, warning that it was a conflict of interest for the IRS and would inevitably hurt low-income people.

The letters and op-eds don’t mention that, as ProPublica laid out last year, return-free filing might allow tens of millions of Americans to file their taxes for free and in minutes. Or that, under proposals authored by several federal lawmakers, it would be voluntary. … Or that the concept has been endorsed by Presidents Obama and Reagan and is already a reality in some parts of Europe.

It appears that a public relations firm has been persuading people to pen the op-eds and letters against return-free filing without disclosing their lobbying ties to Intuit.

Slate.com’s Jordan Weissmann said that despite the underhanded tactics of Intuit, there’s actually a reasonable argument against a return-free tax system. For instance, the system wouldn’t work well for people with complicated taxes. Plus, the U.S. has a complicated tax code.

Small businesses might also have to spend extra money getting payroll information to the IRS on a tighter schedule so the government could pre-populate everybody’s paperwork. But there are probably enough Americans who simply input some W-2s and take a standard deduction without adding on any complicated breaks to make the system worth it. Some studies have suggested the system could work for somewhere around 40 percent of taxpayers, saving them time and money.

What do you think of Intuit’s sneaky “grass-roots” campaign to rally against return-free filing? Share your comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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