Intuit(ive) Solutions to UnBlock Free File

The average American spends $140 each year to prepare their tax returns. Tax Day is over for most of us, but the headache of being required to pay a private, for-profit company to fulfill a civil obligation never goes away.

Thankfully, the IRS is developing and deploying a long-overdue solution. After conducting a successful cost and feasibility study, the agency announced that it will launch a pilot program for its own free, online direct-file system. The study showed that the IRS was capable of developing such a program and that the majority of taxpayers would be interested in using it. Details about who will be eligible for the pilot program and whether the Treasury Department will ultimately decide to proceed with a larger-scale program is still unclear, but it’s a huge step in the right direction!

Of course, not everyone is excited about this initiative. Large tax preparation companies like Intuit (the parent company of TurboTax) and H&R Block – which stand to lose a lot of money from the successful launch of an IRS direct file program – have cried foul at the very idea of making it easy for taxpayers to, well, pay their taxes. Intuit spent a record $980,000 on lobbying in the first quarter of 2023 alone, after spending a record $3.5 million in 2022. Republicans have also publicly opposed the program over absurd claims that it would give the IRS too much control, which it would then use to go after Americans making less than $75,000. They’ve gone so far as to include a stipulation in their appropriations bill that would bar the development of an IRS direct file system.

Interestingly, the US already has a free file option for taxpayers who make less than $73,000 a year, which comprises about 70% of all taxpayers. In 2002, President George W. Bush wanted to create a free online tax filing program like the one the IRS is developing now. But Republicans and tax prep giants successfully lobbied to stop it. Instead, a compromise was struck: private tax prep companies would offer low-income Americans a free-file option, in exchange for the IRS agreeing to not create its own competing free service.

But thanks to deliberate efforts by tax prep giants to confuse and frustrate taxpayers, few Americans – just 3%, according to a Government Accountability Report – use the free file option, let alone know about it. In 2019, ProPublica published a series of bombshell reports that laid out in stark detail just how far companies like Intuit and H&R Block would go to make a buck. One report highlighted the deceptive designs and advertising tricks that TurboTax uses to deliberately make their free file option difficult to find for eligible taxpayers. Another exposed Intuit for adding code to its site to prevent its free file option from appearing in Google searches. Finally, another revealed that, in 2019, Intuit made $1 billion from 14 million Americans who could have otherwise filed for free.

As insane as it may be, tax preparation companies’ money-grubbing doesn’t stop with taxpayers themselves. Last month, three tax prep giants – H&R Block, TaxAct, and TaxSlayer – came under fire after a congressional report disclosed that, over the course of two years, they intentionally sold taxpayers’ personal and financial information to Meta, which its parent company Facebook then used to create targeted advertising. We couldn’t make this up if we tried!

Dozens of other countries provide free tax filing. There is absolutely no reason why the United States of America – which put a man on the moon, invented the internet, and developed the polio vaccine – can’t join their ranks. The only parties that stand to lose from an IRS direct file program are billion dollar companies like Intuit and H&R Block, who rigged the system for years and raked in billions by taking hostage Americans’ ability to pay their taxes. Everyone else stands to win.

We at the Patriotic Millionaires frequently say that we consider paying our taxes to be our patriotic duty. Our country enabled our extraordinary success stories in different ways, so it’s only right that we pay what we owe in taxes just like everyone else does. We don’t think it’s too much to ask that fulfilling that patriotic duty be free, online and as simple as possible.

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