Flickr / rangerholtonIntuit, the makers of TurboTax, has spent tons of money and time lobbying against a simplified tax system known as “return-free filing,”
Liz Day of ProPublica reports.Return-free filing is a system where the government prepares your tax returns, effectively getting rid of the need to hire a tax preparer or pay for software like TurboTax. Taxpayers would receive a prefilled return and have three options: accept it, make changes, or reject it and file it on your own.
But in the past five years, Intuit has spent $11.5 million on federal lobbying. Not all of the money went to lobbying against return-free filing specifically, but Intuit has disclosed that it opposes the notion of having the government prepare taxes or allowing people to file taxes directly, for free, on a government website.
Intuit argues, as do other tax prepares, that if the IRS prepares your taxes, it could mean you would end up paying more money. Here’s the rationale: The government has no motivation to calculate your taxes in a way that lowers your tax bill, so why let it handle your tax return?
As a compromise, the tax-preparation industry has expanded its free-filing options for people in simple tax situations. But that still requires people to download an app or use a website to do their taxes themselves.
Intuit’s TurboTax product accounted for more than 35 per cent of the company’s total revenue last year. About 25 million Americans used TurboTax to file their taxes last year, which made up more than half of all individual electronically filed tax returns.
Intuit also says return-free programs hinder Americans’ participation in the tax process and have “implications for accuracy and fairness in taxation,” Intuit spokesperson Julie Miller told ProPublica in an emailed statement.
But Austan Goolsbee, the former chief economist for the President’s Economic Recovery Advisory Board, told ProPublica that the program would be entirely voluntary. Also, you wouldn’t have to accept the prefilled return from the government.
Despite Intuit’s efforts to prevent return-free filing, California has been experimenting with a program called ReadyReturn since 2005. The program is available for state tax returns by single filers with income from wages of $240,000 or less, and no other sources of income.
If enacted nationwide, it could collectively save people $2 billion and 225 million hours in preparation cost and time, advocates tell ProPublica.
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