The never ending greed of tax prep companies

Filing taxes should be free and easy for most Americans.

It’s tax season, a time that fills millions of Americans with dread as they pay out hundreds of dollars to tax prep companies like TurboTax, and spend hours filing their taxes.

It doesn’t have to be this way.

Filing taxes should be free and easy, which is why I pushed the IRS to create a new Direct File program. The program is officially in pilot mode for eligible taxpayers in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. Learn more here.

But now, big tax prep companies aren’t happy about the potential of being cut out of the tax filing process for families with simple tax needs, so they’ve been busy trying to kill this program and thwart any expansion ⤵️.

Let’s back up for a second: Tax prep companies have spent *decades* lobbying Congress to ensure we didn’t fix this broken system, allowing them to continue collecting big payouts from American taxpayers. 

In 2002, Intuit, H&R Block, and other big tax prep companies came to an agreement with the IRS. These companies would provide free filing services to Americans whose annual income was below a certain level. In exchange, the IRS was banned from creating its own free file system.

But even that wasn’t enough for these corporations. These companies have used deceptive techniques to trick people into paying to file, even when this law means they shouldn’t have had to pay. Reports found that Intuit, the parent company of TurboTax, purposefully suppressed its own Free File product, even adding website code to block the Free File page from showing up in search engines. And companies have used manipulative marketing techniques to trick customers into paying to file even when they qualify for a cost-free option.

The greed kept going: Without the prosper consent or disclosures, some of these corporations sent taxpayers’ personal data—from how much they made to their filing status—to big tech companies.

Tax prep companies are a perfect example of why we need effective government oversight that holds corporations accountable. In most cases, the IRS already has the information it needs to collect your taxes or issue a refund, but tax prep companies have made themselves a well paid middle man. 

This IRS free file tool is an exciting step in the right direction. Now, it’s up to lawmakers and regulators to keep holding these corporations’ feet to the fire and ensure they don’t continue cheating Americans.

Katie Porter