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Audit Indicates Intuit Made $1 Billion By Hiding Free File Program From The Public

from the dr-evil-shit dept

It's been quite a long and frustrating walk for us in covering the lengths to which Intuit went to hide the free to file tax program. This is the program that it is legally mandated to offer. If you're not caught up, the IRS struck a deal with the big tax prep companies out there, promising not to offer and expand its own free file programs, but only if companies like Intuit offer their own free file programs. Intuit did as instructed with its TurboTax product, except that the company then went about hiding the website for the free to file program from search engines and the internet, all while dropping the word "free" into as many places on the website for the paid services site it also runs. Then, because evil is an addictive drug, Intuit went ahead and lied to a bunch of customers to avoid refunding their money when it got caught in all this, informed its own employees that it bilked the public for their own good, and was even eventually found to have wrapped itself in the American flag while swindling active duty soldiers as well.

So, now you're caught up. But perhaps you're wondering why Intuit would risk all of the bad PR that comes with treating tax prep services like a game of three card monty. Well, the answer, according to a recent audit by the Treasury Inspector General, is because one-billion dollars.

More than 14 million taxpayers paid for tax prep software last year that they could have gotten for free, according to a scathing audit released Wednesday by the Treasury Inspector General for Tax Administration. That amounts to roughly a billion dollars in revenue for TurboTax maker Intuit, H&R Block and other tax software companies, according to a ProPublica analysis of tax prep fees.

The audit, which was launched following ProPublica’s reporting last year, explores why so few taxpayers use the Free File program, a public-private partnership between the IRS and companies such as Intuit and H&R Block. Among the reasons, the audit found: the confusing design and complexity of the program and persistently lax oversight by the IRS.

I suppose if Intuit was asked precisely how much its soul was worth, we now have our answer. And, yet, this is still all very stupid in the end. Because now, thanks to ProPublica's reporting, the IRS has scrapped its moratorium on offering its own free to file program. So, by being so immensely greedy, Intuit turned what could have perhaps been a minor revenue generator instead into a combination of a PR shit sandwich and a competitor in the IRS. Well done?

But, in case you thought Intuit would finally be in a place where it recognizes its misdeeds and is ready to turn this PR boat around, nooooooope.

In a statement, an Intuit spokesman said the company “consistently and publicly supported recommendations and efforts to strengthen the [Free File] program as part of our commitment to free tax preparation and our mission to empower individual taxpayers to manage their finances and receive every dollar they earned and deserve.” He added that “the majority of eligible tax filers using DIY software filed for absolutely free through the Free File Program or using commercial products.”

Around 104 million taxpayers were eligible for Free File last year, according to the audit. Of those, just 2.4% actually used the free government program. Of the remaining 101.5 million, 67 million did not use tax software (most going to bricks-and-mortar tax prep services). The remaining 34.5 million used software to do their taxes, and of those, 14 million paid for tax prep they could have received for free.

So Intuit would rather play games in representing its numbers than simply admit to the truth. Not exactly the sort of thing you might want out of a tax prep service.

Filed Under: free file, irs, scams, taxes, treasury department, turbotax
Companies: intuit


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  • icon
    Ehud Gavron (profile), 11 Feb 2020 @ 7:45pm

    Enjoyable read... especially given as you guys have been covering this.

    Also s/moritorium/moratorium/

    E

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Feb 2020 @ 8:17pm

    s/swindeling/swindling, while we're doing spelling corrections.

    reply to this | link to this | view in chronology ]

  • identicon
    Pixelation, 11 Feb 2020 @ 9:20pm

    Shocker!

    Company gets rich from ties to the government. At leasr we know Verizon would never profit from something like this...

    reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    James Crown, 11 Feb 2020 @ 10:37pm

    Senate Judiciary Subcommittee met yesterday to ruin DMCA????

    Senator Tom Tillis is about to make using the internet a crime by destroying the DIGITAL MILLENNIUM COPYRIGHT ACT. The Senate Subcommittee met on this yesterday. Here is what exactly the Subcommittee wants to do https://townhall.com/columnists/danschneider/2020/02/11/untitled-n2561087?amp=true

    reply to this | link to this | view in chronology ]

  • identicon
    Henry Tower, 12 Feb 2020 @ 12:19am

    Tom Tillis out to rip up the DMCA by making links a crime???

    Take a look at this article from the HILL

    https://thehill.com/blogs/congress-blog/technology/474918-getting-back-to-basics-on-the-digital-mil lennium-copyright-act

    SENATE JUDICIARY SUBCOMMITTEE CHAIRMAN MET YESTERDAY TO DISCUSS HOW TO DESTROY THE DMCA ALONG WITH SENATOR CHRIS COONS A DEMOCRAT FROM DELEWARE. THR SENATE RUN BY REPUBLICANS IS OUT TO RUIN THE INTERNET BY DESTROYING DMCA. SCARY

    reply to this | link to this | view in chronology ]

  • icon
    Seegras (profile), 12 Feb 2020 @ 12:35am

    Why doesn't government provide the software?

    In Switzerland, most cantons (like states in the US, only much smaller) do. The software is written in Java and runs (at least) on Windows, Mac and Linux. And the revenue services surely don't hide it:

    https://www.steueramt.zh.ch/internet/finanzdirektion/ksta/de/steuererklaerung/software.html (English page very incomplete.)

    What it's not yet, is compliant to "public money, public code".

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 12 Feb 2020 @ 5:57am

      Re: Why doesn't government provide the software?

      Paying to file your taxes seems to be a very US sort of thing, at least compared to Europe in general.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 12 Feb 2020 @ 10:03am

      Re: Why doesn't government provide the software?

      Why doesn't government provide the software?

      The IRS obviously has such software, which would be public-domain if not done by contractors. Maybe it's just that nobody's filed a FOIA request for it.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 12 Feb 2020 @ 5:20am

    Last I heard, the tax preparation people charge per page. It is interesting to note the increase in page count after forms are updated.

    reply to this | link to this | view in chronology ]

    • identicon
      anon, 12 Feb 2020 @ 6:53am

      Re:

      That's because the pages are only 44 lines instead of 66 (standard US Letter).

      On a separate note, why is the free file option limited by capping income? I would think that if you're just filing a simple 1040 that it shouldn't matter what your income is... As it stands I had to use the free online form and I'll have to print it and mail it to the IRS and get a <$10 refund. For my state taxes, I have to mail them along with a money order for $3.00

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 12 Feb 2020 @ 7:28am

        Re: Re:

        I do my own, nothing terribly complicated but it seems they go out of their way to make it so. At one point I expected the instructions to tell me to go outside dance around whilst screaming like a chicken.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 12 Feb 2020 @ 5:39am

    WhatTheFree

    You mean to tell Free that Free Free isn't even Free???
    Get the Free outta Free.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 12 Feb 2020 @ 7:34am

    So, now you're caught up. But perhaps you're wondering why Intuit would risk all of the bad PR that comes with treating tax prep services like a game of three card monty. Well, the answer, according to a recent audit by the Treasury Inspector General, is because one-billion dollars.

    The solution is very simple: fine them 1.1 billion dollars. When they're risking more than just bad PR, when it's made painfully clear that crime truly does not pay, then we'll see a whole lot less of crap like this.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 12 Feb 2020 @ 9:45am

      Re:

      Nah, if they come out roughly even, that's not enough of a disincentive.

      Now we know that the actual damages are $1 billion, we can use those to assess the punitive damages. Maybe an extra few billion?

      When they know that not only does crime not pay, but it is actively harmful to their bottom line, they might start behaving.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 12 Feb 2020 @ 9:15am

    It still hasn't changed either. When I did my taxes this year I went to TurboTax and right there on the front of the site was an option to file for free. Then as I worked my way through that, I reached a point where they said I couldn't proceed without paying.

    I had to go to IRS.gov and click through a few pages to get back to the real TurboTax Free File option.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 13 Feb 2020 @ 4:58am

    Now all we need is a big company that HATES Intuit to develop a completely FREE tax return program. and GIVE it to the IRS.

    Make it free regardless of how much you earn, and Intuit as a business is fucked.

    They'll go bankrupt within a few short years.

    reply to this | link to this | view in chronology ]


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