If George Washington were around today, he would take one look at the United States tax filing system and say, “Dying is easy; doing taxes is harder.”
Now is the time to examine the current tax filing system and realize just how flawed it is. One very apparent flaw is the need to file our taxes annually when the Internal Revenue Service (IRS) already has all our information.
Why don’t they send us a bill that tells us how much we owe them and have us pay that? As is typical with issues in the modern-day U.S., the reason is systemic.
After obtaining TurboTax from the company which created it in 1993, Intuit has worked hard to ensure that any other tax filing service remains shrouded in mystery and inaccessible, especially the truly free options.
According to Justin Elliott, a reporter with ProPublica, in 2002, TurboTax and H&R Block worked out a deal with the IRS stipulating that both companies would give U.S. citizens access to free-filing software through their websites, so long as the government did not attempt to compete by creating its own.
TurboTax subsequently hid its free file page from search engines. Intuit eventually made the page accessible but has since stopped participating in the IRS free file.
In 2022, the Federal Trade Commission sued Intuit for having generated misleading TurboTax ads which claimed their product was completely free. Intuit initially contested the accusations and defended its actions but pulled the commercials shortly afterward.
However, Intuit still claims online that their service is free for eligible people, but the free file option often includes hidden fees that don’t show up until you have completed and filled out the form.
Moreover, the company still actively works to prevent U.S. citizens from finding free options, leaving the free versions inaccessible to many tax-payers.
The notion that completing tax returns can be simple and free is foreign to most U.S. citizens but not in other countries. According to an article written by Tom Healey, a former Assistant Secretary of the Treasury, about 36 countries use what is called “Return-Free Filing.”
Under Return-Free Filing, a given government handles all of the clerical work so that citizens don’t have to fill out federal tax returns from scratch every year. Individual citizens under this system are merely required to assess the government’s calculations, judge their accuracy and update any personal information, if necessary.
Companies like Intuit and H&R Block become all the more insidious when you realize that they are the reason this has yet to be adopted by the U.S. government.
According to Open Secrets, a research group tracking money in U.S. politics and its effect on elections and public policy, Inuit spent $3.78 million in 2023 alone on total federal lobbying expenditures in a thus-far triumphant attempt to prevent any such alternative from ever becoming more than a pipe dream.
Despite all this effort, few people have heard anything about TurboTax and similar companies’ nefarious efforts. In a country as chock-full of flaws as ours is, taxes become a very low rung on the priority for most citizens, and something we try and do the quickest without thinking about more than we have to.
The U.S. has a long way to go in streamlining its tax filing processes. The fact that many equally affluent countries have operated off of Return-Free Filing instead of the subsidized system used in the U.S. puts this into perspective.
Moreover, an actual free file still exists in the U.S. IRS-free file is a current option for eligible taxpayers and much less restricted than in the past, with free in-person options where volunteer tax preparers can help you fill out and file your taxes and help reduce any confusion with the process.
Also worth mentioning is the IRS’s brand-new Direct File pilot, initiated just last December, making free filing far more accessible as an online platform.
Advertisements broadcasting this information are practically nonexistent, but trust that such platforms are out there, waiting to replace the nefarious, costly, invasive TurboTax.