Filing taxes is often talked about as something many people in the US are not sure how to do. As reported by ProPublica, in countries including Denmark, Spain, and Sweden, taxes are filed automatically through one’s employer and their bank, all for free. This expedited process is estimated to “save a collective $2 billion and 225 million hours in prep costs and time.” In the US, although the IRS offers its own free service for filing taxes, private, for-profit companies such as Intuit, which markets TurboTax, do not want the competition. Instead, they lobby the IRS to discontinue its services so that citizens must pay for-profit companies to assist them in doing so.
The average household income in the United States is just under $62,000, meaning most US citizens are entitled to file their taxes for free since they fall below the $64,000/year income line set by the IRS. But, as Justin Elliott and colleagues at ProPublica reported in a series of articles, internal documents and current or former company employees show how TurboTax and H&R Block “steered customers away from the government-sponsored free option and made them pay.”
Many Americans are unaware that they can file their taxes without fees. But advertising on sites like TurboTax sows confusion and takes advantage of anti-government frustrations. It is in Intuit’s financial interest to conceal the truth about tax filing for citizens who qualify for free filing by the government. The message must be clarified: let the government work for you.
In May 2019, Elizabeth Warren and other Senators called on the IRS and the Federal Trade Commission to investigate whether Intuit, H&R Block, and three other tax software companies deceived customers and violated restraint-of-trade laws, in party by hiding the IRS’s free filing options from search engines.
Sources:
Justin Elliott and Lucas Waldron, Here’s How TurboTax Just Tricked You Into Paying to File Your Taxes, ProPublica, April 22, 2019, https://www.propublica.org/article/turbotax-just-tricked-you-into-paying-to-file-your-taxes.
Justin Elliott, “TurboTax Deliberately Hid Its Free File Page From Search Engines,” ProPublica, April 26, 2019, https://www.propublica.org/article/turbotax-deliberately-hides-its-free-file-page-from-search-engines.
Justin Elliott and Paul Kiel, TurboTax and H&R Block Saw Free Tax Filing as a Threat—and Gutted It,” ProPublica, May 2, 2019, https://www.propublica.org/article/intuit-turbotax-h-r-block-gutted-free-tax-filing-internal-memo.
Justin Elliott and Paul Kiel, “Elizabeth Warren and Other Senators Call for Refunds and Investigations of TurboTax and H&R Block,” ProPublica, May 3, 2019, https://www.propublica.org/article/elizabeth-warren-and-other-senators-call-for-refunds-and-investigations-of-turbotax-and-h-r-block.
Liz Day, “How the Maker of TurboTax Fought Free, Simple Tax Filing,” ProPublica, May 9, 2019, https://www.propublica.org/article/how-the-maker-of-turbotax-fought-free-simple-tax-filing.
PJ Vogt, “#144 Dark Pattern,” Replay All (Gimlet Media), June 27, 2019, https://gimletmedia.com/shows/reply-all/6nhgol.
Student Researcher: Camille Evans (University of Vermont)
Faculty Evaluator: Rob Williams (University of Vermont)
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