
FTC Is Investigating Intuit over TurboTax Practices - justinpropub
https://www.propublica.org/article/the-ftc-is-investigating-intuit-over-turbotax-practices
======
klmadfejno
God I hope this suit is successful. Lots of people here are discussing the
regulatory trap they've got, and that's a big problem. But the actual problem
mentioned in the suit is deceptive marketing. TurboTax is the worst in this
regard.

Last year, I, at every step of the process, declined the expensive options
that say "maybe you'll save more money if you permanently switch into this
paid mode". Yet after a couple hours of filling out forms, they said at the
end that it wasn't possible to file using the free version, and that I would
have to pay a couple hundred dollars. That ticked me off. They have all of the
information required to figure this out much earlier in the process (income),
yet they continue to allow you to pick the free tier up until the very end
where the tedium of starting over with a different service is too high. Fuck
em.

Their UI is very nice though, especially for guiding people through a process
that they almost intrinsically hate.

~~~
loosescrews
I have tried nearly all of the DIY tax offerings out there. CreditKarma has a
relatively new completely free offering that I feel rivals TurboTax in ease of
use. I also feel that it is superior to paid offerings such as H&R Block.

Another completely free offering is freetax.com. I used them for a few years,
and while not quite as easy to use, it works well.

Note that both of these free offerings include free state tax filing and have
no income limits or up sells.

~~~
bityard
Did you mean freetaxusa.com? (freetax.com goes to a site called DIY Tax which
doesn't look like they offer free returns anymore.)

I've used freetaxusa.com for the past couple of years. They don't do the same
level of hand-holding that TurboTax and TaxAct are famous for. So what I have
done in the past is fill out the tricky parts in TaxAct using a free account
and if the number look right, copy them into FreeTaxUSA.

I used to use TaxAct until their prices, tiers, and upsells got to be flat-out
usurious. FreeTaxUSA federal filing is free but you have to pay a small
(around $15) fee if you want to e-file for state. _That_ is a price I can live
with. I don't mind paying it at all if it means escaping the TurboTax and
TaxAct traps.

~~~
pdxandi
I switched to freetaxusa.com this year after 15+ years in Intuit. I have more
complex taxes than the average person and I felt like it went just fine.
Really happy with the service. Went from about $150 per year to $15.

------
supernova87a
Why are we bothering with the small potatoes in the room (TurboTax not putting
URLs to free tax filing, etc. etc) when the elephant is:

"Why isn't the IRS giving people a way to prepopulate and file taxes for free
with the financial info that the IRS already has on everyone?"

Well, I suppose it's just a product of the corporate interests and
congressional deadlock that prevents us from doing a multitude of things right
now. Other countries manage to do this just fine.

~~~
scott_s
Because we know the answer: the IRS is prevented from doing that by law.
Lobbied by Intuit. If you google around, you can find stories on it.

edit: save_ferris linked to an excellent story below:
[https://www.propublica.org/article/filing-taxes-could-be-
fre...](https://www.propublica.org/article/filing-taxes-could-be-free-simple-
hr-block-intuit-lobbying-against-it)

~~~
crispyporkbites
Ok so I don’t know much about the us legal and political system, but a couple
of questions:

\- why does a judge in a lawsuit get to make the decision here? I.e. why is
this kind of law not debated as part of public discourse and a decision made
through a democratic path?

\- given this benefits a tiny fraction of people in the US, why doesn’t a
particular party/politician take a stand on it as a policy to win a chunk of
votes?

For the first point, a UK former judge spoke extensively on the topic of the
courts overstepping their remit as part of the 2019 Reith lectures:
[https://www.bbc.co.uk/programmes/m00057m8](https://www.bbc.co.uk/programmes/m00057m8)

~~~
comex
> \- why does a judge in a lawsuit get to make the decision here? I.e. why is
> this kind of law not debated as part of public discourse and a decision made
> through a democratic path?

What judge?

The FTC investigation mentioned in the article may end with the FTC filing a
lawsuit, but that would be about whether Intuit deceived taxpayers (by
directing them towards a paid version even if they were eligible to file for
free), not whether the Free File program should exist or whether the IRS
should develop its own software.

The Free File program as it currently exists is the result of executive
action, a “memorandum of understanding” between the IRS and tax software
companies. [1] Last year there was a bill in Congress that would have codified
it into law, but that part of the bill was dropped due to concerns it would
permanently bar the IRS from developing its own software. ProPublica’s
reporting about Intuit’s obfuscation played a part in that outcome. So there
was a “public discourse” of sorts, although it’s a pretty obscure issue.

Also:

> given this benefits a tiny fraction of people in the US

Keep in mind that a large fraction of Congress follows the ideology that,
broadly speaking, the government can’t do anything right and it’s best to
outsource as much as possible to private companies. Intuit’s lobbying was
obviously a major factor, but they were playing for a receptive audience.
Congress is also not particularly tech-savvy, by and large.

[1]
[https://www.journalofaccountancy.com/news/2019/jun/congress-...](https://www.journalofaccountancy.com/news/2019/jun/congress-
approves-irs-reform-bill-201921474.html)

------
guerby
In France you can fill your tax form online since 1999

[https://fr.wikipedia.org/wiki/T%C3%A9l%C3%A9d%C3%A9claration...](https://fr.wikipedia.org/wiki/T%C3%A9l%C3%A9d%C3%A9claration_de_revenus)

In the past years banks and companies give tax related information to the tax
authority so for lots of people the online tax form is already 100% filled and
correct.

For the past year tax filling I just had to add to the web form renting
income, tax deducible donations, and that was it.

~~~
Macha
Same idea here in Ireland.

Reasons you might need to interact with the income tax system here:

1\. You have significant (>€5000) non-employment income.

2\. You worked for less than 12 months and are claiming your tax refund.

3\. You disagree with the government assessed tax reciept (which is based on
what your employer fills in).

For 90% of people then, they don't need to interact with it. Their employer
reports their income, deducts an appropriate amount of taxes, and sends it to
the government. End of process.

~~~
vonmoltke
> Their employer reports their income, deducts an appropriate amount of taxes,
> and sends it to the government.

How does your employer know what "the appropriate amount of taxes" is? In the
US I have always had trouble setting this to where I'm not at least 5% off in
one direction or the other, and I know more than my employer about what my
withholding rate should be.

~~~
arvindch
It's not set by the employee, rather the employer looks at expected income for
the year and withholds accordingly. At the end of the financial year, the Tax
dept. does a final calculation and if the amount was too high/low, they send
you a notice.

Tax deduction at source is a common concept in a lot of countries, incl.
dissimilar ones like India and the NL, where I have both worked. Super
convenient and frictionless for the vast majority of employees.

~~~
vonmoltke
> It's not set by the employee, rather the employer looks at expected income
> for the year and withholds accordingly. At the end of the financial year,
> the Tax dept. does a final calculation and if the amount was too high/low,
> they send you a notice.

That's my question, how does an employer or taxing authority know what that
amount is? My employer doesn't know my withholding status until I tell them
via a W-4, and that doesn't take into account how the appropriate amount to
withhold may change due to my spouse's income. Is the taxation scheme just
different in most European jurisdictions?

Edit: corrected a brain fart (see below)

~~~
Macha
Withholding =

(Taxable income in each bracket * tax rate for each bracket) - (annual tax
credits / number of annual payments from your employer).

If you're married and want to be taxed as a couple, you simply send the
documentation as such to the tax office after your wedding.

You can tell your employer and they'll try adjust appropriately in payroll, or
you can not tell them and the government will send you a tax refund at the end
of the year for the partner with the higher tax bracket. It's optional to be
taxed as a couple, so presumably you're opting into it because it will reduce
your tax obligations, so there shouldn't be a case where you have to pay more
because you're married. The same applies for tax credits that you don't want
to tell your employer about.

~~~
vonmoltke
> If you're married and want to be taxed as a couple, you simply send the
> documentation as such to the tax office after your wedding.

So that's one difference. I have never sent the IRS proof of our marriage, and
they have never requested it. I simply updated my wife's name and our filing
status in the year we got married.

> (Taxable income in each bracket * tax rate for each bracket) - (annual tax
> credits / number of annual payments from your employer)

> You can tell your employer and they'll try adjust appropriately in payroll,
> or you can not tell them and the government will send you a tax refund at
> the end of the year for the partner with the higher tax bracket.

I'm confused by this. Are tax brackets always individual in Ireland? The
reason I need to specify additional withholding is because each of our income
withholding calculations starts from the lowest bracket and tops out at a
bracket below our actual top marginal rate, which is determined by adding our
incomes.

~~~
lozenge
It's achieved in three ways

1) far less deductions/carve outs in tax law, or ones that people can use
without contacting the tax service. Eg pensions and charity contributions
deducted by employer, so tax is calculated. Charity contributions paperwork
for one off donations dealt with by the charity (Gift Aid scheme)

2) "tax code" five digits representing your tax status, that the tax office
will give your company to update calculations when your status changes.
Possibly starting from a phone call from you. Eg using marriage tax laws.

3) tax summary P60/P45 provided by your last employer(required by law) that
you can give your next employer so they calculate correctly

Sounds complicated, but it's all geared towards moving the burden to employers
who just pay for payroll software, for everybody else it is very simple.

------
ourmandave
Ironically, for most people the IRS has a copy of most your forms (W2, 1099s,
etc.) already and can do your taxes for you if you want.

~~~
owenmarshall
I work and live in different states, but those states have a reciprocal
agreement: any local taxes I pay to my employer's state are a credit for my
home state income taxes.

Last year a Turbotax glitch (combined with my inattentiveness!) accidentally
marked my local taxes as belonging to my home state – this made it appear like
I paid significantly too much for local taxes. I filed and happily but
surprisingly expected a large refund. Instead, I received a more typical
refund and a letter from the Dept. of Revenue showing that the state had
amended my return to match their records and that no further action was
required.

My taxes could be this simple every time. What a bummer that they aren't.

~~~
ourmandave
I moved from IL to IA one year and had to file both states.

I did it by hand and screwed up the IA one somehow. =(

They eventually sent me the corrected form and a refund I was actually due.

It was like drawing the Monopoly card "Bank error in your favor. Collect
$200."

------
spicymaki
The government (IRS) gets most of the data and can make a reasonable tax
estimate. They should send us a bill. This find the loophole game is really
counter productive and time consuming.

------
sriram_sun
Intuit has already done the math. The actual profits from this practice will
far outweigh the ensuing fines with "No admission of wrongdoing".

------
gkfasdfasdf
Obligatory mention of
[https://www.turbotaxsucksass.com/](https://www.turbotaxsucksass.com/), which
takes you directly to _real_ free file option of each major online tax prep
site, bypassing all the misleading not-actually-free filing options that the
sites loudly advertise.

~~~
swiley
I thought the official IRS form filler was discontinued? Does this just take
you to another intuit competitor?

EDIT: it just sends you to the free version of turbo tax and has links for the
competitors heh

~~~
masklinn
> I thought the official IRS form filler was discontinued?

IRS's own service was discontinued after an agreement with tax preparation
companies that _they_ would provide such a service (the IRS Free File Program)
if your AGI is below 69k (nice).

Which they do, but try to hide as much as they can via negative SEO and
various dark pattern, so that you unknowingly get directed towards "free"
offers which quickly require you to pay.

There's plenty of information all over the net. And I thought I remembered LWT
doing an episode on that recently, but apparently it was Patriot Act… in what
I now learn was the last episode, that _would_ certainly explain why it's been
so long I've seen an episode pop up in my feed.

~~~
pmiller2
Unfortunately, _Patriot Act with Hasan Minhaj_ was canceled[0]. The last
episode was June 28, 2020: "Why Doing Taxes Is So Hard"

It's too bad. I thought it was a really worthwhile show.

\---

[0]: [https://variety.com/2020/tv/news/hasan-minhaj-patriot-act-
ca...](https://variety.com/2020/tv/news/hasan-minhaj-patriot-act-canceled-
netflix-1234738562/)

~~~
masklinn
Yes, that’s what I meant by “last episode”. I should probably have written
“final” or “ultimate”.

------
3327
Finally. Turbotax is fraud on so many levels I cannot even get started.

------
ilaksh
Personally I think that there needs to be fundamental structural tax reform.
To the degree that Intuit's business model goes away.

But Intuit probably owns all of the decision makers somehow. Which to me means
that there needs to be radical government reform.

I actually believe that government and money need to be radically modified and
modernized.

------
knicholes
From reading the comments here, it sounds like creating a great tax product
that people could use for free would be a great way to get Intuit to acquire
you.

------
rietta
I just buy one copy of TurboTax Home and Business each year and then everyone
in my family uses it one at a time and free Federal efile. My parents both
have different LLCs, I have a business, my sister has a business. We print and
mail state returns because no reason to pay yet again for each State efile.
I've become the defacto family accountant/keeper of tax file backups.

------
wffurr
What's the least scammy alternative to TurboTax? I keep paying for it every
year because it's what I'm used to, and I have capital gains and all that junk
so I can't free file.

~~~
zie
You can pay a tax professional for about the $100 that turbo tax apparently
charges.

There is an OSS tax solver here:
[https://opentaxsolver.sourceforge.net/](https://opentaxsolver.sourceforge.net/)

Only does IRS, not state, works fine for me so far.

~~~
Bedon292
For some reason that link doesn't work foe me (may be a DNS issue on my part).
Appears to be here:
[https://sourceforge.net/projects/opentaxsolver/](https://sourceforge.net/projects/opentaxsolver/)

And it does seem to have a few states, at least in text form.

------
dboreham
Didn't donate enough campaign contributions?

------
coronadisaster
I used H&R block the last few years and I feel like they also try to trick you
into paying when you don't need to.

~~~
wrycoder
I even felt that way with TaxAct recently.

------
isabelc
I've been happy using express1040.com for 14 years. It's always easy, updated
and free for federal filing.

------
briandear
Not sure I understand the hate for TurboTax. Literally not a single person is
forced to use it. I do use it and it's a very good product for the most part.

Perhaps energy should be directed at the actual tax code complexity rather
than software built to help navigate filing.

Ted Cruz's tax plan would have practically eliminated the need for TurboTax-
type software. [https://taxfoundation.org/details-and-analysis-senator-
ted-c...](https://taxfoundation.org/details-and-analysis-senator-ted-cruz-s-
tax-plan/)

But, let's not forget what Milton Friedman had to say about tax reform:
[https://www.youtube.com/watch?v=TruCIPy79w8](https://www.youtube.com/watch?v=TruCIPy79w8)

~~~
syshum
I 100% agree, to bad all you will get in response to your comment is how it is
evil companies that prevent the noble and universally good government from
helping the people.

Unfortunately very few people seem to understand that government,
intrinsically, is inefficient and bad at everything it does. This can not be
avoided or changed it is the natural state of a monopoly.

They seem to be able to recognize that when a large corporation that has
become monopoly that is bad for people, however they fail to recognize that
government is the worst kind of monopoly as unlike a corporation, they have
the legal authority to put you in a cage if you refuse them, and kill you if
you resit the governments attempt to put you in that cage.

~~~
save_ferris
> Unfortunately very few people seem to understand that government,
> intrinsically, is inefficient and bad at everything it does.

This is a laughably false statement. It's easy to find stories of government
projects that came in ahead of schedule and under budget, but you have to look
for them because those stories don't get nearly as much attention as the
inverse.

Take the Hoover Dam, for example. That was one of the most ambitious
infrastructure projects in American history, and came in years ahead of
schedule, and millions under budget.[0] Google around infrastructure
publications and you'll find dozens more stories like this.

To say that every thing a government does is bad is to fundamentally ignore
reality, which is that no, not everything the government does is bad. You can
never be taken seriously making sweeping generalizations like that.

0: [https://www.marketplace.org/2010/05/28/why-we-might-not-
have...](https://www.marketplace.org/2010/05/28/why-we-might-not-have-built-
hoover-dam-today/)

~~~
ultrarunner
I'm not here to argue that "everything the government does is bad" because I
think it's a very nuanced situation. That said, I feel like the Hoover Dam
needs to be mentioned in the same breath as Hoovervilles, and as a precursor
to the Great Depression.

Arguably, this high-level decision making is the only part that the government
_did_ , and should receive credit for, as the Six Companies consortium
actually executed the construction.

It's unfortunate that these arguments often involve people talking past one
another; governments (being made up of people) are obviously capable of good
outcomes. They're also capable of generating bad or inefficient outcomes.
Those two latter points are where I think there is value in the discussion: is
a governmental act _moral_ , and does it increase _efficiency_ (in the sense
of humanity prevailing against its default state).

~~~
save_ferris
> Arguably, this high-level decision making is the only part that the
> government did, and should receive credit for, as the Six Companies
> consortium actually executed the construction.

I agree with this, but couldn't it also be applied inversely? If a government
project experiences cost overruns due to a private contractor poorly
estimating the project, shouldn't blame also be placed on said contractor?
Success is so often privatized and failure socialized.

~~~
ultrarunner
Sure, absolutely, and this is a good point. However, much of that comes from
changing requirements or an unrealistic bid process to begin with. Shady
business practices by government contractors should absolutely be scrutinized.
It’s a complicated undertaking all the way around.

