
TurboTax and H&R Block Saw Free Tax Filing as a Threat - danso
https://www.propublica.org/article/intuit-turbotax-h-r-block-gutted-free-tax-filing-internal-memo
======
danso
FWIW, Turbotax/H&R's hiding of their Free File site pages was discussed here
about a week ago:
[https://news.ycombinator.com/item?id=19758126](https://news.ycombinator.com/item?id=19758126)

They have since made their pages discoverable by search engines and have
denied that it was intentional obfuscation. But the news in TFA is that
apparently someone at (or formerly at) H&R leaked internal documents with
explicit guidance:

> _“Do not send clients to this Web Site unless they are specifically calling
> about the Free File program,” the guidance states, referring to the site
> with the company’s free option. “We want to send users to our paid products
> before the free product, if at all possible.”_

(there's also interviews with former employees recalling meetings)

This is all "news" because Congress is considering a bipartisan tax reform
bill that includes a law that would _block the IRS from creating its own
official Free File program. Senator Ron Wyden, the bill 's co-sponsor, is now
having second thoughts [0] and yesterday, NY Gov. Cuomo ordered a state
investigation into the tax prep companies [1].

[0] [https://www.huffpost.com/entry/taxpayer-first-act-free-
file_...](https://www.huffpost.com/entry/taxpayer-first-act-free-
file_n_5cc9fb90e4b0d123954db6f4)

[1] [https://www.governor.ny.gov/news/governor-cuomo-calls-
depart...](https://www.governor.ny.gov/news/governor-cuomo-calls-department-
financial-services-and-department-taxation-and-finance)

edit: _changed "permanently block" to "block"

~~~
asdff
Is there even a reason we have to file? My understanding is that if you don't
file, the IRS knows about your W2 or 1099s anyway and will punish you, so
what's even the point of filing yourself? Just have the IRS send a check or
bill in the mail in April and end this nonsense industry.

~~~
magnetic
In addition to the penalty you'd incur, the IRS is unlikely to dig into your
deductions and credits with your fervor, so they will likely compute a number
that is "quite suboptimal".

There are also multiple ways of doing things, and picking one path may be
strategic to you (if you expect more or less income in the following years).
Giving up on this flexibility and its ramifications will affect your outcome
negatively.

For simple filings, yes, it should be possible for them to give you a bill
that is close to what you'd compute yourself.

This is my experience for the US system.

~~~
StephenCanis
I think the general idea would be for the IRS to provide you with the
completed tax return. This should be sufficient for a vast majority of people
who only earn employment income.

You would then review the return and could update/file a return if you have
additional deductions or business income that would not otherwise be reported
to the IRS.

I believe the UK and some other European countries already have this system.

~~~
Twirrim
The UK tends to do its tax incentives a different way.

The government favours them as subsidies at point of purchase, rather than
something you do at the end of the year. That actually works out a lot nicer
as a tax payer, as you don't need to have the full amount of money up-front,
and also means you're way less likely to miss out on some of them.

------
Animats
A similar trick exists for credit reports.

The real site for Government-mandated free credit reports:

[https://www.annualcreditreport.com](https://www.annualcreditreport.com)

(See "[https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-a-
copy...](https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-a-copy-of-my-
credit-reports-en-5/"))

The highly publicized deceptive site designed to get you to sign up for a
service you don't need:

[https://www.freecreditreport.com/](https://www.freecreditreport.com/)

~~~
koolba
The fact that the “real” website doesn’t have a .gov tld is an ongoing
travesty.

------
Shivetya
I am not really in the camp of blaming either of these companies or any tax
filing companies for issues like this.

The real blame is Congress for making such a complex tax system will all their
attempts to keep their offices secure. The tax system used to have meaning but
generations of politicians found they could reward and punish with it and they
did so with abandon.

The system should never had become so complex as to need a program. If your
middle class or higher the chances you need more than 1040A/1040EZ put you
into the category it just isn't worth the risk to do them without guidance and
that is where Congress should be taken to task.

Now one good effect of that "Republican" tax change was the standard deduction
got pushed so high most people will never need to itemize again. It also
increased the progressiveness of the tax system by that and other changes. I
guess if we cannot rid ourselves of all those tax laws that make itemization
the punish/reward system it is then just raising the standard deduction is
best.

~~~
hunter23
> The system should never had become so complex as to need a program.

Actually there were bills in congress that would have made it so a program
wasn't needed because the government would file on your behalf
([https://slate.com/business/2019/04/turbotax-bipartisan-
tax-f...](https://slate.com/business/2019/04/turbotax-bipartisan-tax-filing-
bill-win-for-lobbyists-ron-wyden.html)). In most cases the government knows
enough about you to calculate your taxes for you. Turbotax lobbied the
government to kill these bills because it would have destroyed their business
model.

So the reason you have to use a complicated form or program to file, is
entirely Turbotax's fault because they have lobbied the government from making
it simpler for users.

Of course a bigger root cause is that lobbying is undermining our democracy.

~~~
umvi
> Turbotax lobbied the government to kill these bills because it would have
> destroyed their business model.

“Institutions will try to preserve the problem to which they are the
solution.” — Clay Shirky

~~~
nojvek
Well it’s still Congress’s fault for being scammed by a corporation.

In way, US is run by corporations so I think this was by design.

This is a country for corporations, run by corporations.

What’s written on US passports is a lie.

------
jwiley
I've heard anecdotally from people working in non-profit agencies assisting
with tax preparation that there was extensive lobbying to prevent changes that
would make it easier to file for the earned income tax credit.

The average return for those applicable is ~$2,500, which is a huge amount for
people who qualify, lost so Intuit and H&R block can better market their
product.

[https://www.eitc.irs.gov/partner-toolkit/basic-marketing-
com...](https://www.eitc.irs.gov/partner-toolkit/basic-marketing-
communication-materials/eitc-fast-facts/eitc-fast-facts)

[https://www.washingtonpost.com/us-
policy/2019/04/30/research...](https://www.washingtonpost.com/us-
policy/2019/04/30/researchers-say-theres-simple-way-reduce-suicides-increase-
minimum-wage/?noredirect=on&utm_term=.01bbed4bc306)

------
rdonohue
Although it doesn't do the filing for you this guy has a great excel program
that handles many tax forms. I have been using his stuff for years.

[https://sites.google.com/site/excel1040/home/](https://sites.google.com/site/excel1040/home/)

~~~
HEHENE
It's funny how sometimes the best utilities are just really complex Excel
sheets. Amazing how versatile Excel can be.

I homebrew beer and use a tool called Bru'n Water to calculate what
adjustments I need to make to my source water to match the characteristics of
the style of beer. Once again it's just a massive excel file. Water and style
information goes in, water additions (calcium sulfate, lactic acid, etc) comes
out.

[https://sites.google.com/site/brunwater/](https://sites.google.com/site/brunwater/)

------
maire
The issue is more than free filing. Everything seems to be broken.

I helped my brother in law file for an extension through the IRS web site. The
IRS directed us to private companies including TurboTax to file the extension.
We clicked on the free TurboTax link which nowhere had an ability to file for
an extension!

I finally told my brother in law to print the extension form and mail it to
the IRS.

The IRS should not include a link to something that doesn't exist.

Yikes!

~~~
tathougies
> I finally told my brother in law to print the extension form and mail it to
> the IRS.

What was wrong with this to begin with?

~~~
tomschlick
You're taking things that are already in a computer system (IRS Database of
Income) and putting them back on paper to be snail mailed to them, then
hopefully OCR'd or manually entered instead of directly inputting it to their
website. Huge waste of time, taxpayer dollars, and prone to errors.

~~~
tathougies
an extension is already in the IRS database?

------
rhacker
I used to use TaxActOnline but this year it was asking for $80 simply because
I had a 1099 for a couple months of 2018.

I switched to FreeTaxUSA and did everything for free (well for me because I
live in TEXAS)...

I definitely think the US should have it's own system that individual states
can extend however. The so-called "free" ones find any reason they can to
swindle you.

I used TaxActOnline exclusively for all my taxes for the past 15 years and
never paid more than $12 for any given year - so I will never be using them
again.

~~~
BostonEnginerd
FreeTaxUSA seems to work pretty well. I'll gladly pay $15 for help walking
through the process. $80 is just unreasonable.

------
dvorak365
It would be amazing if the US had an equivalent of the CBO for determining the
impact of legislation on the annual total of labor-hours. Are there any
estimates how many less labor-hours would be necessary if the US handled tax
returns more efficiently (eg. sent out prefilled forms)?

------
jontaydev
Can anybody suggest an alternative program that will help me file? I know I
could probably do this myself, but I prefer having software validate my
returns.

It seems like this is something an indie developer could create, but maybe its
too complicated and too risky?

~~~
jms703
I don't see how anyone can produce tax software, resolve bugs and issues, and
keep it up to date with current tax code without charging money for it. It's
too bad that paying taxes is this difficult.

~~~
rhizome
That's why it's a good idea to pay the IRS with tax dollars to create their
own free efile facility.

~~~
raverbashing
That's exactly the answer

------
alkonaut
If they signed a deal with the IRS how come they stil control how the product
is displayed? Shouldn’t this free filing app be part of the IRS site, or
directly linked from the IRS site (click here to file your taxes...)?

~~~
vonmoltke
[https://www.irs.gov/filing/free-file-do-your-federal-
taxes-f...](https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-
free)

I haven't tried it, and some people tell of getting the runaround when trying
to actually use it, but there it is.

~~~
PhantomGremlin
Yes, there it is.

That page is literally 1 click from the main irs.gov site. Granted, it's
"below the fold", most people will have to scroll down just a little bit. But
there it is: IRS Free File.

Go ahead, naysayers, downvote me all you want, but I'll say this: if you can't
find that page and investigate if it applies to you, then you _deserve to pay
to file_.

It's a totally different discussion if the links from the IRS site lead to
dark patterns and tricks. That's a legitimate topic of discussion.

But not the existence of IRS Free File itself. That's just fine. About the
only way it could be easier to find that page would be if it were "above the
fold".

~~~
zerd
Most people won't type in [https://www.irs.gov/](https://www.irs.gov/)
directly, they will start with a search. Here's what might happen:
[https://www.propublica.org/article/turbotax-just-tricked-
you...](https://www.propublica.org/article/turbotax-just-tricked-you-into-
paying-to-file-your-taxes)

~~~
PhantomGremlin
_Most people won 't type in [https://www.irs.gov/](https://www.irs.gov/)
directly_

I didn't type that directly either. I just typed irs.gov and magically wound
up in the right place. :)

But you're right, most people don't grok the WWW enough to go directly to a
site. Which, as an engineer, drives me crazy. I don't want _magic_ , I want to
understand what's happening. I _need_ to understand what's happening.

------
flowersjeff
"Saw" \- "See", there - now that title is correct...

------
starpilot
How many articles are we going to have on this?

~~~
SilasX
As many as it takes for Congress to change the asinine laws that make it so
the IRS has us search for and input information it already has about us.

~~~
craftyguy
I seriously doubt Congress browses HN. Your cause would be better served by
taking actual action, like writing your congressperson

------
neya
Just curious, is there any value to making a clone of H&R Block / Intuit and
making it open source (with also hosted somewhere)? It probably takes only a
weekend for me to do this and I'll be happy to do it if there is significant
interest from my fellow HNers.

Besides, fuck Intuit, never been a fan of them for the exact reasons mentioned
in the article.

~~~
TimTheTinker
> It probably takes only a weekend for me to do this

Seriously? I know there are "10x" developers out there (I actually have worked
alongside one extensively) but the PDF export of all the forms and IRS eFile
integration alone seems like it would take a little longer than a weekend,
even for an extremely prolific developer.

~~~
neya
Thanks for the advice, I didn't think it would be this complex when I posted
the comment. Because, where I live, it's really a breeze to file taxes online.
So, I had my mind setup ("How hard could this be?") until I saw another
commenter's linked PDF that had about 200+ pages of spec.

~~~
dmoy
> 200

Heh you are off by an order of magnitude there. The linked pdf is only pub 17.
There are numerous other publications you'd need to include to actually
implement fully correct software for this.

For one relatively trivial example, if we see page 255 of pub 17, it describes
the tax computation work sheet. But wait, there's more! If you have dividends
or capital gains, you need a different worksheet, which is in a different
publication, Mario.

------
macspoofing
The number of anti-TurboTax articles lately ...

I get it, filing taxes could be easier but it isn't - on the scale of things
to worry about, is it really that important? What about on the scale of things
that government is inefficient at - does this rank in the top 1000?

Again, I'm not saying we can't improve it, and I agree with calls for the IRS
(and CRA) to send pre-filled forms. What I'm calling into question is the
outsize coverage that this particular issue got over the last few weeks as
certain Democratic nominees (Elizabeth Warren) decided this was the path to
their relevance.

~~~
GordonS
I'm a Brit, so ab outsider - but isn't the big issue here that a private
company has been able to successfully lobby to get laws changed to make it
illegal for tax filing to be free?

I'm not aufait with the US tax system, so please correct me if I've got that
wrong.

~~~
macspoofing
>but isn't the big issue here that a private company has been able to
successfully lobby to get laws changed to make it illegal for tax filing to be
free?

Why would it be a 'big issue'? There is no human right to super easy tax
filing. Interest groups, whether they be corps, or unions or activists, will
lobby to get laws they like passed. Par for course whether you're in United
States or Britain.

~~~
GordonS
> Why would it be a 'big issue'?

Let me flip that around - why _wouldn 't_ it be? Surely corporations shouldn't
have the power to change laws to let them squeeze citizens for every cent?
Surely laws should be there for the _benefit_ of the populace?

> lobby to get laws they like passed. Par for course whether you're in United
> States or Britain

Lobbying is indeed a thing in the UK, but not remotely to the degree it is in
the US. And on this specific issue, there isn't even a remote possibility that
the UK would legislate against free tax filing, regardless of ludicrous
lobbying (and I say this as someone with a very low opinion of UK politics).

~~~
macspoofing
>Let me flip that around - why wouldn't it be?

Because it isn't a big deal.

>Surely corporations shouldn't have the power to change laws to let them
squeeze citizens for every cent?

They don't have the power to change laws. Congress makes laws. Corporations
certainly have a right to lobby government, just like unions, just like
citizens, just like activists, just like non-profits.

>Lobbying is indeed a thing in the UK, but not remotely to the degree it is in
the US

I'm not sure what standard you use to make this assertion.

>And on this specific issue, there isn't even a remote possibility that the UK
would legislate against free tax filing

What are you talking about? You can file for free in United States. That's not
at issue. People are complaining that IRS doesn't send a simpler pre-filled
tax form. They are also complaining that TurboTax and H&R block does not
advertise free filing options [1].

[1] [https://www.irs.gov/filing/free-file-do-your-federal-
taxes-f...](https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-
free)

