The ROI on those costs must be stupendous! Say 100 Million people file taxes in the US, it doesn't take long to hit 10x or 100x returns.
Am I missing something? (I'm not from the US)
For most filers with W2 income, there’s nothing to it and they could easily do that. It’s fairly simple and you just need to read the directions and do maybe a half dozen additions and subtractions.
Where the real return has come in is the millions, if not billions, of dollars that the industry has spent convincing consumers that taxes are super hard and complicated and open to tons of interpretation, that their tax filing experts know this ONE WEIRD TRICK to get you thousands back, and if you screw up even once the IRS is going to come after you hard and put a lien on your house and put you in jail. The reality is not like that at all - if you do screw up they are happy to help and it’s actually pretty simple for most people. But this has engendered an incredibly deep mistrust of the IRS - most people would still taking their taxes to one of these firms or their local accountant because they’d be convinced they could get more back.
I’m not saying the system couldn’t be even better for these filers, but it does require the federal government and the IRS to start collecting data they they don’t right now, and the actual gain is pretty minimal in real terms - taxes for most filers is already incredibly easy and free. And the you’ve only solved half the problem - what about state taxes?
You can also claim back the cost of filing here I believe, so if you need to use a third party they are essentially paid by the government. Maybe that's why they make it so easy here?