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Listen to TurboTax Lie to Get Out of Refunding Overcharged Customers (propublica.org)
171 points by bbatsell 12 days ago | hide | past | web | favorite | 44 comments

A lot of focus is on the bribers (TurboTax, H&R Block) rather than the bribees (politicians).

But that's curious because the bribers are acting in their own interests whereas the bribees are meant to protect the general public and are failing in their duties. The misplaced focus might actually be why this continues seemingly unabated.

Two other examples of this phenomenon: College textbooks and ticket fees (TicketMaster, et al). In both cases the company acts as a lightning rod deflecting blame away from the only parties able to actually change things (college professors and performers respectively) and who are failing in their duty to protect others (students and fans).

I'm surprised this doesn't have a name, seems super common (and quite effective).

PS - No doubt someone will intentionally or unintentionally misread my post as defending this behavior rather than pointing out that politicians are really the ones that allow this to continue. I'm critical that the focus is not on the MOST guilty, not that TurboTax et al aren't guilty.

Moralizing the incentives of politicians while framing business leaders' behavior as rational responses to their incentives somewhat betrays a lack of sophistication of thinking here.

It's all moralizing, with one set under and additional constraint of civic duty. You have it squarely backwards. What you're getting at is less sophisticated than the point made, which is why it's not compelling.

I said that politicians are failing at their duty. Duty and morality are different concepts.

Businesses have a duty to make money, politicians have a duty to work in their constituent's best interests, only one of the two is failing in their duty but they're both acting immorally.

As an aside calling another post "dumb" is quite clearly against the site's rules. You're welcome to disagree but the civility is lacking.

Right. Under capitalism everyone is acting rationally here. Everyone is using whatever methods they can to accumulate profit.

that reads like a rationalization of selfishness. however, the rationalism underlying capitalism neither attempts to encourage nor discourage amoral behavior.

capitalism instead acknowledges that people will sometimes (often?) have selfish intentions and redirects that penchant toward productive economic purposes through competitive counterbalance.

it's still not ok to be a jerk, but if you are one, the system counteracts your selfishness with that of others to reach a greater good (in the form of efficient allocation of resources). "because capitalism" doesn't excuse bad behavior; rather, it brings bad behavior out in the open so other social structures/norms can deal with it.

Or you know they can form a cartel.

Unlike socialism where people do what exactly?

I agree with your main point, and of course many other industries are the same. But you could also say politicians are acting in /their/ best interests in the system we have set up, so we need to change the system.

Your other two examples are a little fuzzier however. Professors often try to make as much material available at libraries, or online, etc as they can but don't really have substantial control over the publishing industry, and performers have /no control/ over ticketmaster. Ticketmaster contracts with venues, if you want to play in that venue, you've gotta go TM. Some bands (Pearl Jam notably) have tried to bypass this system entirely and other bands have managed to carve out exceptions to sell some block of tickets directly to fans without the fees, but unless they could go on mass strike, there's not much they can do to pressure them.

It's the arena/TM conglomerate that's the problem in that case.

> they can but don't really have substantial control over the publishing industry

Academics (professors, heads of departments, etc) are selecting the books to be used in their classes/programs. They're the king-makers. They're the gatekeeper for which of a publisher's books potentially hundreds of students are required to purchase.

This includes requiring students buy books containing one time use codes and books that re-version every couple of years driving up costs further.

The only people able to stop the publishing industry's abusive practice towards students is academic staff that refuse to do so, and have a duty to do so. The fact that nobody holds a professor responsible for assigning a $100+ book, with a one time use code, and a yearly re-versioning is absurd and why it continues to this day.

> Ticketmaster contracts with venues

And performers select the venue. If performers avoided venues with ticketmaster requirements, venues would likely be forced to offer a non-ticketmaster bundled option (particularly for very popular/famous artists).

> I'm surprised this doesn't have a name, seems super common (and quite effective).

It's called being a slimy piece of shit.

> I'm surprised this doesn't have a name

Isn't it just the principal–agent problem? Both the tax preparers and the government are agents of the people, but the government acts in its own interest (by not developing its own system) and TurboTax acts in its own interest (by misleading people into paying for something they promised to offer for free).


The bribes could easily be viewed as deliberately interfering with the politician's sworn oaths - the crime is https://en.wikipedia.org/wiki/Tortious_interference

And "acting in their own self interests" is an explanation, but not a justification, and doesn't lessen the crime in any way.

Not really following this logic. If the briber disappears, the bribee no longer has an incentive (at least in this case) to behave as the briber wanted. If instead the bribee disappears, it's quite plausible that the next bribee will happily take the briber's money.

It's completely bonkers that the IRS has been prevented from providing a simple and free filing service for tax payers with basic returns.

I think this is large simplification of the issue.

The agreement does prevent the IRS from creating a free filing system, but requires the private companies involved to produce a free filing system for 60% of filers which is currently anyone making under $66,000 per year. Functionally this amounts to the IRS outsourcing the development and operating costs of the system to the private companies involved. In turn this means the folks paying those companies for filing, ostensibly meaning those making over $66,000 a year, are paying the tax filing costs of those making less.

I don't think this is a particularly bad deal given how awful the government is at building things like this, look at the cost of HealthCare.gov as an example. Where I take issue with the agreement is that it should have put in place requirements to promote/advertise the free option to anyone qualified for it.

For those lower-income tax payers, is there really any reason to have an end-user initiated return?

With no itemized deductions and only wage income, the IRS already has everything that is needed. They should just mail/email a pre-filled form. If everything is correct, no action needed (other than paying any taxes due). If something is wrong, that bumps you into the existing "pay TurboTax" model.

The only hole I can see in this plan is that it would require our government to change a standard for the better.

how does the IRS know you only have wage income? if you also have cash or some other income that's not automatically reported then their pre-filled form would be wrong

They don't, but most tax payers will only have wages, and for them, the no-file system is easier. For those of us with investment income, itemized deductions, or anything else, we do the same as we do now. Still not perfect - my taxes aren't that unusual, but I still feel like I need a CPA to do them some years - but I'll take anything.

Objection--it shouldn't be the same as it is now. Rather, the IRS should mail you the pre-filled portion and you should be able to use any portion of it you can in filing your own taxes.

The pre-filled return should also have a QR code that allows tax programs to obtain the data.

Then you have to do changes to the form yourself. I don't really see the problem. That's how it works in a lot of countries.

But it doesn't work that way now, therefore it can NEVER work that way!

The distinction is an important one simply for liability and accountability purposes. I'm ok with going to a .gov site and doing tax work rather than foobartax even if they both are run by the same software shop. I have no idea what I'm signing away in the fine print while using foobartax. Almost all free financial products have some sort of a data siphon gig (all the free credit report and identity protection products for example). Is there any reason to believe a free file from a company is any different ? And even if you have some protections, it will be close to impossible to fight it out.

Indeed. I think the government needs to revise the deal. These corporate tools are well-designed to make the tax system fairly understandable and straightforward, I found using TurboTax to be pretty pleasant, and I highly doubt an IRS-built system would feel as polished.

I see nothing wrong with the inherent basis of the free file program, they just need to literally forbid the companies from charging for comparable tax services to free file eligible users. Tax companies would still have a strong incentive to run it, as users using their under $66,000 are likely to continue doing so once they rise above that mark.

I don’t do my own taxes anymore due to the complexity. The last year I filed my taxes myself was in 2014, and I used Turbo Tax’s online product.

1. It makes no sense to me why I have to pay because my income was over some threshold. Why does the government prop up an industry and force me to pay to file my taxes. If Uncle Sam already knows what I owe, just show it to me to review and a box to sign and attach bank account details. This is a scam. Uncle Sam has an agreement with these companies not to provide a product and relies on these companies instead, who are only in it to maximize profit. It doesn’t make sense.

2. There was no traceability. At least in 2014, Turbo Tax had me enter my W2, add in some interest I’d earned and then connect to my brokerage accounts to pull in cost basis and selling prices for various equity trades.

Then they told me I owe about $85K. A magic number... great! This was all wrong. My W2 withholding was fine, and the sum of what I owed on a few trades I made that year and accrued interest was closer to $12K.

I don’t trust TurboTax. Maybe it’s sufficient if all you have is a W2, but they’re not acting on their customers behalf. They exist to maximize their own profit.

Except the free file should apply to all returns done by the program. Anyone can download the full version, but without a license key it won't let you see any forms if you are over the limit.

An argument I've read from those opposing government created filling services or pre-filled tax forms is that it will in some manner facilitate government raising taxes

The line I've heard a few times is about forcing people to confront how much they're paying in taxes. If you have to do the numbers (or pay someone to do so), you will confront how much you're having to pay. Rather than just glancing at a form, and passing it on.

I don't agree with that reasoning. It feels that we just look at the numbers, and punch them in. There were many people that were surprised that they had to pay extra taxes this year.

The Norquist anti-tax block wants people to have pain filing taxes so they can militate against it, or at least complain about how much they're being taxed.

That said, my sense is that most people don't know what their total yearly tax is, nor their tax rate is, only their refund/tax payment that's due in April 15. As the Republicans found out recently, a lot of people complain about their "tax increase" when they don't don't get a refund, even if their actual tax rate went down.

Yup this is Republicans once again acting on behalf of a company instead of their constituents. It's not just federal either California had their Ready Return product a while back. We're the only country that does taxes this way. There's no reason to do it either. The IRS already knows how much you owe. Having the ability the revised statements is important and there should be an allocation table of where your tax money went provided with details available publicly.

Honestly, I don't think the free tax filing software companies have enough pull here. There are other constituencies who are against the IRS telling you what you owe:

* Special interest groups who have won tax credits/deductions--most of these don't get reported to the IRS, so it makes it easier to kill these off since fewer people will take advantage of them.

* The anti-government crowd, who is a) afraid that the IRS could abuse this power to tax people more (if people get used to signing the dotted line, they might not notice if the IRS stops accounting correctly for some reason); b) adamant that people know just how much the government is "stealing" from them in taxes and so form a ready constituent for lower taxes; and c) generally don't like the idea of the government telling them what to do anyways, so the government just sending them a bill is the ultimate anathema.

* People who are underreporting certain classes of incomes who might be afraid that there will be a push for broader mandatory reporting to help make taxes even simpler.

Given that the political power of the second class I've mentioned is quite vast, they are sufficient to prevent the sensible implementation of the IRS-sends-you-a-bill even if TurboTax and the like were to stop lobbying the government.

At least personally (and with a few friends) my experience is that not merely is that argument wrong, it's literally backwards. Taxes are frequently painful enough that by the time I'm finished I'm ready to pay anything the computer tells me to so long as it's just over with. This year TurboTax had my taxes go up about 27% despite my income going down and no extra write-offs and I have no idea why, but I just paid it. I don't really have any interest in revisiting it and trying to dig through things either, because even if I had the free time (which I don't) I'd much rather spend it on other things, and anyway I figure taxes are normally too low in America anyway. Some friends now just pay a professional to do it (which I'm considering for next year), but that still means that now you have to pay even more money for something the IRS could and should just be doing for us all anyway by default. It'd make more sense in the normal scheme of things to only have to pay more to investigate if something seems off.

I mean even in general it's hardly an uncommon strategy by shadier companies to get people to pay more: make the process so convoluted and tiresome that people will pay whatever just to make it all go away (hell, see most of the medical industry for a big current events example). It seems like even if someone did want to embark upon an anti-tax strategy it'd make way more sense to increase transparency and ease, just have a big number in an envelope of "We calculate you must pay $X this year, which is $Y (more|less) then last year". Then if it's significantly more people can just focus on that while fresh, rather then arriving to that result after hours of going through stuff with nebulous "you may be audited by the IRS you potential criminal!" hanging over it all and thus being exhausted.

So even taking Norquist's goal as a given (which I don't) the strategy seems pretty damn stupid to me at least. The primary result has been that I now hate Norquist and every single person who goes along with him, and would cheerfully support higher, easier taxes not just because easy would be nice but also to piss him off.

The IRS already checks your work to some degree when you file your taxes. A pre-filled tax form would basically just the IRS to do what it already does earlier, and allow the taxpayer to check the IRS's work instead: a role reversal.

Planet Money did a good podcast about this topic, https://www.npr.org/sections/money/2019/04/03/709656642/epis.... Grover Norquist and his Americans for Tax Reform has way too much leverage on Republicans for them to ever agree to pre-filled tax forms. It's a shame.

I'd love to know how they come to that conclusion.

Because they think people are more likely to challenge their taxes and be less complacent to tax hikes if they have to see it and deal with it yearly. In reality those who make enough to be concerned are already well aware of their tax obligation and how to minimize it. It's just hogwash to punish citizens and poor people especially.

This pleases Grover Norquist.

There are two groups of accountants / CPA firms; those that work for you and those that work for the government.

The Public can't afford the accountant that works for them.

I've long suspected TurboTax and H&R Block to be in bed with the G. We out not to be surprised if we end up learning Intuit/QuickBooks is secretly sharing their customers financial records, to red flag businesses who tax filings don't match up with their QuickBooks GL.

You'd think TurboTax would have clear scripts for their frontline representatives to deal with this fairly and quickly. Rip the band-aid off all at once, so to speak. There's not exactly a clear message between these representatives, though. Not having a clear message shifts the focal point from management right to the poor frontline workers.

I want to punch this guy on the phone in the face.

Why wouldn't you just file your own damn taxes?

Speaking as someone who has bypassed the interview/wizard mode since it was invented...

The advantage of TurboTax is that it incorporates the relationships between different lines of all the forms.

So your workflow doesn't have to involve reading and understanding all of them up front. Rather, you can enter numbers and see how they change, and deduce the rules from that.

To some people, this is a much easier way of understanding a complex system. It may be partly personal preference, but I think also that instructions everywhere, are getting worse and worse, and so it's becoming more practical to take an experimental approach in a variety of situations.


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