It's that time of year again: Federal taxes are due Tuesday, April 18. If you're like me, you've started the process of organizing various documents and receipts that you dumped into a pile on the floor despite all your well-meaning resolutions to actually use that accordion file laying at the bottom of the stack. You'll go back and forth on hiring someone who actually knows tax code and then will ultimately, likely at the last minute, decide to go it alone. At some point, there will be a panicked call to Pops that will have him wondering how you've survived this long. Or maybe that's just my experience.
At any rate, millions of Americans will become, as Joan McCarter writes, "unwitting victims of a multiyear, multimillion-dollar lobbying campaign by [Intuit, the maker of TurboTax, and H&R Block] to make you pay them to do your taxes."
Tax filing could be free right now. The IRS already has the authority to create a free, easy-to-use online tax filing tool. Instead, Americans will once again spend billions for the privilege of paying corporations to file for them.
Sign if you agree: Tax prep should be easy and free
I don't mind paying taxes. I'm pretty proud of a lot of things my money helps pay for (and yes, disgusted by other things, but those are the breaks in this democracy).
However, while hardworking Americans understand the importance of pitching in our fair share to fund schools, hospitals, roads, and other critical services, it's outrageous that we're often paying hundreds of dollars for tax preparation services we don't really need.
The IRS likely already has all of the information it needs to calculate your tax liabilities and refunds—your employer provides it. There's no need for the annual nightmare of gathering all the scraps of our financial lives to submit them to the government. The agency could just send a pre-filled-out tax form based on information they already have, and allow taxpayers to confirm or amend it.
But wealthy corporations like Intuit, the maker of TurboTax, and H&R Block brokered a sweetheart deal, promising to offer low-income taxpayers free software in exchange for the IRS not making a free filing program of its own. Of course, these companies then made the "free" options difficult to use by deploying deceptive design and misleading tactics to steer low-income filers to paid versions of their service when they are eligible to file for free.
Public outcries, largely ignited by ProPublica's fantastic investigative reporting, have led to successful federal and state investigations, lawsuits, and some reforms. And in 2022, Democrats in Congress funded a $15 million study of free tax filing options as part of the Inflation Reduction Act—an important move toward a universal public filing option.
As if their campaign to bilk taxpayers out of billions of dollars weren't enough, when forced to treat consumers with a modicum of decency, Intuit and H&R Block retaliated, pulling their software from the IRS's "Free File" options, which allows folks earning less than $73,000 annually—about 70% of taxpayers—to actually file for free.
The tax prep giants were also caught sending your name, address, email address, and financial information—filing status, income, student loan debt, mortgage payments, names of your dependents, their college scholarships—to Facebook. The information was used to more effectively write and target advertisements, regardless of whether you have a Facebook account or not.
Efficiency and cost are reason enough to move toward a simpler tax filing system, and the ongoing bad practices of these corporations should ignite a firestorm of reform.
We still have a long way to go, especially when it comes to making corporations pay their fair share. Simplifying how we file taxes is an important step forward that would take much of the abuse, frustration, stress, and expense out of doing your taxes.
In the meantime, no matter your income, you can use Code for America’s free virtual tax filing service to file your own tax return or get help from an IRS-certified volunteer. And good luck to us all this tax season.
Sign if you agree: Tax prep should be easy and free