Return-Free Filing vs. TurboTax: Doing Taxes Could Be Much Simpler

Return-Free Filing vs. TurboTax: Doing Taxes Could Be Much SimplerTop tax-software maker Intuit, producer of TurboTax, has vigorously opposed letting the federal government do your taxes for free — a concept adopted by other countries, endorsed by U.S. presidents, but an idea that would cut deeply into private corporate revenue if adopted.
So-called “return-free filing” would be a voluntary alternative to hiring a tax preparer or using commercial tax software.
The government-prepared return would estimate your taxes using information your employer and bank already sends the U.S. Treasury.
A report by ProPublica says such a system could be used by tens of millions of taxpayers, saving them a collective $2 billion and 225 million hours in prep costs and time, according to one estimate.
However, Intuit has spent about $11.5 million on federal lobbying in the past five years. Although the lobbying covers several issues, Intuit’s disclosures emphasizes that the company “opposes IRS government tax preparation.”
The disclosures show that Intuit as recently as 2011 lobbied on two bills, both of which died, that would have allowed many taxpayers to file pre-filled returns for free, ProPublica reports.
The company also lobbied on bills in 2007 and 2011 that would have barred the Treasury Department, which oversees the IRS, from initiating return-free filing.

Intuit argues that allowing the IRS to act as a tax preparer could result in taxpayers paying more money. It is also a member of the Computer & Communications Industry Association (CCIA), which sponsors a “STOP IRS TAKEOVER” campaign and a website calling return-free filing a “massive expansion of the U.S. government through a big government program.”
Roughly 25 million Americans used TurboTax last year, and a recent GAO analysis said the software accounted for more than half of individual returns filed electronically. TurboTax products and services made up 35 percent of Intuit’s $4.2 billion in total revenues last year. Versions of TurboTax for individuals and small businesses range in price from free to $150.

Intuit responded to the ProPublica piece with a lengthy statement. Here’s a portion:

More than 70 percent of all taxpayers are eligible to choose for free from among the best-known, most-trusted tax prep software programs. One hundred percent of taxpayers can file their federal taxes free by using Free File’s simple “fillable form” product.
Why spend money the government doesn’t have when every American can get free online tax preparation and e-filing right now at no cost to consumers or the government?  Free File insures that taxpayers get every credit and deduction they are entitled to, including the Earned Income Tax Credit (EITC); A government tax reconciliation system will not.

Return-free filing advocates point out that the IRS “would be doing essentially the same work it does now. The agency would simply share its tax calculation before a taxpayer files rather than afterward when it checks a return,” ProPublica writes.

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