I'm surprised the article and comments haven't mentioned CreditKarma's tax solution yet, which is (actually) free. [1] Presumably their strategy is to take the users and data they get from offering free tax filing and use them to advertise lending products. I think that's a sustainable and politically feasible way to get free tax filing, actually; I expect that in ~5 years Credit Karma will have eaten a big part of TurboTax and H&R Block's lunch.
Because of the complexity of tax regulations, I don't think coming up with a competing free/open-source/nonprofit tax preparation service is the right answer to this problem.
Let's consider the positions of all sides:
* The professional tax preparers are worried that they're going to lose business if the government assumes the bulk of the tax preparation work.
* We as taxpayers would prefer that the government pre-fills a return for us, since they already have the information, and lets us file the pre-filled form if we detect no errors. That saves us time and also lets us see what info the government has about our income.
* But we also recognize that it's in the government's interest to maximize the tax we pay, and (ideally) it's in the tax preparers' interest to minimize the tax we pay.
Given all that, if pre-filled returns are unlikely, for political reasons, then perhaps a step up from the current Free File program might work like this:
1) You go to a Free File partner.
2) You authorize the IRS to release all of your tax information to that partner, who pre-fills the forms.
3) The partner walks you through the pre-filled forms, so you can check for accuracy.
4) The partner then does its own checks to discover errors that you might not have picked up on.
5) The partner makes money by selling optional add-ons, such as audit protection services.
This would, at the very least, speed up the Free File process and let you see what info the IRS has. It also ensures (like it or not) that the partners keep getting business (or at least eyeballs to pitch extra services to), and it ensures that your interest in paying the least amount of tax possible is reasonably protected.
While I am against Intuits efforts, what astounds me most is how LITTLE money is spent lobbying. A few million over a year is peanuts compared to the broader market opportunity. And the implication that Congresspeople are bought off by sums as low as "$32,000" since 2008 seems unlikely. Intuit and H&R may simply contribute to those they know already support their agenda.
It's never wrong for businesses to lobby for their interests. It's wrong when our elected officials bend to those business interest when it goes against the public interest.
Filing is always free. Online filing costs money, but you can always mail in a paper form. If everyone did that, the IRS would pretty quickly want to make sure people can file online easily and cheaply.
Stop using HR Block and Turbo Tax. For most people, taxes are not very complicated. The IRS publishes detailed instructions that literally explain what every box means and what should go in it for every form. Just read it, fill it out, mail it in.
Could we not start a non-profit that builds software as good as H&R block and allows people to file their own taxes?
For anyone who can program (including spreadsheets!), it's not all that hard to file your own taxes the old-fashioned way. To do it digitally, just use https://www.freefilefillableforms.com/ and start with a 1040. Read each line carefully and go from there.
The IRS has tons of great resources, and you can even call them up. Each form has a companion instruction booklet (online PDF), and sometimes those instructions refer to an IRS publication with additional clarification. If you can read a technical blog post and follow a clear procedure, you can file your own taxes.
I've been filing taxes the (new) old-fashioned way for my wife and I for the last 3 years. That includes 330+ days abroad (Federal Earned Income Exclusion), a sole proprietorship, an LLC, an ISO exercise (AMT), 3 separate states, and 5 separate cities.
Each time, it has taken me a full 12-16 hours (a solid day or two on a weekend) for federal, multiple states, and multiple cities. It's not the most fun, but by the end of it, I understand our taxes and finances a lot better. We can arrange our situation better going forward. We can keep more appropriate records to make the next year's filings easier. And most of all, I have the satisfaction of not funding an industry that lobbies against my interests.
Both excel at finding ways to gouge customers too. Doing standardized deductions, but happen to sell one stock? Nope. Gotta upgrade to Premier for $30 more.
I mean, I feel like we should've seen this coming. They chunked off a significant portion of the market, and now they can try to make tax filing more expensive such that they can make more money. It's disappointing, because I love online tax filing, and I just hope their lobbying efforts don't pay off.
Every time I read that Intuit is lobbying against making Tax filing free and easy, I feel immensely grateful that Indian tax filing is simple and free. Yes, we might lack in 24x7 electricity or the first world infrastructure, but our tax filing mechanism is simple! I hope that the US makes this change to their tax process.
Good luck there is already hundreds of companies that offer free e filing, This is a losing proposition for them, competition has kept this free and there is no reason to use either H&R Block or Intuit. There is also no reason to pay a tax preparer or accountant to do your taxes, since you can easily do it yourself. I can understand for companies, and very wealthy people with tons of stocks, bonds, and IRAs etc. Then pay someone, but for the normal person who just works one job and doesn't do much trading or investing, then go onto the irs web site and choose one of the hundreds of free efile companies each year, they often have a limit of 62,000 anyway in gross income, so it's harder to find a free file if you make more money. They are going to try but this is a state by state issue.
Is there anything we can do to fight back?
I am not sure if it is true still, but I remember "regular" workers in Japan do not have to file tax. They are deducted from their pays and that's it. I think that will similarly apply to a very large number of population.
I also never liked really to use accountants, as they basically ask the same questions that I have to collect myself. Might as well use an online tool. Especially if most of the "W"s are already at IRS/FRB why do I even have to send the copies of them again. Why don't they just give me the partially filed XML/JSON to me to finish it off.
I file my taxes for free, easily, by printing out the forms at home and doing them by hand on paper. The only cost to me is for the envelopes and postage. I've done some pretty complex filings over the years, and have built up the knowledge I need to do it well. Also, if I make a mistake the government is usually pretty good about letting me know and I either cut them a check for the difference or they cut me a check. It's actually not that hard, as long as you go through it line by line and read the instructions.
Even without the lobbying the public choice aspects of this are bad. I'd like easier tax filing but I wouldn't vote for a politician who I disagreed with about immigration if they supported it. On the other hand I'd bet that most of employees of H&R Block, Intuit, etc would consider tax reform a huge threat to their livelihoods and would rank this as their top priority in choosing who to vote for.
They've been doing this for years. When I grumble about capitalism this is the sort of thing that annoys me. People say government is bad because it doesn't have competition and is a van intrinsically violent monopoly, but here we see an example of private actors spending money to make government unresponsive or outright antagonistic to people's needs so as to profit by serving those needs. The argument goes on that it's government's fault for allowing itself to be influenced, but that rests on an increasingly common fallacy of composition as if government were a monolithic entity, which (especially in the United States) is so far from being the truth as to be a lie. The fact is that many actors in government have been corrupted by campaign donations, and that the mechanistic application of an unlimited first-amendment concept of political speech Does Not Work.
A basic problem particular to the United States, in my view, if that while the Constitution treats of both law and equity, law has gained primacy and some parties are heavily invested in keeping it that way, arguing that the courts should be no more than mechanistic deciders rather than moral agents in their own right, most often summarized as 'we're a nation of laws!' - a curious statement from people who pledge allegiance to the idea of a Republic with liberty and justice for all, as if there could never be any such thing as unjust laws.
It would be interesting to see which members of Congress are most heavily influenced by lobbyists, and examine their public statements to see whether this correlates with hostility towards the judicial branch that checks their 'work.'
I've been using TurboTax for years, and I think I'm ready to move on if they are going to continue lobbying. What are some other alternatives? I don't mind paying, but I want to make sure it's a service people trust.
For three years, one of the departments I worked in had to suffer through massive, monthly paper report distributions. Because the petty-tyrant manager would not let us convert to electronic reporting. Because it would shrink his personal turf.
From business and legal aspects through to recent news on scientific "protectionism", no matter the "professionalism" and "objectivity" attached to the domain, they remain run by humans. With all their human traits and foibles -- which tend to come before the "objective."
One reason -- a primary one -- I see for guaranteeing people a basic quality of life, e.g. health care and an at least tolerable retirement. So that they -- maybe -- don't fear change so much. Feel, even, that they get to take part in the change, even when it is not at their own initiative and patent.
This was already discussed here in https://news.ycombinator.com/item?id=13853150 little more than a week ago.
Doesn't surprise me.
That's what happens when companies are legally obliged to provide profit for shareholders.
That's why I highly respect Kickstarter (among many others) who decided to reincorporate at Public Benefit Company.
> But the legislation would also permanently bar the IRS from offering its own free alternative.
Why should we as citizens of this great country be forced to give up the right to form a public option? Not quite 1:1 but the analogies to health care do come to mind.
Automating inefficient/complex systems is just going to make the same problems happen faster.
Seems to me the first step should be to simplify the tax code. AMT and deductions seem like a good first pass.
There is already more than enough bureaucracy involved in paying taxes, creating an ecosystem to make more of that bureaucracy... for a profit.... is not my idea of a good idea.
I feel like this comes up every March :)
Such bullshit. Can't believe they've gotten away with this for so long.
The government would actually love this. Most people are ignorant of tax laws and would just sign a piece of paper to get all of their taxes done. It would be an instant pay raise because most people would never even know if they could write something off. It would also allow them to easily remove the ability to write anything off, without too many people complaining.
What many people don't like to talk about is that yes, places like Sweden have much simpler tax code. But they also removed most ways to actually reduce your tax burden and grow your business (this applies to personal taxes too). You are also required to have a special black box on any credit card transactions, which sends everything straight to the government. This smacks of authoritarianism.
Simplicity might seem better, but it gives us less control over our own taxes.
It's also not really that difficult now. Everyone I know has been doing their own 1040-EZ form since they started to work. It's usually only one or two forms to fill out. If this is too complicated for our society, we truly have problems.
Is lobbying just a cute alternative word for "corruption"?
In this alternative solution, the government does your taxes, so instead of paying a company/accountant to do it, our taxes / the deficit will pay for it. Someone has to do the work, and if it's not these companies, it will be the IRS. I'd be in favor of simplifying the tax code so everyone could file their own return with confidence!
In the Netherlands we have had this for years. You login with the tax agency and download a pre-filled tax form. Wages and Income Tax is pre-filled, as are Bank savings and morgages. The pre-filled form is complete for over 90% of people.
The 10% for who it is not can add or correct things that our IRS may not know correctly (i.e. foreign holdings or bitcoins).
You then digitally sign and submit it. It's quite easy to do yourself and I think most people here do (couldn't find a percentage). I could find that 97% is submitted digitally, only 3% is on paper.
We do have commercial offerings, those are used for the more complex scenario's, mostly by accountants and tax professionals