Posted on | April 5, 2013 | Comments Off on TurboTax Fights Filing Reform
TurboTax Fights Filing Reform
TurboTax has come under fire recently after a report from Propublica revealed that Intuit, TurboTax’s parent company had launched a massive lobbying effort against what is known as return-free tax filing.
This method, which is already used in other countries, would have the IRS prepare an estimate of the taxpayer’s liability. The recipient would have the option to accept the estimate, make corrections to it, or reject it and prepare his own return, using a tax preparation company or other option.
This process puts the onus on the IRS to use the information that employers and banks have already provided to them to prepare these files. The taxpayers who would benefit most from this process are those who file simple forms with no itemization. Up to 40% of taxpayers could benefit from this system.
TurboTax 2013 would have suffered a clear loss of revenue by implementation of this plan. Fewer taxpayers would actually need to file, and TurboTax, being the largest online tax preparation firm, would certainly feel the loss of preparation fees.
Other tax firms and some political figures have opposed return-free filing because they feel the plan expands government control and that receiving a “bill” from the government might intimidate taxpayers into paying the amount without question.
Free Turbo Tax 2013 preparation would not have been necessary if the return-free plan had been adopted. Considering that TurboTax 2013 garners much business by selling consumers upgrades to more expensive packages, the company’s opposition is understandable from a financial standpoint. They cannot, however, claim an impartial interest in the matter.
Return-free filing is not a new idea and has been endorsed by two Presidents and a host of consumer advocates. Other countries have already successfully adopted such a plan, but strong lobbying efforts by TurboTax and other tax preparation firms have so far kept it from becoming a reality in the United States.
Intuit’s PAC Lobbies Against IRS Filed Taxes
Should taxpayers determine how much are owed on their taxes or is this a job for the government? TurboTax lobbying has led to millions of dollars being spent against IRS filed taxes. The IRS could make doing taxes easier on Americans by filing the taxes of citizens instead. Intuit is the parent company behind the TurboTax software and has used its public action committee (PAC) to spend millions to oppose every effort to make tax day less painful.
Intuit, the parent company of TurboTax has lobbied extensively against the “return-free” filing, decreasing the stress of Americans who file complex taxes. This represents the continuation of having to file taxes which take up a great deal of time, despite Obama’s efforts in 2007 towards taxes being prepared by the IRS.
TurboTax and other similar companies are partly responsible for Americans not being able to go without filing their taxes for years. It’s possible that this would have previously been made a law, however, tax professionals have expressed their opposition to this. American’s being able to go without filing taxes for such long periods of time would be detrimental to the businesses that profit from this.
TurboTax’s public opposition to IRS government tax preparation is a clear indication the business knows their long term profits would be affected. Intuit’s PAC has spent over $5 million contributing to certain politicians with the biggest donation to one individual being $1 million.