TurboTax Isn't Getting Its Sweet IRS Deal Written Into Law After All

Photo: Kimberly White/Getty

The for-profit tax filing industry, including the pure evil company TurboTax, will not get a long-sought deal with the IRS that would give the industry exclusive rights to develop tax filing software for U.S. taxpayers, according to ProPublica.

A controversy emerged over the Free File program, an agreement between the IRS and the tax preparing industry that promises the IRS won’t develop their own free tax filing software for low-income consumers. A bill in Congress was set to make that program permanent, but it has now been scrapped.

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The change comes after ProPublica reported that TurboTax and H&R Block were intentionally hiding their free filing software from low-and-middle income people by keeping the free services unlisted on search engines.

Intuit, the company that makes TurboTax, spent $2.6 million last year lobbying for the inclusion of the Free File agreement in the bill, known as the Taxpayer First Act.

Now, Congressional leaders are introducing a new bill without the Free File provision. The bill could be voted on as early as next week.

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There’s no federal agency Americans interact with more than the IRS, and it’s critical that it be modernized to better serve taxpayers,” Sen. Ron Wyden said in a statement.There’s bipartisan agreement that Congress should not codify the Free File program given its deficiencies and allegations of deceptive advertising and search engine manipulation by participating companies. I hope the House and Senate take quick action on the revised bill, and I will continue to advocate for a public program that allows taxpayers to file directly with the IRS.”

This, of course, doesn’t mean the Free File program will end. TurboTax and other industry players will continue to do whatever they can to make filing taxes for free as difficult as possible. All this change means is that their relationship with the IRS won’t be written into law. The current deal between the IRS and industry expires in 2021.

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The IRS announced in May that it would internally review the Free File program. New York state has also launched an investigation.

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On Monday, a group of 75 academics and advocacy groups wrote a letter to the bill’s sponsors urging them against including Free File.

“Recent reports warrant further inquiry from Congress into whether the companies in the Free File Alliance are actually offering a free and accessible service to low- and moderate-income taxpayers as promised,” the letter read.

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