As millions of Americans struggle to file their last-minute taxes, Sen. Elizabeth Warren wonders why it’s not easier to do so for free.
The Massachusetts Democrat wrote Monday to the CEO of Intuit, the most widely used tax software maker in the United States, accusing the company of “unethical and potentially illegal practices that cost billions of dollars to U.S. taxpayers.” “.
Warren accuses TurboTax software maker of pushing against government efforts to create a truly free tax return option for Americans while sabotaging the public-private partnership that allows some Americans to file unpaid taxes. called Free File.
“The Free File program has been a failure, scamming taxpayers to pay for services that should be free,” Warren said in the letter, signed jointly by Reps Katie Porter and Brad Sherman and first reported by The Verge.
TurboTax is a founding member of Free File, a partnership between the IRS and commercial tax preparation companies, which apparently allows any taxpayer who earns less than $ 73,000 to file their tax returns at no cost. However, less than 3% of taxpayers used it in fiscal year 2020, IRS figures show.
An audit by the Inspector General of the Treasury for the Tax Administration found that at least 14 million Americans paid the tax preparation they did not need, in part because tax preparation companies hid their free products to eligible taxpayers.
In previous years, TurboTax actively targeted low-income Americans toward paid products by coding its website to hide its “Free File” option from search engines, as reported by ProPublica. He also actively promoted his products as free, giving them names like “Free Editions,” only to charge some taxpayers when they reached the end of the form. (Last year, TurboTax released the Free File Alliance.)
The Federal Trade Commission accused Intuit of executing an illegal bait and switch last month and denounced the company in California.
Intuit did not immediately respond to a request for comment on Warren’s letter.
The company previously said it would “vigorously challenge” the FTC’s lawsuit. In a lengthy blog post, Intuit said it always followed the law when it came to Free File.
“Far from taking taxpayers away from free tax preparation offers, our free advertising campaigns have made more Americans file their taxes for free than ever before and have been instrumental in raising awareness about free tax preparation.” , said Kerry McLean, Intuit’s general counsel. in a company position.
Revolving door?
Warren, Porter and Sherman’s letter also calls on Intuit to take its lobbying activities into account and alleges that the company is benefiting from an overly welcoming relationship with the government by hiring former regulators to work as lobbyists. .
For example, Dave Williams, a former IRS official who was a “chief negotiator for the Free File program,” later went to work for Intuit, according to the letter. After the FTC sued Intuit, the company hired Jon Leibowitz, a former chairman of the Federal Trade Commission, to defend him, Warren said.
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