"We want to send users to our paid products"

May 2, 2019 2:18 PM

TurboTax and H&R Block Saw Free Tax Filing as a Threat — and Gutted It: An internal document and current and former company employees show the companies steered customers away from the government-sponsored free option and made them pay. (SLProPublica by Justin Elliott and Paul Kiel)
posted by crazy with stars (37 comments total)

For-profit company's gonna for-profit. My roommate, who makes less than $66,000 and is lousy with computers, asked me to do his simple taxes using the free H&R Block service. After warning him that he was going to receive a gazillion marketing emails, and two gazillion clicks later, I figured it out.

I worry these days that the IRS has bigger problems.
posted by Melismata at 2:28 PM on May 2, 2019

(Previously on this topic)
posted by box at 2:29 PM on May 2, 2019 [2 favorites]

I love this. The IRS is so pure of heart and so naive. Oh yes, for-profit corporations will definitely love to provide their services for free if we ask them to. Wait, they're not actually providing their services for free?? WHY? Haha, weird. Wild, man. Anyway. How was your weekend?

I was never able to actually get to the free file option on any of these sites so I guess their hard work paid off. Imagine any of those giant brains were pointed at actual problems?
posted by bleep at 2:35 PM on May 2, 2019 [2 favorites]

TurboTax definitely was blocking me from free filing a few years ago so I switched to TaxAct. Then I think I had problems getting it free from TaxAct the second or third year and switched to H&R Block for the past two years. So far, H&R Block has allowed me to free file but I'm nevertheless wary and I always navigate to them from the governmental list of free filing options because I hope that avoids site redirects to paying options.
posted by vegartanipla at 2:47 PM on May 2, 2019 [5 favorites]

This is both surprising and not surprising to me. It's not surprising for exactly the reason Melismata gave. But it's surprising because up here in Canada some of the most popular tax filing software, which is officially recognized by the CRA (so it can do proper NETFILE and such) is pay-what-you-want.

I mean, you can still buy TurboTax or go to H&R Block, but I used StudioTax for years without ever paying for it. This year, I switched to SimpleTax.ca because it's online and therefore cross-platform (StudioTax is Windows and Mac only, and I got tired of running my slow-as-hell Windows partition once a year just to do my taxes). I actually opted to pay for it because they set up their payment page in such a way that I felt really guilty when I selected the $0 option...so I paid them $5.

Both of the companies I mentioned have been around for years and are profitable, despite offering the exact same functionality to people who choose not to pay.

I think you can also still do your taxes the old fashioned way, on paper, but for the past few years you've had to specifically request paper forms.
posted by asnider at 2:51 PM on May 2, 2019 [5 favorites]

I always go to the irs website first because it always seems to work using their links. Successfully filed state and federal free that way. Told everyone who would listen.
posted by one4themoment at 2:57 PM on May 2, 2019 [6 favorites]

I do my taxes on paper every year. It's the ideal way.
posted by Quackles at 3:09 PM on May 2, 2019 [1 favorite]

I do my taxes on paper every year. It's the ideal way.

We own a 2 family house, so dealing with rental income and expenses make our filing "non-trivial", and I'm grateful for our CPA who provides real value in (1) doing the tax prep so I don't have to and (2) uploading it via his Thompson/Reuters software...
posted by mikelieman at 3:13 PM on May 2, 2019 [2 favorites]

Oh the amount of no shit. I don't mean that against the article, just, of course. USA: There will be no public option. Living in California means living in a place where the FUCKING INTERNET COMES FROM and also no wifi coverage for towns at a time. Shitty cell coverage.

I've got a friend who does civic engineering along the lines of bridge and infrastructure inspection in often hard to reach places in North America. He's gone to the absolute middle of bumfuck, Canada (not to mention the frozen tips) and found excellent, publicly-backed coverage. For his trips in the US, he brings a pocket radio for company.
posted by es_de_bah at 3:35 PM on May 2, 2019 [14 favorites]

Yes, it's a damn shame that filing taxes is far too complex for many people - and yes, it's a damn shame that far too many people simply throw up their hands when faced with such complexity.

And yes, it's also a damn shame that companies have to "cozy up" to bureaucratic agencies.

But this bogus outrage against the tax-prep companies is misplaced and foolish.

From the article: “Do not send clients to this Web Site unless they are specifically calling about the Free File program,” the guidance states, referring to the site with the company’s free option. “We want to send users to our paid products before the free product, if at all possible.”

The companies do what they are supposed to do - provide products and services to generate revenue and hopefully enough profit to remain a viable business.
posted by davidmsc at 3:47 PM on May 2, 2019 [1 favorite]

“Bogus” outrage?

Definitely a good faith argument being made there.
posted by FallibleHuman at 4:04 PM on May 2, 2019 [35 favorites]

Christ what assholes
posted by Hermione Granger at 4:13 PM on May 2, 2019

I use a free pdf editor that works with Google Drive and download forms and instructions directly from the IRS website. Whole thing takes part of an afternoon once a year. And assuming my time is free, my only expenses are printing the completed returns over at my local FedEx and a stamp...
posted by jim in austin at 4:19 PM on May 2, 2019 [1 favorite]

Why do we have this "voluntary" system again?
posted by 1adam12 at 4:27 PM on May 2, 2019 [1 favorite]

Articles about big problems with IRS Free File are helpful, but they really should emphasize the solution that most wealthy countries use: "return-free filing", in which taxpayers are not required to fill out tax forms at all. Instead, you receive a bill in the mail, based on what the government already knows about you; if you agree, you pay as needed or receive your refund. If you don't agree with what the government tells you, you have the option to fill out forms the conventional way, with your own information. Here's more from this Priceonomics article (linked in a previous thread) about a Stanford professor's fight for "ReadyReturn" in California:

The United States is one of the few countries—and the only wealthy country—that forces taxpayers to gather up tax forms and calculate their own bill. The reason why is a uniquely American mix of lobbying by tax preparation companies—who worry about demand for their services—and anti-government sentiment.

There is one program in America, however, that provides some taxpayers with completed tax returns. Since 2007, around 80,000 California taxpayers each year have paid state income taxes this way under a program called ReadyReturn.

posted by Tacit at 4:30 PM on May 2, 2019 [22 favorites]

davidmsc: "And yes, it's also a damn shame that companies have to "cozy up" to bureaucratic agencies."

I would actually turn that completely around -- it's a damn shame that the IRS has to "cozy up" to these rent-seeking companies.
posted by crazy with stars at 4:33 PM on May 2, 2019 [21 favorites]

Free Fillable Forms. It's the best of the not-great options. I spent years wrestling with the free-file options to accurately handle my taxes, giving up and submitting paper each year, and had either the IRS or the state tax agency make a mistake in copying data from my paper forms to their electronic system 3 years in a row. Free Fillable Forms just gives an electronically fillable 1040 (et al) which you submit online, no bells and whistles, not even automatic calculations. If you're comfortable filling the paper forms, Free Fillable Forms is an easy improvement.

The fact that the IRS is prevented from offering a direct e-filing service to taxpayers because of a non-compete agreement with the tax industry is obscene.
posted by biogeo at 4:48 PM on May 2, 2019 [9 favorites]

The companies do what they are supposed to do - provide products and services to generate revenue and hopefully enough profit to remain a viable business.

You missed the part where these companies are being paid money by the US government to offer the Free File service. This is an attempt to get every taxpayer to pay them twice. If they can't generate enough profit to stay in business without cheating people, they should go out of business. Considering that the "service" they're offering here exists only because they've strong-armed the IRS to prevent them from providing a way for taxpayers to communicate with them directly (you know, like most developed countries do), I don't think showcasing them as an example of capitalism working as it should works as well as you think.
posted by biogeo at 4:58 PM on May 2, 2019 [34 favorites]

I had issues that required help, and was using FreeTaxUSA. Their online chat was useful. I didn't see any option to file state taxes for free, and paid 14 bucks to file. Given that they were pretty helpful, I didn't mind at all. Healthcare.gov really came through for me by phone.

The issue is that it could and should be trivially easy to file one's taxes directly; these companies lobby to be intermediaries. Every step you make as an American must generate profit for a corporation. Yay, capitalism.
posted by theora55 at 6:13 PM on May 2, 2019 [2 favorites]

The US tax system is so nuts. I'm freelance and have two business entities. For the last decade I have always sucked it up and paid for a specialist tax lawyer to do my tax preparation, because it is so damn complicated I can't even go to a regular CPA.

I just actually attempted TurboTax for the first time today (after seeing that my tax dude has raised his rate to $975/hr... and he's fully booked for the next 3 months). I mean, I have his examples to follow from past years and nothing has changed, but I got pretty much the same result after roughly 6 hours of strenuous clicking. I was kind of impressed for $120.

On the other hand, this entire nonsense should simply not exist. Don't most countries just do your taxes automatically for you? Why is TurboTax even a thing.
posted by bradbane at 6:53 PM on May 2, 2019 [3 favorites]

theora55, healthcare.gov and the attendant call centers will direct you to your state's system. Your state's system may be a carnival of horrors. (Let me tell you about the difference between MA and CA, sometime). I understand that one of the bigger sections of the ACA that's let us down can be summed up by the phrase 'state's rights,'

And I can understand that individual state tax filing is always going to be more complicated / less profitable. But, if nothing else, the much more impactful federal tax system should be free and easy. SO easy.
posted by es_de_bah at 8:44 PM on May 2, 2019

Thanks. It was a Federal issue that needed to be resolved and it was successfully done. If you work for Healthcare.gov, Kami deserves a hug.

It used to be *much* worse. I owned a small business in the 80s and the IRS had an accuracy rate of about 66% by phone. I had a problem caused by bad information that caused me to file a form late, the IRS misapplied it, and it went downhill from there. It took 3 years to resolve, the IRS threatened a lien on my business, and they used to be more likely to actually do stuff like that. It's one reason I sold the business. I don't know about now, but at the time, even if the IRS gave you incorrect information, you're still liable for the taxes and any fines. And sleepless nights.
posted by theora55 at 9:07 PM on May 2, 2019 [1 favorite]

Yes, it's a damn shame that filing taxes is far too complex for many people - and yes, it's a damn shame that far too many people simply throw up their hands when faced with such complexity.
...
The companies do what they are supposed to do - provide products and services to generate revenue and hopefully enough profit to remain a viable business.

I think you might have missed the part where Intuit (makers of TurboTax) and H&R block lobby so that taxes stay complicated. Creating a viable business out of unnecessary bureaucracy is not, to my thinking, creating value.
posted by tuffet at 9:46 PM on May 2, 2019 [13 favorites]

And yes, it's also a damn shame that companies have to "cozy up" to bureaucratic agencies.

They are not fucking "cozying up" because they fucking "have to", they are fucking interfering with the operation of the damn Federal government in order to siphon off profits.

From the article: “Do not send clients to this Web Site unless they are specifically calling about the Free File program,” the guidance states, referring to the site with the company’s free option. “We want to send users to our paid products before the free product, if at all possible.”

How do you read that sentence from the damn article and not understand that the motherfucking objection is that they're pulling a fucking bait-and-switch while supposedly operating a free service officially offered by the IRS? "Here's a thing we're offering at no personal cost to you because the government is footing the bill . . . . oh wait oops too bad, if you have a problem with our "free" service we're not going to help you with it, we're just going to insist that you shell out bucks for a different service."

Also from the goddamn article:

"the companies were making it more difficult for people to find their Free File websites by hiding them from search engines."

"At Intuit, “The entire strategy is make sure people read the word ‘free’ and click our site and never use” an actually free product, the former midlevel employee said. In reality, TurboTax’s Free Edition guides many people to a product that costs them money. It’s only free for people with the simplest tax situations. The “vast majority of people who click that will not pay $0,” the former employee said."

"Intuit and the industry have spent millions lobbying to make the Free File program permanent because it contains a noncompete provision that restricts the IRS from creating its own free, online filing system."

"As a result, many people end up paying TurboTax even though they could have filed for free. The company won’t say how many people this is, but it is likely in the millions. Dozens of taxpayers have contacted ProPublica to tell their stories of being charged by TurboTax despite the fact that they earned under $34,000 a year, qualifying them for TurboTax’s Free File product. An 87-year-old retiree with a gross income of $11,000, for example, was charged $124.98 to file with TurboTax."

The companies do what they are supposed to do - provide products and services to generate revenue and hopefully enough profit to remain a viable business.

Really? Really? The above examples from the article are just a normal, ethical, not-to-be-questioned way of doing business?

Nobody would give two shits if these companies just offered up their services as a straightforward business with TV ads and dancing sign guys in Statue of Liberty costumes on the street corner and managed to convince some suckers that their taxes are too confusing or even actually provide a valuable service for people whose taxes are genuinely complicated. They are fucking double-dipping and lying about it, they are fucking preventing the actual government agency that is responsible for collecting my taxes from developing an actual "free to the public funded by a tiny share of the budget" service, and they're doing it with my goddamn tax dollars.

Jesus fucking Christ quit suckling on the teat of "free-market capitalism" and recognize that we're all paying the price for these motherfuckers running their scam on the American taxpayer.
posted by soundguy99 at 9:49 PM on May 2, 2019 [30 favorites]

I didn't have any problem selecting the free version of TurboTax this year. And by that I mean ll of the hundred times it made me revisit my decision and tried to make it seem like I needed something in the paid version, it was easy to click the much smaller "hope you don't notice this" option.
posted by ctmf at 10:00 PM on May 2, 2019 [4 favorites]

But I had read somewhere on MetaFilter before that there had to be a free option, so I was looking for it.
posted by ctmf at 10:00 PM on May 2, 2019 [2 favorites]

stories of being charged by TurboTax despite the fact that they earned under $34,000 a year, qualifying them for TurboTax’s Free File product. An 87-year-old retiree with a gross income of $11,000, for example, was charged $124.98 to file with TurboTax."

I have a gross income well over 100k, and I was able to pay $0. As I said above, not for lack of them trying to trick me out of it, but the free option was always there.
posted by ctmf at 10:06 PM on May 2, 2019 [1 favorite]

Every year I start my taxes with the free file option I did the previous year. When it inevitably blocks me from completing without payment, then I switch to another. So far I’ve only had to do my taxes twice each year (>_<). I just assumed these for profit companies resent losing this revenue and say whatareyougonnadoaboutit? To the users and the government. It’s a free market, so I switch to a different company. But I rarely think about how the government should do or can accomplish, because, well, what do I want them to spend their tax supported salaries doing? Going after business for using loopholes to shakedown the public who didn’t leave enough time to shop around for the free version which isn’t compromised?
posted by xtian at 4:58 AM on May 3, 2019

"I always go to the irs website first because it always seems to work using their links."

This is some Digital Divide shit right here. If a free option is supposed to be available based on your income, it shouldn't also be contingent on undeclared requirements about the path you took to get there.
posted by baseballpajamas at 5:05 AM on May 3, 2019 [5 favorites]

So... there is no free open-source equivalent for this?
posted by pracowity at 7:02 AM on May 3, 2019

Follow-up in ProPublica by Jesse Eisinger and Paul Kiel:

You Can’t Tax the Rich Without the IRS: Until the budget-starved agency is restored, corporations and the wealthy will easily fend off attempts to increase the rates they pay.
posted by crazy with stars at 9:44 AM on May 3, 2019 [3 favorites]

what do I want them to spend their tax supported salaries doing? Going after business for using loopholes to shakedown the public who didn’t leave enough time to shop around for the free version which isn’t compromised?

...

Yes?
posted by Karmakaze at 9:45 AM on May 3, 2019 [4 favorites]

So... there is no free open-source equivalent for this?

It's less about the price or complications of the software or doing the math as much as it's about the business practices of these companies and the fact that there are only a few ways to OFFICIALLY file your US/state/local taxes, wherein "filing" means that you are sending a collection of forms you have filled out, therefore making a legal statement to the governments about how much tax you owe them and if you're wrong you are looking at possible fines, liens, garnishment of wages, or jail time. There are probably plenty of open-source ways to do the math (although I would have serious doubts about how well any open-source program would keep up with the complexity and regular changes to the US tax codes), but in order for the IRS and state and local tax agencies to recognize that you have filed your taxes you need to either fill out a form by hand and snail mail it, or use the "Free Fillable Forms" (for Federal taxes an online set of pdfs you can enter data into), or use one of these company's "free" products. There is no open-source software that I am aware of that the IRS will accept as having filed your taxes.

To wit, here's the main IRS page, where right smack in the middle you see a big thing for "IRS Free File." Click on that, and you're sent to a page describing some basic requirements and parameters for filing for free, click on that and you're sent to this page, which lists twelve (12!!!) links to private corporations' websites with all sorts of their own lists and parameters.

And said companies will supposedly let you file for free, but once you get partway into the process it turns out that if, say, you have a small part time business selling homemade cookies at craft fairs, they don't allow you to access those necessary forms for free, you need to pay them money. Or you get one year for free, but when you try to "log in to your account" to access past years' tax info (which can be useful to have), nope, you need to pay them money. Or if you're working 3 part time jobs you get three W2 tax statements from your employers, but the "free" software will only let you enter the info from two of these forms. And usually this "oops it will cost you" only pops up after you've already invested time and effort into starting the whole process, so a fuck-ton of people are going to feel overwhelmed and just pay the money rather than start over with a different program.

So far I’ve only had to do my taxes twice each year. I just assumed these for profit companies resent losing this revenue and say whatareyougonnadoaboutit? To the users and the government. It’s a free market, so I switch to a different company.

Hence the point - you should not have to do your goddamn taxes twice every year, for crying out loud, and paying taxes should not be controlled by the whims of the "free market." You wanna use TurboTax or H&R Block or whatever, fine, knock yourself out, free-market away. Allowing for-profit companies to leech off citizens' legal requirement to pay and file taxes by pretending to offer a free method for filing is fucking unacceptable.
posted by soundguy99 at 10:57 AM on May 3, 2019 [7 favorites]

Whoops, just to clarify, you are of course always free to use various companies' paid versions of their tax prep & file software - before this "Free File" debacle got started TurboTax was already raking in millions by just straightforwardly selling tax software. The problem, again, is the bait-and-switch tactics where what is presented as free software is not.
posted by soundguy99 at 11:02 AM on May 3, 2019 [1 favorite]

And another followup from Eisinger and Kael (they are hitting it out of the park):

Elizabeth Warren and Other Senators Call for Refunds and Investigations of TurboTax and H&R Block. "In letters to the IRS and the FTC, the senators are seeking inquiries into whether the companies have deceived customers and violated restraint-of-trade laws."
posted by crazy with stars at 12:09 PM on May 3, 2019 [6 favorites]

From the article: “Do not send clients to this Web Site unless they are specifically calling about the Free File program,” the guidance states, referring to the site with the company’s free option. “We want to send users to our paid products before the free product, if at all possible.”

Yes, even when I specifically went from the IRS website to H&R Block's solution this year only to get blocked AT THE MOMENT OF FILING and directed to their expensive "self employment" option, and despite being able to do it there the past three years in a row. That is to say, it was free up until the important moment, when it was suddenly not, a classic bait-and-switch.

What I did was leave H&R Block, go back to the IRS Free File site, go to TurboTax from there, and repeat the process, which I indeed was able to do for free. Whether that will work next year will be a roll of the dice of course.
posted by JHarris at 5:14 PM on May 3, 2019

Another ProPublica follow-up (this one by Justin Elliott and Meg Marco):

Listen to TurboTax Lie to Get Out of Refunding Overcharged Customers: "TurboTax successfully lobbied to keep the IRS from offering free tax prep. Now it’s pretending the government already does it."
posted by crazy with stars at 9:10 AM on May 9, 2019 [1 favorite]