Paul L. Caron

Saturday, January 4, 2020

IRS Reforms Free File Program, Drops Agreement Not To Compete With TurboTax

Following up on my previous posts (links below):  ProPublica, IRS Reforms Free File Program, Drops Agreement Not to Compete With TurboTax:

Free FileFinding free online tax filing should be easier this year for millions of Americans.

The IRS announced significant changes Monday to its deal with the tax prep software industry. Now companies are barred from hiding their free products from search engines such as Google, and a years-old prohibition on the IRS creating its own online filing system has been scrapped.

The addendum to the deal, known as Free File, comes after ProPublica’s reporting this year on how the industry, led by TurboTax maker Intuit, has long misled taxpayers who are eligible to file for free into paying.

Under the nearly two-decade-old Free File deal, the industry agreed to make free versions of tax filing software available to lower- and middle-income Americans. In exchange, the IRS promised not to compete with the industry by creating its own online filing system. Many developed countries have such systems, allowing most citizens to file their taxes for free. The prohibition on the IRS creating its own system was the focus of years of lobbying by Intuit. The industry has seen such a system as an existential threat. Now, with the changes to the deal, the prohibition has been dropped.

The addendum also expressly bars the companies from “engaging in any practice” that would exclude their Free File offerings “from an organic internet search.” ProPublica reported in April that Intuit and H&R Block had added code to their Free File pages that hid them from Google and other search engines, diverting many users to the companies’ paid products.

“The improved process will make Free File stronger and give taxpayers another reason to consider this valuable software option,” IRS Commissioner Chuck Rettig said in a statement. The agency hopes the changes will make the free option more accessible for taxpayers in the 2020 filing season, he said.

Prior TaxProf Blog coverage:

IRS News, Tax, Tax News | Permalink


Great! I always thought it was crazy for a year's copy of tax prep software ($20 to $100) to cost anywhere near as much as a family's average cost of funding the actual IRS that makes the regulations, forms and publications that the program basically walks you through, and collects, processes and audits the taxes to boot ($11.5 billion IRS budget / 128 million households = $89.85).

Hopefully the e-filing process will also make it convenient to submit one's data to the government directly through all computer operating systems including Linux so I don't have to trust some third party web site or feed the Windows / Mac "tax" too.

Posted by: Anand Desai | Jan 6, 2020 5:59:37 AM

Long overdue! Why the IRS can generate forms freely available to the public and use its own software for entering and processing the data on those forms but not share that software with the same public it shares the forms with, is simply beyond me.

When it comes to tax administration, health care and legal services there is no country on the planet that wastes more private talent and productivity than the US.

Posted by: John | Jan 6, 2020 3:38:04 AM