How To Get Free, Simple Tax Filing
Upon calling intuit and asking whether they still oppose free, government-prepared returns, Julie Miller, the spokeswoman stated that the answer was yes since their policy position on the issue has not changed. Miller referred to Inuit as being strongly opposed to government prepared tax returns.Elizabeth Warren who is the Massachusetts Senator proposed a bill recently allowing government prepared returns. Warren’s office also released a report on the opposition of the tax industry to simpler filing solutions. The report cited the following article in addition to a different story detailing how a civil rights activist, a rabbi, and other people were misled into offering support for Intuit’s campaign.Free File: Do Your Federal Taxes for Free
The following story was produced in conjunction with NPR.
Imagine filing income tax returns for free in less than ten minutes. You would simply open a pre-filled form, determine what the government believes you owe, make any adjustments needed and that’s it. The miserable annual IRS shuffle no more.In Spain, Sweden, and Denmark, this is already a reality. Government-prepared returns would simply estimate your taxes on the basis of information your bank and employer have already sent. Proponents say that tens of millions of taxpayers would make use of such a system each year that in turn saves them 225 million hours and $2 billion collectively in terms of prep time and costs according to one estimate.“Return-free filing” is the name of the proposed idea and it would be a voluntary alternative to using a professional or using commercial tax software. The concept has been in existence for decades and both a campaigning President Obama and President Ronald Reagan have endorsed it.According to a co-director of the Urban-Brookings tax Policy Center, William Gale, it is not something idealistic that has never been previously executed. Gale says that it is something feasible, implementable, and doable at relatively low cost. Related : Turbotax offers great savings by way of coupon codes and offers , see here for more
Why has it not become a reality then?
For starters, the fact that the company behind the most popular consumer tax software, Intuit, which makes Turbo Tax has been opposing it for years does no good. An influential computer industry group and Grover Norquist, a conservative tax activist have also been fighting return-free filing.Over the last 5 years, Intuit has spent around $11.5 million on federal lobbying, which is more than what either Amazon or Apple have spent. While lobbying usually spans a variety of issues, the disclosures by Intuit regularly refer to the fact that it opposes government tax preparation by the IRS.According to the disclosures, as recently as 2011, Intuit has lobbied on 2 bills both of which never saw the light of day that would have enabled many taxpayers to file free pre-filled returns. In 2007 and 2011, Intuit also lobbied on bills barring the Treasury Department including the IRS from introducing return-free filing.
The company also argues that allowing the IRS to prepare tax returns would mean that taxpayers would have to pay more money. Intuit is also a member of the Computer and Communications Industry Association (CCIA) that sponsors a campaign and website aimed at “stopping the IRS takeover,” which refers to return-free filing as using a big government program for a considerable expansion of the United States government.Julie Miller, Intuit’s spokeswoman, in an emailed statement stated that Intuit participates in the political process actively like many other organizations do. She stated that return-free programs limit the participation of citizens in the tax process and has implications for the fairness and accuracy in taxation.Intuit has stated in its annual report it has filed with the Securities Exchange Commission that preparation of tax returns by government presents a risk to its business model.
Approximately 25 million Americans used Turbo Tax in the previous years and according to a recent GAO analysis, it accounted for over 50 percent of all electronically filed individual returns. Turbo Tax services and products accounted for 35 percent of the $4.2 billion Intuit made in revenues in the previous year. TurboTax versions for both small businesses and individuals range in price from free to $150.TurboTax’s competitor, H&R Block declined to discuss return-free filing. However, the firm’s disclosure forms indicate that it also has lobbied on not less than one return-free filing related bill.Supporters of return-free filing claim that Intuit and other critics are simply overstating the risks of government involvement. There is little to fear since nobody would be forced to accept the IRS accounting of their taxes.According to Austan Goolsbee, who served as the chief economist for the President’s Economic Recovery Advisory Board , it is voluntary and those that don’t trust the government don’t have to do it. TurboTax® Tax Preparation Software,
Austan has written supporting the idea and published the estimate at $2 billion in terms of saved preparation costs in a 2006 paper that also stated that return-free filing can reduce the time lag in dispute resolution significantly and accelerate the time to receive refunds.Other proponents highlight the fact that the IRS would still be doing as it currently does. The IRS would simply share its tax calculation before filing by the taxpayer as opposed to later when checking a return.
Paul Caron, who is a tax professor at the University of Cincinnati College of Law states that considering that the IRS already has the information, it is not that hard to put it in a format where taxpayers can see it. After all, for a big portion of the population it is exactly what is on their return.Taxpayers would choose between 3 options when they receive pre-filled returns: accept them as they are, make alterations, or simply reject it and file a return by a different means. Caron stated that he was shocked that this had not already started happening already.
However, some conservative activists have taken the side of Intuit. Norquist testified in 2005 before the President’s Advisory Panel on Federal Tax Reform against return-free filing. In 2006, Norquist along with others wrote to President Bush claiming that an official bill coming from the IRS would be very intimidating especially for low-income, seniors, and non-English speaking citizens.Norquist, who founded Americans for Tax Reform did not offer a comment but his spokesperson pointed to writing that he and some other conservatives sent to the members of Congress this month. The letter claims that the IRS wishes to get higher tax revenues by ‘socializing’ all tax preparation in America. Later, Norquist’s spokesperson disputed that Norquist declined to comment.
One years after Norquist had written to Bush, a pair of unlikely allies namely Reps. Eric Cantor (R) and Zoe Lofgren (D), the conservative House majority leader introduced a bill to limit return-free filing.Intuit’s employees and political committee have contributed to both. In the last 2 years, Intuit employees and PAC have donated $26,000 to Lofgren. In the past 5 years, Intuit employees and PAC have also contributed $26,100 to Cantor and his leadership.In an email, a spokesperson stated that Cantor did not believe that the IRS should be participating in filing tax returns on behalf of citizens and that the bill was to ensure that the IRS does not circumvent congress.
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