TurboTax Lobbies Lawmakers to Keep Tax Code Complicated
In countries like Spain and Sweden, tax filing is much easier than it is here.
April 4, 2012— -- File your taxes in Denmark, Sweden or Spain, and one thing will soon become clear: In those countries, tax filing is hardly the, uh, taxing effort it is in the United States.
Over there, it takes about five minutes, and it's free. Known as "return-free filing," it's rather basic: The government-prepared return estimates taxes using information your employer and bank send them. When the taxman cometh, consumers simply open up a pre-filled return, see what the government thinks they owe, modify (or reject) it accordingly, and voila! No accountants, no tax software, no receipt tracking.
Advocates say it could save 225 million hours in prep costs and time, and billions of dollars in the U.S.
"The data shows that having the IRS send pre-populated returns could simplify tax filing for tens of millions of people. That seems like a very tangible benefit," William Gale, co-director of the Urban-Brookings Tax Policy Center, told ABC News. "The arguments against such an idea come mainly from companies that sell tax filing services and from anti-tax advocates who want to make filing taxes harder not easier. The policy would require new investments in technology and manpower for the IRS, but many of those changes are needed anyway."
Still, although the concept has been endorsed by presidents from Ronald Reagan to Barack Obama, it has not been implemented. According to an in-depth article by ProPublica, that's largely because of extensive lobbying by companies like Intuit, which manufactures TurboTax, the software used by about 25 million Americans in 2012. Prices for its products range from free to $150.
Over the past five years, the story reports, Intuit has spent about $11.5 million on federal lobbying. In 2011 Intuit lobbied Congress on two bills that would have allowed many taxpayers to file pre-filled returns for free. Both bills died.
Intuit is also a member of the Computer & Communications Industry Association (CCIA), which operates a website calling return-free filing a "massive expansion of the U.S. government through a big government program," according to ProPublica. CCIA supports the "STOP IRS TAKEOVER" campaign.
Intuit spokeswoman Julie Miller declined to comment to ABC News. But in an email statement to ProPublica she said that Intuit "actively participates in the political process," and that return-free programs curtail citizen participation in the tax process.
The ProPublica article also noted that in its latest annual report filed with the Securities and Exchange Commission, Intuit stated that that free government tax preparation presents a risk to its business. About 35 percent of Intuit's $4.2 billion in revenues come from TurboTax products and services.
While many conservatives agree with Turbo Tax's arguments, Nicole Gelinas, a senior fellow at the Manhattan Institute, a conservative think tank, told ABC News that she doesn't think return-free filing is a bad idea.
"For most people who have a payroll job and don't have investment income it makes sense just to have them send you a form and if you agree with it you don't do anything with it at all," she said. However, she added, those earning under $57,000 annually can easily file online (and on your mobile device!), at least on the federal level.
However, she understands TurboTax's motives. "If taxes were simpler then TurboTax would lose their job of making them simpler."