Tax-induced migraines are as American as apple pie. But the tax-filing tango is a different dance across the rest of the world: In most developed countries, tax agencies like the IRS do people’s taxes for them.
For years, the chronically underfunded IRS has wanted to build a similar system to make taxes easier and cheaper for millions of Americans.
But yesterday, the House passed a bill preventing the plan — and you can thank TurboTax.
The fight for free filing
The “Taxpayer First Act” passed the lower chamber with bipartisan support; now, it’s headed to the Senate, where it’s likely to pass.
The bill, which is the first legislation passed to update the IRS in 20 years, aims to “modernize and improve” the IRS. But the fine print makes it illegal for the IRS to make a free online filing system.
That fine print is the result of years of lobbying: Last year, H&R Block and Intuit (TurboTax’s parent) spent $6.6m lobbying for tax legislation.
Your tax pain is H&R Block’s tax gain
By keeping things complex, H&R Block and Intuit continue to make fat stacks of tax cash (over the past several years, H&R Block has helped push through several pieces of legislation that have made it harder to file for tax credits).
Surprisingly, 70% of Americans are already eligible to file their taxes for free. But since the Free File Program is run by 12 for-profit partners who intentionally fail to promote the free program, only 3% of eligible taxpayers actually file.
As for the rest? They pay TurboTax and H&R Block billions to do it for them.
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