The following is a press release from Sen. Elizabeth Warren’s office. She is one of two individuals elected to represents the Commonwealth of Massachusetts in the U.S. Senate. She is a Democrat.
WASHINGTON DC – United States Senator Elizabeth Warren (D-Mass.) led her colleagues in sending a letter to Intuit Chief Executive Officer Sasan Goodarzi asking him to respond to reports that Intuit is deceiving American taxpayers about their tax filing options by deliberately directing them to costly profit-generating products, rather than to the free tax-filing option the company has agreed to provide eligible taxpayers.
The lawmakers noted that the reports raise serious questions about the company’s compliance with its agreement with the federal government to provide free tax filing services.
Joining Senator Warren in questioning Intuit’s practices are Senators Richard Blumenthal (D-Conn.), Edward J. Markey (D-Mass.), and Cory Booker (D-N.J.), along with Representatives Brad Sherman (D-Calif.), Tim Ryan (D-Ohio), and Donald Beyer (D-Va.).
Intuit, which owns the tax preparation software TurboTax, is a member of the Free File Alliance, a consortium of private tax preparation companies that have an agreement with the Internal Revenue Service (IRS) to provide free tax preparation services.
All taxpayers who make less than $66,000 are eligible for the program, however, less than 2% of eligible taxpayers used Free File in 2018, and, in recent weeks, it has become increasingly clear that this under-utilization stems in large part from deliberate actions by some members of the Free File Alliance.
In April 2019, reports revealed that TurboTax, along with several other Free File members, was hiding its Free File edition from online search results in order to steer taxpayers toward paid products.
TurboTax also makes it impossible for taxpayers to access TurboTax’s edition of Free File from TurboTax.com.
Additionally, in an internal video, Intuit admitted that the company delisted their landing page for Free File from online search results.
Even taxpayers who specifically searched for “turbotax free file” encountered ads placed by Intuit for TurboTax’s other products at the top of their results.
Most recently, reports suggested that Intuit customer service agents incorrectly told people who called Intuit to ask for refunds that Free File was run by the government, rather than private tax preparation companies like Intuit.
“Intuit’s track record of deception with regard to Free File is extensive, including its efforts to sabotage the service by hiding it from taxpayers, its false customer service claims, and its public relations campaign in support of the tax filing status quo,” wrote the lawmakers in their letter.
The lawmakers also responded directly to Intuit’s misleading statements attempting to defend their practices: “Despite your comments that ‘knowledge is power’ and that Intuit wanted consumers to ‘more easily find the product they were looking for,’ you justified hiding the Free File software from search results by claiming that ‘experience and our common sense’ suggest that most people are not looking for that website.
This reasoning appears to be directly contradicted by the fact that even taxpayers who specifically searched for ‘turbotax free file’ encountered ads placed by Intuit for TurboTax’s other products at the top of their results.”
The lawmakers are requesting that Intuit provide answers to their questions no later than June 5, 2019 in order to better understand this pattern of behavior, its impact on taxpayers, and whether Intuit will provide refunds to taxpayers they misled.
Senator Warren has long opposed outsourcing tax preparation for low- and moderate- income taxpayers to the private sector through the Free File program because private tax preparation companies have strong incentives to steer taxpayers toward paid products and because the program has been mismanaged from the outset.
Senator Warren has long fought on behalf of taxpayers to make it easier and cheaper to file their taxes, including by:
- Leading letters to the IRS and FTC calling for investigations into Free File members’ deceptive practices and calling for the IRS to force the private tax preparation companies to refund consumers who were eligible for Free File but were steered into paid products.
- Introducing the Tax Filing Simplification Act, which would require the IRS to provide its own free tax filing software, and take other steps to make tax filing easier and cheaper.
- Calling on the IRS to improve the tax refund process in response to Government Accountability Office findings that show low-income and some minority taxpayers are more likely to use tax-time financial products in part because they are more likely to need quick access to cash to meet their financial obligations.
- Urging the IRS to select consumer advocates and individuals representing the needs of low-income, elderly, disabled, and non-English-speaking taxpayers to serve on its Electronic Tax Administration Advisory Committee.
- Releasing Tax Maze, an investigative report that details how the tax preparation industry blocks government from making Tax Day easier.