Why tax-prep giants don’t want the IRS to help taxpayers

Donald Cohen


For most of us, filing our tax returns with the Internal Revenue Service is a frustrating, complicated, and opaque process. And if you make a small mistake, you could be threatened with additional fines, or even prison.

Recently, IRS leadership, with support from the Biden administration, proposed modernizing the filling process to make it easier for Americans to file, bringing it in line with nations like New Zealand, Japan, and Denmark.

According to Treasury Secretary Janet Yellen, the IRS modernization plan includes intensifying efforts to enforce tax laws on the wealthy, increasing the quality of customer service through in-person taxpayer assistance centers and shorter phone wait-times, and digitizing more IRS functions.

But now, tax-prep corporations are teaming up to protect our nightmarish tax-filing system — and they’re using a century-old playbook to do so.

It’s easy to understand the motivations behind this unholy alliance to kill tax reform. The proposed IRS e-filing system would make the process of paying taxes simple and painless, saving Americans billions of hours a year and allowing them to keep the billions of dollars they now pay annually to tax-prep firms like Intuit, which last year made $11 billion in profit thanks in part to its ubiquitous Turbo Tax software.

Wealthy corporations have long used the same set of well-worn claims to convince people that their profits are more important than the public good, and have falsely argued that making products like Turbo Tax obsolete would hurt the very people the modernization policy is intended to help.

First, they deny. Denial is corporate America’s go-to strategy when trying to kill progressive policy — even when they know their product is problematic.

“A direct-to-IRS e-file system is wholly redundant and is nothing more than a solution in search of a problem,” Intuit spokesman Rick Heineman warned.

In nearly the same words, a spokesperson for H&R Block warned that “the IRS direct e-file pilot set to start in January 2024 continues to be a solution in search of a problem.”

Another familiar tack the tax-prep companies take: This new program can’t be any good, because it’s run by the government. This argument can go in two different directions, or sometimes both at once: either government is bumbling and incompetent, or it’s all-seeing and all-powerful.

Intuit is leaning in on the menacing Big Government message, and its Congressional allies are marching in lockstep.

Never mind the fact that plenty of other countries run their own popular tax filing systems, or that Intuit and H&R Block have already suffered their own information breaches on a level that the IRS has never suffered.

Finally, the tax-prep firms, like so many other profiteers, depict themselves as philanthropists, concerned not about money but their down-trodden customers.

As an Intuit spokesperson told The Wall Street Journal, having the IRS build a free file system is “a bad idea that will especially hurt low-income and other vulnerable individuals and families.”

Of course, corporations like Intuit that rake in billions of dollars in profit every year are generally not in the business of helping low-income people — at least, not without a hitch.

Right on schedule, here’s that hitch: Last year, attorneys general from nine states announced a $141 million settlement agreement with Intuit “for deceiving millions of low-income Americans into paying for tax services that should have been free.”

All 50 states and Washington, D.C., have signed onto the agreement.

The good news: Once you recognize the pattern, BS of the variety that Intuit and its allies are pushing becomes easy to dismiss.


Donald Cohen is co-author of “Corporate Bullsh*t: Exposing the Lies and Half-Truths That Protect Profit, Power, and Wealth in America,” due this fall, and the founder and executive director of In the Public Interest, a national nonprofit research and policy organization that studies public goods and services.

More Stories In Opinion