According to the deal that the IRS has with the private tax preparation companies, the IRS will not develop its own free software provided that the companies offer free software to people earning less than $66,000 per year. Congress is now about to pass a measure making that agreement an actual law. But Justin Elliot and Lucas Waldron at ProPublica tried to file free and found that TurboTax has made it incredibly difficult for people to even locate the free service.
Did you know that if you make less than $66,000 a year, you can prepare and file your taxes for free?
No? That’s no accident. Companies that make tax preparation software, like Intuit, the maker of TurboTax, would rather you didn’t know.
In fact, if you start from the TurboTax.com site, you can never get to the free software.
But that’s not all. TurboTax then further trips people up by including conditions that disqualify people from free filing, though these conditions were not supposed to be part of the deal. Filers suddenly find themselves faced with a bill. Elliot and Waldron created profiles of a house cleaner who earns $29,000 a year and a Walgreens cashier but TurboTax demanded that both of them upgrade to paid versions, using conditions to disqualify them from free filing (the former for being an independent contractor and the latter because of lack of health insurance) that they should not have been able to.
Are the house cleaner and the cashier not allowed to prepare and file their taxes for free because of their particular tax situations? No! According to the agreement between the IRS and the companies, anyone who makes less than $66,000 can prepare and file their taxes for free.
Is it any wonder that the use of the ‘free’ software has actually declined by millions from its peak in 2005? Elliott asked TurboTax spokesman Rick Heineman why eligible people were not immediately directed to the free software site rather than having it buried and but he did not respond.
These companies are unscrupulous exploiters of poor people. They probably feel that after having gone through the process of filing thinking it was free, most people would think that they are genuinely prohibited from the free service and will pay the bill they are presented with.
It is blatant bait-and-switch. And now these unethical companies are going be rewarded by Congress by having their shady practices protected by law.