TurboTax and H&R Block under investigation

Thanks to a series of reports by ProPublica about how the tax preparation companies are thwarting efforts to provide free tax filings, the IRS has launched an investigation into TurboTax and H&R Block.

Amid calls for investigations from members of Congress, the IRS announced late Friday that it has convened a team of senior leaders to review concerns raised about its Free File public-private partnership with the tax software industry, following a series of ProPublica stories.

[A]s we have reported, use of the free option, which was never high, has dropped sharply in the past decade. Insiders say that Intuit and H&R Block deliberately steered users away from the Free File option and to paid products. At least five of the companies in the Free File program added code to their free websites effectively hiding them from Google and other search engines.

The move is a sharp break for the [IRS], which as recently as April 26 defended Free File as a “successful program and partnership that’s benefited millions of taxpayers.”

It remains to be seen if this review is just a means for the IRS to mollify critics until this fuss goes away or if they will take meaningful action.

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