APril 15 is the day of the tax, which means that the most stupid tax that you will probably pay this week is the one you pay to a software company in order to deposit your taxes. In recent decades, tax preparation software companies have built an industry of several billion dollars so omnipresent, most people have forgotten to be crazy about it.
As an actor specializing in the identification of the scam, I would say that paying for the privilege of paying taxes is good and, yes, a scam.
First of all, you shouldn’t have to produce your taxes at all. And secondly, you should certainly not have to pay a private company to fill in legally mandated documents.
Anyone who earns $ 84,000 or less – 70% of taxpayers – is eligible to use the free file of IRS. However, in 2023, just 3%. Instead, hundreds of millions of Americans pay what is essentially a strange tax in the private sector. But unlike regular taxes, this money does not finance roads or coastal guard, it goes to private companies that have historically used this money to ensure that the system never improves. It is as if there was a toll door in front of each DMV belonging to a massively profitable technological company which pumps this profit in lobbying against the abolition of unnecessary DMV doors.
You shouldn’t need a private company to fill out documents for you, but you shouldn’t have to fill out documents either. The government has most of the same information as you. Think about it: The government guarantees social security taxes of each of your pay checks and employers are required to submit a lot of tax information to the government about you. This means that if you are a full -time W -2 employee who takes a standard deduction, it would be easy enough for them to tell you how general you should or should not – instead of making you spend time and money to tell them something that they already know in this strange game to high issues Family quarrel. “We asked your boss how much money you have earned, the 10 answers are on the board. If you guess badly, you are punished. “
Many countries such as Denmark, Japan, Sweden, Spain and the United Kingdom have a return without return. And countries like Germany send prefabilled tax forms for citizens. Why not? Why can’t we have great things?
Just because it’s too difficult. A study in 2022 published at the National Bureau of Economic Research revealed that the Americans spend more than 1.7 billion hours and 33 billion dollars by preparing individual income declarations each year and determined that the United States could send taxes prefabilled to almost half of the taxpayers with the information they already have.
And it is not because we have never thought about it. The without return deposit was included in the law on the tax reform of President Ronald Reagan of 1986. It is true, almost 40 years ago, people were already working on this idea which still seems extremely futuristic.
We have again dreamed with the Bipartisan Irs Restructuring and Reform Act of 1998, which forced the IRS to develop a system so that taxpayers occur without return at the latest in 2008. OK, it is a period of 22 years, but it is better than nothing. Unfortunately, 2008 came and came and we always deposit old -fashioned taxes. A potential reason? Toll collectors really love to collect tolls.
For decades, the mother company of Turbotax, Intuit, has paid money (perhaps the money they have collected from their “toll gate”) to influence the American tax policy. Asked about his lobbying efforts, a representative of Intuit said: “Intuits firmly believes in defense of the names of its customers. We are committed to political decision -makers on various questions, AI and innovation that benefits individuals and businesses to consumer protection and stronger tax simplification. ”
An internal presentation disclosed by Propublica clearly shows how the company has boasted of stopping attempts so that the government facilitates payment taxes or more free. The presentation also details the plans to get the idea to pay to deposit your taxes seem to be a basic idea for which we are shaking. And it worked.
The loyal frugal among you can be among the small percentage of Americans who deposit free of charge. I’m proud of you, I’m really. But the fact that toll collectors allow some people to pass their doors for free is part of the scam. In 2002, Intuit and others entered an absurd pact with the government saying that they would allow certain people to deposit free of charge and, in exchange, the government would not offer a deposit without return. It would be sufficiently exasperating if they fully kept their end of the market. But instead of that, Intuits built a system in which many people who wanted a free file of Turbotax (which was free) were responsible for registering for Turbotax Free Edition (which for most people was not). For this, they settled with the FTC in 2022 for $ 141 million. To put this number in context, Intuits plans to generate more than $ 18 billion in income this year only.
In 2024, Intuits appealed to the FTC decision, the appellant “deeply imperfect” and the Intuit representative maintains that “Intuits has always been clear, fair and transparent with its customers and undertakes to prepare free taxes”.
Admittedly, the FTC has also taken measures against H&R Block, accusing the management company of eligible declarants of free options to file its taxes to paid plans.
Finally, in 2023, the IRS began to develop its own easy and free classification system using money from the Bide-E-Ere Inflation Reduction Act. This effort is not as ambitious as I wish, it is 40 years late, it is currently tested in only 25 states, and the name “IRS Direct File” does not sell how cool – but it works and people like that. If you can believe, the tax policy center reports that 90% of people who use the direct file function have a positive experience to pay their taxes. And they seem particularly appreciated the fact that he does not transform you at random towards something called “edition” IRS direct which costs money.
In 2025, around 30 million taxpayers in 25 states can use a direct file. So of course, it could disappear. In February, Elon Musk dismissed all the people who built the software that worked well, people liked and saved them money. Cool.
If you were extremely generous, without reservation and you gave Musk the benefit of the doubt, you might think: “Well, maybe these programmers cost the government too much.” Alas, no. In its first pilot at 12 states, the system cost $ 10.5 million to develop and $ 2.4 million per year to operate, but it allowed taxpayers of $ 5.6 million in deposit costs. At this rate, it would come back in just a few years.
Rest assured, it gets worse. In 2022, Intuits took a tax credit of $ 94 million for “research”. They spent $ 94 million from your money to understand how to charge you to do something that the government already knows how to do free of charge and has obtained tax relief of about nine times more than the government to do the same thing. And then, in the name of efficiency, the people who saved the government and the taxpayers of a ton of money were dismissed.
You don’t have to like to pay taxes as you don’t like going to DMV, but if you have to pay the privilege of doing it or the other, you can be scammed.
We deserve better. We deserve beautiful things.
