Pluralistic: The IRS will do your taxes for you (if that's what you prefer) (17 May 2023)

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Originally published at: Pluralistic: The IRS will do your taxes for you (if that’s what you prefer) (17 May 2023) – Pluralistic: Daily links from Cory Doctorow


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A vintage drawing of Uncle Sam toasting with a glass of Champagne, superimposed over an IRS 1040 form that has been fuzzed into a distorted halftone pattern.

The IRS will do your taxes for you (if that's what you prefer) (permalink)

America is a world leader in allowing private companies to levy taxes on its citizens, including (stay with me here), a tax on paying your taxes.

In most of the world, the tax authorities prepare a return for each taxpayer, sending them a prepopulated form with all their tax details – collected from employers and other regulated entities, like pension funds and commodities brokers, who must report income to the tax office. If the form is correct, the taxpayer signs it and sends it back (in some countries, taxpayers don't even have to do that – they just ignore the return unless they want to amend it).

No one has to use this system, of course. If you have complex finances, or cash income that doesn't show up in mandatory reporting, or if you'd just prefer to prepare your own return or pay an accountant to do so for you, you can. But for the majority of people, those with income from a job or a pension, and predictable deductions, say, from caring for minor children, filing your annual tax return takes between zero and five minutes and costs absolutely nothing.

Not so in America. America is one of the very few rich countries (including Canada, though this is changing), where the government won't just send you a form containing all the information it already has, ready to file. As is common in complex societies, America has a complex tax code (further complexified by deliberate obfuscation by billionaires and their lickspittle Congressjerks, who deliberately perforate the tax code with loopholes for the ultra-rich):

https://pluralistic.net/2021/08/11/the-canada-variant/#shitty-man-of-history-theory

That complexity means that most of us can't figure out how to file our own taxes, at least not without committing scarce hours out of the only life we will ever have to poring over the ramified and obscure maze of tax-law.

Why doesn't the #IRS just send you a tax-return? Well, because the tax-prep industry – an #oligopoly dominated by a handful of massive, ultra-profitable firms – bribes Congress (that is, "lobbies") to prohibit this. They are aided in this endeavor by swivel-eyed lunatic anti-tax obsessives, like #GroverNordquist and #AmericansForTaxReform, who argue that paying taxes should be as difficult and painful as possible in order to foment opposition to taxation itself.

The tax-prep industry is dominated by a single firm, #Intuit, who took over tax-prep through its #anticompetitive acquisition of #TurboTax, itself a chimera of multiple companies gobbled up in a decades-long merger orgy. Inuit is a freaky company. For decades, its defining CEO #BradSmith ran the company as a cult of personality organized around his trite sayings, like "Do whatever makes your heart beat fastest," stenciled on t-shirts worn by employees. Other employees donned Brad Smith masks for selfies with their Beloved Leader.

Smith's cult also spent decades lobbying to keep the IRS from offering a free filing service. Instead, Intuit joined a cartel that offered a "#FreeFile" service to some low- and medium-income Americans:

https://www.propublica.org/article/inside-turbotax-20-year-fight-to-stop-americans-from-filing-their-taxes-for-free

But the cartel sabotaged Free File from the start. They blocked search engines from indexing their Free File services, then bought Google ads for "free file" that directed searchers to soundalike programs ("Free Filing," etc) that hit them for hundreds of dollars in tax-prep fees. They also funneled users to versions of Free File they were ineligible for, a fact that was only revealed after the user spent hours painstaking entering their financial information, whereupon they would be told that they could either start over or pay hundreds of dollars to finish filing with a commercial product.

Intuit also pioneered the use of #BindingArbitration waivers that stripped its victims of the right to sue the company after it defrauded them. This tactic blew up in Intuit's face after its victims banded together to mass-file thousands of arbitration claims, sending the company to court to argue that binding arbitration wasn't enforceable after all:

https://pluralistic.net/2022/02/24/uber-for-arbitration/#nibbled-to-death-by-ducks

But justice eventually caught up with Intuit. After a series of stinging exposes by #Propublica journalists @elliottjustin@mastodon.social, #PaulKiel and others, NY Attorney General #LetitiaJames led a coalition of AGs from all 50 states and DC that extracted a $141m settlement for 4.4 million Americans who had been tricked into paying for Turbotax services they were entitled to get for free:

https://www.msn.com/en-us/news/us/turbotax-to-begin-payouts-after-it-cheated-customers-new-york-ag-says/ar-AA1aNXfi

Fines are one thing, but the only way to comprehensively end the predatory tax-prep scam is to bring the USA kicking and screaming into the 20th century, when most of the rest of the world brought in free tax-prep for ordinary income earners. That's just what's happening: the #IRS is trialing a free tax prep service for next year's tax season:

https://www.washingtonpost.com/business/2023/05/15/irs-free-file/

This, despite Intuit's all-out blitz attack on Congress and the IRS to keep free tax-prep from ever reaching the American people:

https://pluralistic.net/2023/02/20/turbotaxed/#counter-intuit

That charm offensive didn't stop the IRS from releasing a banger of a report that made it clear that free tax-prep was the most efficient, humane and cost-effective way to manage an advanced tax-system (something the rest of the world has known for decades):

https://www.irs.gov/pub/irs-pdf/p5788.pdf

Of course, Intuit is furious, as in spitting feathers. #RickHeineman, Intuit's spokesprofiteer, told @KQED that "A direct-to-IRS e-file system is wholly redundant and is nothing more than a solution in search of a problem. That solution will unnecessarily cost taxpayers billions of dollars and especially harm the most vulnerable Americans."

https://www.kqed.org/news/11949746/the-irs-is-building-its-own-online-tax-filing-system-tax-prep-companies-arent-happy

Despite Upton Sinclair's advice that "it is difficult to get a man to understand something, when his salary depends on his not understanding it," I will now attempt to try to explain to Heineman why he is unfuckingbelievably, eye-wateringly wrong.

  • "e-file…is wholly redunant": Well, no, Rick, it's not redundant, because there is no existing Free File system except for the one your corrupt employer made and hid "in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying 'Beware of the Leopard.'"

  • "nothing more than a solution in search of a problem": The problem this solves is that Americans have to pay Intuit billions to pay their taxes. It's a tax on paying taxes. That is a problem.

  • "unnecessarily cost taxpayers billions of dollars": No, it will save taxpayers the billions of dollars (they pay you).

  • "harm the most vulnerable Americans": Here is an area where Heineman can speak with authority, because few companies have more experience harming vulnerable Americans.

Take the #ChildTaxCredit. This is the most successful social program in living memory, a single initiative that did more to lift American children out of poverty than any other since the days of the #GreatSociety. It turns out that giving poor people money makes them less poor, which is weird, because neoliberal economists have spent decades assuring us that this is not the case:

https://pluralistic.net/2023/05/16/mortgages-are-rent-control/#housing-is-a-human-right-not-an-asset

But the Child Tax Credit has been systematically sabotaged, by Intuit lobbyists, who successfully added layer after layer of red tape – needless complexity that makes it nearly impossible to claim the credit without expert help – from the likes of Intuit:

https://pluralistic.net/2021/06/29/three-times-is-enemy-action/#ctc

It worked. As #RyanCooper writes in #TheAmericanProspect: "between 13 and 22 percent of EITC benefits are gulped down by tax prep companies":

https://prospect.org/economy/2023-05-17-irs-takes-welcome-step-20th-century/

So yes, I will defer to Rick Heineman and his employer Intuit on the subject of "harming the most vulnerable Americans." After all, they're the experts. National champions, even.

Now I want to address the #ReplyGuys who are vibrating with excitement to tell me about their 1099 income, the cash money they get from their lemonade stand, the weird flow of krugerrands their relatives in South African FedEx to them twice a year, etc, that means that free file won't work for them because the IRS doesn't actually understand their finances.

That's a hard problem, all right. Luckily, there is a very simple answer for this: use a tax-prep service.

Actually, it's not a hard problem. Just use a tax-prep service. That's it. No one is going to force you to use the IRS's free e-file. All you need to do to avoid the socialist nightmare of (checks notes) living with less red-tape is: continue to do exactly what you're already doing.

Same goes for those of you who have a beloved family accountant you've used since the Eisenhower administration. All you need to do to continue to enjoy the advice of that trusted advisor is…nothing. That's it. Simply don't change anything.

One final note, addressing the people who are worried that the IRS will cheat innocent taxpayers by not giving them all the benefits they're entitled to. Allow me here to simply tap the sign that says "between 13 and 22 percent of EITC benefits are gulped down by tax prep companies." In other words, when you fret about taxpayers being ripped off, you're thinking of Intuit, not the IRS. Just calm down. Why not try using fluoridated toothpaste? You'll feel better, and I promise I won't tell your friends at the #GadsenFlag appreciation society.

Your secret is safe with me.

Hey look at this (permalink)


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Colophon (permalink)

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100% Agree, Especially with the standard deduction changes since 2017 there is little that the tax prep companies do for most tax payers other than charge you money for filling out the forms using their annoying interview style (at least Tax Slayer didn’t seem to have an easy way to just fill out forms). They’re incensed that the free gravy train will be over. In general love pluralistic and look forward to in showing up in my inbox!

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Thank you!

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I’ve gotten my Father in Law to do our taxes for the past 3 years. He volunteers for AARP’s free tax program, which is in fact a free tax program.

We will probably switch over to the IRS program.

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Sounds like he’s doing important work!

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