Has Intuit stymied free, no-return filing?

A report says the maker of TurboTax has spent millions to block this simple approach, which would save Americans $2 billion.

By Aimee Picchi Mar 27, 2013 2:28PM

Image: Close up of hands filling in tax form © JGI, Blend Images, Getty ImagesTax season can be a stressful time for many Americans, with worries over missing out on deductions or simply filling out paperwork incorrectly. 

And while taxes are inevitable, the whole experience could be made simpler with something called "return-free filing." But that's far from becoming reality in the U.S. The holdup is at least partly because Intuit (INTU), the company behind tax-preparation software TurboTax, has spent millions to lobby against it, according to a report by ProPublica and NPR

Return-free filing is a voluntary alternative to using commercial tax software or paying an accountant or preparer to file returns, and it's already in use in countries such as Sweden and Denmark, the story says. 

How does it work? A pre-filled return would estimate what the government believes you owe -- based on information your employer and bank already send it -- and you would make any necessary changes. Voila, the forms would be filed within minutes.

The benefit? A savings of $2 billion in tax-prep costs and 225 million hours in time, the report notes. 

If that sounds great to taxpayers, it's not finding a welcome reception at Intuit. The software company has spent $11.5 million on federal lobbying over the past five years, with its disclosures noting the company opposes "IRS government tax preparation," the story says. 

"Like many other companies, Intuit actively participates in the political process," a spokeswoman for the company told ProPublica. Return-free filing would mean reduced citizen participation in the tax process and include "implications for accuracy and fairness in taxation," she said.

But Intuit's own regulatory filings undercut the argument that it's acting on behalf of consumers, with a recent document citing free government tax filing as a risk to its business, ProPublica points out. 

H&R Block (HRB), a competitor to TurboTax, has lobbied against at least one bill related to the return-free filing idea, the story adds. 

Taxpayers wouldn't have to use the system if they didn't want to, supporters of return-free filing say. 

"When you make an appointment for a car to get serviced, the service history is all there. Since the IRS already has all that info anyway, it's not a big challenge to put it in a format where we could see it," University of Cincinnati College of Law tax professor Paul Caron told ProPublica, adding that he's "shocked" it hasn't happened by now. 

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