TurboTax Maker Intuit Funnels Millions to Lobby Against Easier Tax Returns

http://techcrunch.com/2013/03/27/turbotax-maker-funnels-millions-to-lobby-against-easier-tax-returns/

by acjohnson55 • 12 years ago

473 182 12 years ago

ryanobjc2• 12 years ago

It's really too bad, their basic product - turbo tax free file uses the 1040 EZ form and can be confusing.

My gf who is a student was told by turbotax she owed over $300, after doing it on paper, the old fashioned way, the tax liability was 0. Why? The tuition deduction didn't apply on the EZ version of the form.

Ultimately turbo tax takes a conservative, strict and rigid approach to taxes, but as anyone knows this isn't the reality of doing taxes. For anyone with a moderately complex return, I think it's better to hire a tax professional, then at least you'll LEARN something for your money (which can be about the same amount!).

jaredsohn• 12 years ago

That seems unfair to TurboTax. I have found it to ask you about things that are beyond the form it is filling out (and then upsell you on upgrading to the other version) and I think it does a great job with educating you about how you can lower your taxes. If you want, you can avoid their fees by filling everything out through the program and remembering the relevant information when filling out the form manually.

ams61102• 12 years ago

I also file my taxes on paper and I do all the calculations manually (well, in a spreadsheet). Even though my tax situation is far from the most complex, it is more complex than TurboTax can handle. Also I like to keep tax preparation painful as a reminder of the burden that the ridiculous complexity of the tax code places on me.

That said, I do agree with Intuit here. I don't think there's any evidence whatsoever that the government is capable of making software to either provide a service similar to TurboTax or to correctly pre-calculate your taxes. They don't have the technical expertise so they'd have to contract it out. We saw how well that worked with healthcare.gov. They are not incented to "find every deduction" like a private tax preparer is, quite the opposite in fact. They also simply don't know enough in many cases. They don't know what my self employment income and expenses are, for example, until I tell them.

The only way that government can make taxes easier is to simplify the tax code itself.

pkaye• 12 years ago

But why restrict the gov't ability to provide free online filing. If TurboTax can provide an alternative that is better then they can still make money by providing value.

bpeebles4• 12 years ago

I'm not sure you actually agree with Intuit. They're saying that the IRS and state-level agencies should not provide free online filing services--even though they already provide free paper filing systems.

As far as I've seen, no one has done a movement to ban tax paperers (either online or in person). If Intuit or H&R Block can provide a better website for $39 or whatever, they can. The question is if the agencies in question shouldn't develop their own replacements to paper tax forms.

Can you imagine it was 30 years ago and if, instead of getting tax forms mailed to you every year (or photocopies from the local library for a pittance 5 years ago), you had to walk down to the local H&R Block or other private company and pay them $40 to get the forms they wrote based on the tax code to file your taxes? It's pretty much the same thing.

betterunix2• 12 years ago

"I don't think there's any evidence whatsoever that the government is capable of making software to either provide a service similar to TurboTax or to correctly pre-calculate your taxes."

Yes and no. When the government wants to get quality software that solves real problems and saves taxpayer money, it manages to do so:

https://en.wikipedia.org/wiki/Dynamic_Analysis_and_Replannin...

"We saw how well that worked with healthcare.gov."

Keep in mind that healthcare.gov was overburdened with moronic, ideologically driven requirements that were still being finalized a week before it was supposed to go live. It was being set up for failure from step one.

mixmastamyk• 12 years ago

It's certainly possible. CA tax filing via website is now a breeze.

nandhp• 12 years ago

TurboTax Free did a 1040A for me this year. It's not limited just to 1040EZ.

I think they may have adjusted things compared to last year; it imported my data from last year (a new feature), and I thought there used to be a "Basic" product between "Free" and "Deluxe".

clogston8• 12 years ago

and I thought there used to be a "Basic" product between "Free" and "Deluxe".

There is, but it seems like they're not pushing it as hard this year: https://turbotax.intuit.com/personal-taxes/online/basic.jsp

rmrfrmrf• 12 years ago

    "When all else fails, read the instructions."

TurboTax specifically states that you only need to claim the tuition deduction if it benefits you.

ryanobjc2• 12 years ago

btw there are 3 different tuition deductions!

Maybe its also an indictment of the tax code, but I don't see why I should give turbo tax a break.

tn13• 12 years ago

I filed my returns once with turbo tax since then I have been using that form as a reference to file my other returns myself!.

bpeebles4• 12 years ago

Virginia's Department of Taxation used to have a pretty decent online tax website. It was shutdown because of lobbying such as this. There was a year when no free online filing so I took the extra effort to do a paper return that year. Even FreeFilableForms are run by the Free File Alliance which is part of the group that lobbies against the IRS and state taxation departments from doing their own filing websites for personal profit. So they make sure that their own free filing options are just good enough to be barely acceptable while making their paid (for filers with income over ~$58k) options seem much more attractive.

Between this and intentional complexity of the tax system that hinders making the IRS more efficient and hides true tax rates that corporations and higher income people... I dunno, it's one of the blacker marks against America in this aspect of policy.

But I've without doubt decide I'll try as hard as possible to never, ever pay a company like that to file tax returns.

Twirrim• 12 years ago

One of the craziest things is, it save their tax department money for every single tax filing done online vs paper.

Paper takes an obscene amount of human hours to process in comparison. Online tax filings should at the very least be free, or even give you an extra tax deduction.

dfc4• 12 years ago

Do you know of actual/estimated numbers for human/computer processed tax filings? It would be interesting to see how many minutes of human time are needed for the average paper return. I have a sneaking suspicion that the "human touch time" is not "obscenely high."

clogston8• 12 years ago

One of the craziest things is, it save their tax department money for every single tax filing done online vs paper

One of the HUGE benefits of e-file for them is that there are sanity checks that happen almost immediately and if they fail the IRS completely rejects the return. This does two things:

1. ensures accepted returns look much closer to accurate

2. places the burden of rejection notification on the e-file transmitter. For example, if I transmit a tax return that the IRS rejects due to a re-used SSN, the onus is now on me to notify that filer that their SSN has likely been stolen and provide customer service on what they should do next. From the IRS perspective this is a huge win. For e-file transmitters and tax software providers this is an un-fun problem to deal with.

gk12• 12 years ago

Not that crazy. This is seen and encouraged in startups all the time: Companies should charge for the value they provide, not for the man-hours they're spending.

Additionally, anything that makes things significantly easier probably requires a large up-front investment of man-hours and/or money. If you've ever dealt with government software projects, you can imagine how large of a project this must have been. That money has to be recouped somehow, and that won't happen by giving things away for free.

(Note: I'm not advocating for the sleazy behavior of lobbying against easier/cheap tax filing. I'm just making the case that there's business reasoning behind this, other than plain spite for the common folk.)

vorg• 12 years ago

intentional complexity of the tax system

But surely the purpose of the tax system isn't just to collect taxes but also to create employment. Intentional complexity keeps programmers employed, I mean the sort who aren't "developers" but the sort who instead work in firms whose business model is their computer system such as banks and insurance companies.

waqf• 12 years ago

https://en.wikipedia.org/wiki/Broken_window_fallacy

rayiner3• 12 years ago

Between this and intentional complexity of the tax system that hinders

Can you give me an example of this "intentional complexity?"

The income tax is complex for two reasons: 1) it's inherently difficult to define "income" in a practical way; 2) it's a tool used to further all sorts of economic and political policies.

The best class I took in law school was Federal Income Tax (I'm not a tax lawyer). It really showed me that things which seem unnecessarily complex, like depreciation schedules or the treatment of capital assets, exist to solve theoretical problems that can be analyzed mathematically.

Finally, it's not like accounting, pursuant to GAAP, is simple. And it seems obvious, to me anyway, that tax law must be at least as complex as accounting.

Shivetya• 12 years ago

Surely we can define what is income, what is not, and how its treated for taxation purposes in less than seventy thousand pages?

It is complex and it is intentional, this is how politicians reward those whom they appreciate and "punish" those who they do not appreciate. You can move from the non appreciated column through proper donations either directly or through advocacy groups or lobbying firms hiring the correct people. No, I am not being cynical, I wish I were

praptak• 12 years ago

The income tax is complex for two reasons: 1) it's inherently difficult to define "income" in a practical way; 2) it's a tool used to further all sorts of economic and political policies.

3) It's probably the top target law for being gamed/interpreted in a creative way. The more loopholes are patched the more patches there are to find loopholes in.

h4pless• 12 years ago

The complexity for income tax law stems from tax breaks. There are all these different ways for people to pay less in taxes, but each rule for paying less has its own set of instructions and there are criminal and monetary liabilities for filing incorrectly. So it can be said that if you just pay your income taxes as they come and don't claim any deductions, you are essentially over paying in taxes. Another problem problem that arises from this system of tax breaks is that it allows people receive more or less in deductions based on their life situation which is inherently inequitable.

Tax law doesn't have to be so complex though. For example, you could just have a simple income-bracketed flat tax that is just at a lower rate than current taxes without any deductions possibly. Or possibly better yet, you could get rid of the income tax all together and just use a federal tax on sales, real estate and money transfers out of the country. Granted, this would give the government more direct control over how much money is being collected on a daily basis and could result in some people feeling like they need to have a party with tea, but assuming we do live in a democratic society, something like a sales tax would be more understandable and visible to everyone (as the rate would be printed on all of their receipts) and it would probably lead to more oversight of the tax by the taxpayers rather than everyone just being concerned with paying less than they are asked to each year without getting audited.

bpeebles4• 12 years ago

I'd say there's two types of "intentional" complexity. There's the complexity that comes about because we feel like some actions should receive preferred tax treatment over others. So, tax expenditures like student loan and mortgage interest deductions and so on. They had some complexity because "we", as a government, decide to do that.

But the darker side is the complexity that exists to let people with enough income and the means to obfuscate their true tax rate. We may have a top marginal rate of 39.6%, but even people who have a huge income pay nothing close to that. And it's in high income people's interest to keep it that way. It's also in the interest of the companies we're talking about to keep the tax code complex both because they're run by high income people and if the general population has a sense that the tax code is super complex for themselves, they're more likely to use tax preparers even if they actually have very simple taxes or just mildly complex.

So, yes, with a huge economy the tax code is going to be very complex. That's just politics and the nature of the beast, but there's more complexity than there needs to be because of interests who drive it to complexity for their deadweight gain and strive to keep it complex.

wiredfool• 12 years ago

The Free File Alliance has certainly improved over the past year.

Previously, their system used Flash or Silverlight, and had horrible ui around tabbing between fields and copy/pasting. (Especially on the cap gains form).

This year, they're running jquery, bootstrap, and a whole host of other html5 javascripty goodness. The usability went up for me.

webwielder• 12 years ago

I used to boycott TurboTax because of this. But then I realized that Intuit is just playing the game. Why wouldn't they do everything they can to sustain their business (well, a sense of moral decency, I guess, but that's a big ask)?

The real root of the problem is of course our broken political process.

kennywinker2• 12 years ago

Boycotting TurboTax is in your OWN best interests, is it not?

betterunix2• 12 years ago

That depends on how good you are at filing your tax returns. Intuit is lobbying for a complex tax code because that reduces the likelihood that you can actually do your taxes on your own without losing lots of money or getting in trouble with the IRS.

MartinCron• 12 years ago

Moral decency is not a big ask. It should be the expected default behavior.

deciplex• 12 years ago

The real root of the problem is people giving up on expectations of basic decency and moral conduct 'because capitalism'.

vbuterin2• 12 years ago

And out broken political process remains because of everyone in the government doing everything they can to sustain their own livelihood. Reality is a result of human action; to change reality you pretty much have to convince people to act differently in some fashion.

001sky• 12 years ago

Intuit has spent $11.5 million lobbying the federal government...

$10MM seems like a pittance. That's like what...2 minutes of superbowl ads? Can you really buy legislation for this cheap?

harryh• 12 years ago

I'm sure that their lobbying helps a little but that's not really what keeps our taxes complicated.

Lots of conservative/anti-tax/right-wing/libertarian types see the difficulty of doing taxes as a feature, not a bug because it makes people hate taxes in general and more likely to vote for Republicans/fiscally conservative politicians.

bnolsen• 12 years ago

thats insane. huge numbers of conservatives (everyone i know) want the irs gone and a flat tax. sorry to burst your bubble.

RealGeek• 12 years ago

Yes, in many scenarios you can buy it for even less. Corporations donate $50k to 200k to 10 to 20 senators to push their legislation.

nathan_f77• 12 years ago

Just moved to the US last year, and used Turbo Tax to file my tax returns. It was alright, but in New Zealand, we don't generally have to jump through all these hoops.

I guess it would be nice if there were a free alternative to TurboTax, but at the same time, I kind of don't really care, so I'm happy to let them get away with whatever they're doing. I know Lobbying isn't illegal in the U.S., and I don't think it's all that immoral either.

raverbashing• 12 years ago

So you don't care to be made a fool of and be made to pay money to file your taxes?

In Canada the BS is similar however I'll make sure to never buy the software from TurboTax.

IvyMike• 12 years ago

I know Lobbying isn't illegal in the U.S., and I don't think it's all that immoral either.

I guess maybe Intuit is just "playing the game" but the fact that our government is being made purposefully obtuse and inefficient should make anyone mad.

If you think "The government is purposefully obtuse and inefficient all over the place", I agree. I'm just trying to fight the good fight one thing at a time.

zobzu4• 12 years ago

The problem is that this shouldn't be there to begin with. It has no reason to be.

If you accept that it should be there, then you can pile up a zillion other similar services, middle men, etc that have no reason to be but collect yearly money (and thats billions).

Just think about the amount of human time wasted if money doesn't talk to you. When you multiply it by more than your own wealthy self, it's scary.

Oculus• 12 years ago

This makes me wonder how much of the government's incompetence is from companies lobbying for the government to keep its old ways.

asdfologist• 12 years ago

Well, you really should wonder much of it isn't.

clogston8• 12 years ago

Disclaimer: I used to work for Intuit/TurboTax and am now building a product in the same space. On topic: They rightly get beat up for this, and get beat up for their lack of pricing transparency, but somehow manage to always receive a pass on the software itself. IMHO it's pretty atrocious... Sure, the math is almost always right but the math is a commodity. The experience itself is overly-verbose and littered with repeat questions, confusing questions, open-ended questions.

I don't know anyone who genuinely enjoys using TurboTax. I'm surprised there isn't more legitimate competition in this space.

yuhong• 12 years ago

What do you think of these Ars comments:

http://arstechnica.com/tech-policy/2014/04/turbotax-maker-li...

clogston8• 12 years ago

Both of those comments seem to come from call center workers (i.e., they mention clocking in, etc).

Each site has it's own culture (and each site has cultures within cultures). Like any mid-sized company, Intuit has a broad mix of personalities and talent levels. If I had to put them on the couch and nail down the core problem it's that they haven't really done anything groundbreaking lately. All the weird management issues you're reading about in those comments are because they're trying to hang on to what they have without moving the ball forward. All IMO of course.

dlevine• 12 years ago

I don't particularly enjoy using TurboTax, but hey, who enjoys doing their taxes. However, after using it for 10 years, I'm pretty used to it. When I have a question about how to do something, I can just look a a previous year's return and find a similar situation. While it isn't the most straightforward, at least it's relatively consistent.

I've been told by friends that there are less expensive programs out there, but the ~$80 that it cost me to do my taxes on TurboTax (Deluxe + State eFile fee) doesn't seem horrible (ie it isn't worth it to switch to something else to save an insignificant amount of money).

It does seem a bit backwards to have to pay to eFile in CA - I used to mail in my returns to get around this. But, at the end of the day, it's easier to just pay to eFile, and it only costs me maybe $20 more (plus I save a trip to the post office).

Overall, I've optimized to just using TurboTax, and I'm sure there is some laziness involved in that decision, but overall, unless something else is much much better, there isn't too much impetus to switch.

clogston8• 12 years ago

Overall, I've optimized to just using TurboTax, and I'm sure there is some laziness involved in that decision, but overall, unless something else is much much better, there isn't too much impetus to switch.

And in fairness, there's benefit to sticking with them year over year: that's a lot of data that gets transferred automatically. Most of the less expensive alternatives are horrid (I've used almost all of them). There's a good reason they're the king of their market. My point is simply that no one's giving them legitimate competition in the space and that surprises me. My evidence was only to point out the low-hanging fruit to go after (and while that low hanging fruit wouldn't be enough to sway a 10-year user, it's potentially enough to sway earlier users)

TwoBit• 12 years ago

I switched to TaxACT this year and it was at least as easy as TurboTax, much cheaper, and actually supports more functionality.

snowwrestler5• 12 years ago

I went from doing my taxes by hand to using TurboTax. The comparison is like night and day; I get a more complicated return done way faster using TurboTax than when I did things by hand.

The verbosity of TurboTax seems like a feature to me, not a bug, in that it pre-answers many obvious questions.

I don't enjoy using TurboTax because I don't enjoy doing my taxes no matter how good the software. But I certainly don't blame TurboTax for that.

clogston8• 12 years ago

Oh FOR SURE. It's leaps and bounds better than paper forms... IRS says average time to prepare a 1040EZ(!) by hand is over 3.5 hours. Only ~5% of filers use paper forms anymore though.

Maybe "enjoy" is a high bar? But surely there's room for improvement.

Bluestrike2• 12 years ago

The experience of actually using TurboTax is horrible, saved only by the frightening alternative that would be the experience of filling things out manually.

I'd expect that the reason why Intuit refuses to change things (clarifying and streamlining questions, better navigation between forms, etc. etc.) is a fear of risking that which "already works." Unless something significant changes in the market, I don't see Intuit re-envisioning TurboTax anytime soon.

iopq• 12 years ago

Every year they try to force me to pay to file online for state taxes... but it's free online in my state. It's just painfully obvious they're trying to rip me off on the state return.

twoodfin• 12 years ago

I've been using H&R Block's "At Home" software (the product previously known as "TaxCut") for over a decade without major complaints. ~$50 (the "Deluxe" edition + State + State filing fee) and about two hours of my time for a moderately complex joint return seems fair to me.

eli3• 12 years ago

This TechCrunch post is a rehash of last year's ProPublica investigation: http://www.propublica.org/article/how-the-maker-of-turbotax-...

Might as well at least mention this year's revelation, which is that they fund fake Grassroots campaigns against tax reform: http://www.propublica.org/article/turbotax-maker-linked-to-g...

dan_bk• 12 years ago

How realistic would it be to produce an open source replacement? (Maybe a Kickstarter-funded one, to speed things up, given the fact it concerns every US household?)

raquo• 12 years ago

Someone please do this. You can charge for online chat with a professional, maybe business filings, etc. All glory will be yours.

cjoh• 12 years ago

It's pretty difficult. E-Filing isn't as simple as a web service.

I believe that if it were to actually do the e-filing, the people who ran the e-filing would have to submit to federal background and clearance checks at those people's expense and the servers it ran on would have to probably get FISMA High certification, provided it actually posted to the Efiling API.

That's just my speculation, fwiw. But I think that's true.

eli3• 12 years ago

You're solving the wrong problem. The issue isn't that tax prep people are making an easy problem seem hard (and are thus ripe for an open source disruption). Intuit (and others) have a vested interested in making it actually hard.

Filing taxes correctly while maximizing benefits is incredibly difficult. There are tons of ambiguous rules and loopholes and fuzzy boundaries and it changes all the time.

sunsu• 12 years ago

If you were running Intiut, would you do anything differently? The TurboTax product is built on the fact that the Tax code is complicated. Of course they're going to lobby against tax reform.

prawn• 12 years ago

Yes, I'd like to think that I would.

mleonhard• 12 years ago

According to Intuit's 2013 Annual Report page 41 [1] , they had $1.5B in Consumer Tax product revenue, which is primarily derived from TurboTax Online. That is 35% of their $4.2B total revenue in 2013.

They're creating a lot of ill-will for 35% of their business.

[1] http://investors.intuit.com/files/Intuit%20FY13%20Form%2010-...

bbanyc3• 12 years ago

Many foreigners are puzzled about why we Americans complain so much about our taxes, when they aren't particularly high by global standards. A major reason is that our taxes are particularly intrusive and annoying by global standards.

This also goes for consumption taxes - a 9% sales tax added at the register feels more intrusive than a 20% VAT included in the price tag, even though the VAT is much higher.

StavrosK3• 12 years ago

I've been to the US a few times, and it puzzles me why you don't add the sales tax into the price. I mean, it's a certainty it will need to be added, you can't not pay it, so it's a sane default for 99% of cases (if you have some sort of reason not to pay, you can just think of it as a discount on price).

Why waste all this time from millions of people tens of times a day just to add 9% to a price?

MrFoof• 12 years ago

Part of it is that sales taxes are set by the state, and in some cases, municipality/city, since there is no federal sales tax.

For example, in Massachusetts we pay a 6.25% sales tax. Though across the border in New Hampshire, there isn't a sales tax at all.

ihaveqvestion• 12 years ago

One argument I've heard is that it keeps you aware of how much tax you're paying.

smackfu3• 12 years ago

Where is the wasted time? I think foreign tourists get hung up on calculating the tax themselves, so they know how much the bill will be, while most Americans just pay the total that gets rung up.

drone2• 12 years ago

One big reason why the sales tax is NOT included in the price of the item, is that the sales tax you pay is deductible from your federal taxes. To prove the amount of sales tax you pay, should you choose to itemize deductions, you must have itemized receipts.

With itemized receipts, you have a line for the sales tax which serves as proof, if the tax were included in the price, you'd then have to have special indicators for which items are taxable on the receipt, and then calculate for each item on each receipt.

paddy_m• 12 years ago

When I just did my taxes, it was sales tax or state + local income tax. Given that I live in NYC, state+local was higher than any reasonable esitamtion of sales tax.

bbanyc3• 12 years ago

Including the tax in the advertised price doesn't prevent it from being separately listed on the receipt. It'll say something like "Total $120, Included Tax $20" instead of "Subtotal $100, Tax $20, Total $120".

CoachRufus87• 12 years ago

Bigger story: our government can be bought for the low price of $11.5 million.

SeanKilleen• 12 years ago

This is probably better left for "Idea Sunday", but I keep coming back to the fact that:

* We have languages for defining business processes & workflows (e.g. BPMN/BPML);

* We have open-source workflow engines (such as Activiti in Java and others all over the language spectrum) that utilize BPMN and terms;

* We have open-source ways of maintaining changes to these things over time.

I know it would be a monumental task, but why not start an open-source org to tackle Tax visibility at Federal and State levels?

With enough civic-minded hackers and accountants (both of which I believe exist), we could begin the process of transcribing the tax code into an interchange format. Then as we begin to see the updates each year, we can track the changes via source control.

Does anybody know if efforts like this have been undertaken anywhere else? Otherwise, I may have found my passion project.

Furthermore, does anyone know anything about the process by which Intuit makes this happen? They clearly have workflows and inputs into them; they had to get there somehow. I'd be interested in any/all knowledge that could be opened up on this.

gfodor• 12 years ago

it's a great idea, but there's a slight catch. in theory if this were to get so successful it drives TurboTax et al out of business, then the lobbying dollars evaporate, and suddenly we get legislation to simplify the tax code rendering your project unnecessary. (though I suppose there will always be some advantages to software to prepare taxes, regardless of how simple the tax code is.)

then again, it could depressingly turn out this is the only viable strategy to actually get the desired outcome of a simpler tax code.

charlieflowers• 12 years ago

But my god, if you pulled that off, it would be a HUGE success! You would be the catalyst that helped our nation get to a streamlined, efficient tax system.

snowwrestler5• 12 years ago

There seems to be a misconception that intuit is lobbying to keep the tax code complicated. In fact all they're lobbying against is federally-funded e-filing systems.

The tax code is complicated because of all the other lobbying by every interest group in the U.S. For example, banks and realtors lobby super hard to keep the mortgage interest deduction.

Tax simplification is politically hard because any change creates winners and losers, and they all fight hard one way or the other. One man's loophole is another's reasonable exemption, deduction, or credit.

sitkack• 12 years ago

I don't normally do this, but https://xkcd.com/810/

jaynos2• 12 years ago

Getting programmers to work on open source projects is pretty easy. Getting accountants and tax attorneys to do the same would be pretty difficult.

ZachPruckowski2• 12 years ago

Maybe you could sell it to a smaller/medium player who does mostly corporate work as a way of undercutting his larger competitors who do consumer and corporate taxes. Plus it'd be a heck of a branding opportunity.

rebelde• 12 years ago

I have been thinking about this for a long time. It would be a great open source project. If you want to do it, I would be willing to work with you on it.

ZachPruckowski2• 12 years ago

I don't have experience with BPMN/BPML but I'd still be interested in helping out if you get something started.

I'd recommend targeting the folks with relatively simple taxes (salaried/wage employees with limited and structured investments, nothing super fancy) who make more than the Free-File cutoff, and then work your way out from there. The "I own 4 businesses and have 17 different investments all structured differently with various business expenses that are different degrees of write-off-able" group isn't your target, and there's already FreeFile options for folks making poverty-level wages.

The toughest part here business-wise is probably the liability - TurboTax and HR Block and whoever have armies of lawyers and PR and insurance to handle cases like a user getting audited and blaming them or catching flak for clients over-paying. Those armies are there to protect Intuit, not the end user, but they're fairly important nonetheless.

ecolner3• 12 years ago

I'm trying to do this. I'd love some help. Java Drools, Spring, Hibernate JPA, MySQL

https://www.indiegogo.com/projects/tax-compactor-free-income...

http://taxcompactor.com

ecolner3• 12 years ago

Also BTW I did contract work for Intuit TT for the last two years. It's really easy work.

The cost is mostly tax analysis, but those labor prices are much cheaper than developers (which we could do easily).

sirdogealot• 12 years ago

Recently sitting down and manually preparing my taxes for the 9th year in a row now... I am not surprised.

This type of tax-code-manipulation must certainly have been happening since the dawn of time. That, or it was written to confuse the public on purpose.

Finding, reading, learning and understanding the tax code is no mean feat for a layman that was told nothing of it in school (none of us Canadians were taught taxes in public school). And this is coming from a relatively smart person who willingly reads cryptography papers and learns new programming languages for fun.

How much more difficult does TurboTax propose that the IRS make filing? Should we get individually filed returns notarized by our deceased relatives as well?

It usually takes me about 12-24 straight hours of work, and this is for a simple sole-proprietorship that just tallies up income and deducts expenses.

I manage to get it done properly and on time every year, but realizing so many schortcuts along the way that "they" could be making for us yet fail to year after year... it's really quite infuriating.

That, and the fact that I have to do the work to figure out how much I owe them. :/

I am proud to have completed my taxes myself and will strongly urge everybody I know not to vote for TurboTax with their wallets and why.

christemmer• 12 years ago

How can lobbying such as this not be seen as corruption, but as a perfectly legal (but most importantly "right") thing to do?

vbuterin2• 12 years ago

Intuit's argument generally is that if the government was allowed to create their own online filing system then that would create an imbalance of incentives, since the incentive of the people setting up the tax form would be to try to screw people into paying more if possible. Keeping it to a pure private market of tax preparation companies ensures that companies compete to make their returns as favorable to you as possible, thereby counterbalancing the IRS.

I still think the lack of easy government-provided online tax systems is insane, but that's how the other side justifies itself.

snowwrestler5• 12 years ago

I question the idea that the government could build better tax prep software than Intuit or other private companies. I don't think the Feds are known these days for performant, efficient, easy-to-use large scale consumer web applications. At a minimum I think discussion along those lines should wait until federal IT procurement is reformed.

It's also worth noting that the article is not talking about the actual complexity of the tax code itself. As far as I know, Intuit is lobbying on the subject of tax preparation technologies, not lobbying against tax simplification in general. (As some comments seemed to imply.)

teacup50• 12 years ago

California did a trial run of no-file taxes. They simply sent a copy of your return, and if it was accurate, you didn't have to do anything.

The government already has the information to do most people's taxes for them. They don't need end-user web based tax prep software.

snowwrestler5• 12 years ago

A lot of the comments here are not talking about return-free filing; for example the top comment mentions the Virginia state form, which was a simple web form that replicated the fields of the paper form.

California is still offering ReadyReturn but it only covers the simplest cases. Likewise a federal return-free system would only cover a fairly small portion of taxpayers unless there were significant changes to tax law and/or IRS operations.

lingoberry• 12 years ago

Governments in most other developed countries have managed to develop better systems, why do you assume US government is so much more inept?

arebop• 12 years ago

I've been wondering if there's a PAC I could contribute to that would offset my Intuit funding.

onislandtime• 12 years ago

So pathetic to have to even have to debate the benefit of IRS providing a website to file taxes. The free filing for income lower than $58K is a scam. If you have a 1099 for $1000 or capital gains of $500 you are out of luck, it is impossible to know what they will charge until after you enter the data. That's what this assholes call innovation. The only explanation is that Intuit is influencing members of congress with money, that's a crime. There is no possible argument to justify forcing 100 million people to waste time on something that should be trivial for most people.

ewams• 12 years ago

It creates jobs.

acjohnson552• 12 years ago

So do broken windows.

stuaxo• 12 years ago

At the price of a tax (heh) on everyone elses time.

brianstorms• 12 years ago

This should not come as any surprise, really. This is what mature companies do once they achieve any level of monopoly that could be threatened with new legislation that benefits the public (and other businesses) but could hurt the monopoly. This is what the auto dealers are doing: after enjoying decades of control and a cozy relationship with legislators, they're threatened by upstarts like Tesla. But then at some point, if and when Tesla wins, it'll have to deploy its own army of lobbyists to keep the new status quo going.

It is what every web and mobile startup, it seems to me, deep down aims for: a monopoly, an unfair advantage. It is what, between the lines, you are taught at YC and what every VC expects of the "unicorn" portfolio companies that strike it rich. Fight to get to #1, wipe out the competition, reap the winnings, and, oh yeah, strike down any threats from, you know, up-and-coming competitors. So it goes.

It's business. It's ugly. If you don't like it, why are you doing a startup? If your startup is wildly successful and IPO's and turns into a giant, you don't think you will have to pay a lot of lobbyists to control the legislators?

mattgreenrocks• 12 years ago

If your startup is wildly successful and IPO's and turns into a giant, you don't think you will have to pay a lot of lobbyists to control the legislators?

It seems weak to beg the government to protect your precious company. It also smacks of hubris to believe your business is somehow so special that it needs to always be raking in cash despite 'progress.'

Disclaimer: I don't understand business.

lmm2• 12 years ago

If your startup is wildly successful and IPO's and turns into a giant, you don't think you will have to pay a lot of lobbyists to control the legislators?

No, I think I'd be sipping cocktails on the beach. (This is probably why I'm an employee rather than a founder)

willtheperson• 12 years ago

While doing my taxes I was wondering why there isn't a startup in this space.

Turbotax: - Has a terrible UX/UI - It has to update itself with a 100mb payload every time you open it from Jan 1 - Apr 15 - Doesn't actually advise you how to plan for your taxes. It's reactive to what you did. - Uses shady pricing and lots of versions to get you to spend more instead of just being straightforward. - Works hard to make you dependent on them

When you hear about the rich only paying 10%, 15% or whatever low bracket; they did it by putting their money in the right places and sometimes investing or spending it at the right time.

Where is the startup that is basically my accountant without the cost? Can we really not programmatically understand tax code and financial strategy?

mscarborough• 12 years ago

Can we really not programmatically understand tax code

Isn't that what TurboTax does? I don't know about a bunch of different versions, but the online version works just fine for me, and is pretty snappy. Sure, they upsell you to file your state taxes, but the $30 or whatever is worth it to me to avoid the duplicate work.

Their lobbying is a separate issue, but I have no problems with the actual product.

nness• 12 years ago

As an interesting aside, Australia's taxation department, the Australian Taxation Office, provides a completely free piece of software each year called e-tax (http://www.ato.gov.au/Individuals/Lodging-your-tax-return/E-...).

It walks you through filling out your tax lodgement step-by-step and even calculates your expected return. It's not the nicest piece of software, but after having read this article, I am greatly appreciative that it exists at all.

obeid2• 12 years ago

WHAT? a corporation that capitalized on the government's incompetence, is doing everything in their power to make sure things stay the same.

No come on you guys, April first was two weeks ago.

japhyr• 12 years ago

I don't mind paying taxes. But I was definitely cursing this last week as I spent hours filling out forms to calculate numbers that the IRS has already calculated on its own.

I want a letter in the mail saying, "If you don't fill out any paperwork, this is the amount we will return to you/ bill you for. If you get a different number, send in your paperwork by 4/15."

Doing taxes is a ridiculous waste of most people's time.

Figs• 12 years ago

California's ReadyReturn program does this already for state taxes. I wish federal taxes could be that easy...

ghouse• 12 years ago

They can be this easy, but companies like Intuit lobby (successfully so far) against it

obeid2• 12 years ago

WHAT? a corporation that capitalized on the government's incompetence is doing everything in their power to make sure things stay the same.

No come on you guys, April first was two weeks ago.

zobzu4• 12 years ago

in my experience...

in germany filling taxes took me about 5min.. that really because you need to go get a paper and give it to your company. Its otherwise more like 0 minutes since theres barely anything to do (which is.. logical, as its pointed out, they already have the data).

in the US, after hours and hours of reading and trying to do it myself, its still hell. using turbotax means its going to take 30min instead of a month; all that for "$30 a year" or close to that.

That's certainly fucked up.

brazzy2• 12 years ago

in germany filling taxes took me about 5min..

I assume that what you meant by that is merely doing what is required for your employer to withhold taxes from your salary.

The (for most employees optional) Einkommensteuererklärung might be doable in 5 minutes if you know it like the back of your hand, have all necessary data immediately available and no special cases apply to you at all.

Otherwise, if you use the Germany equivalent of TurboTax, merely reading and answering "no" to all the questions that determine whether any special cases apply to you would take longer than 5 minutes.

zobzu4• 12 years ago

if you do the extra stuff its probably 10 or 15min which is fine. Sure the first time it might take a little longer.

That's a far cry from what the taxes are in the US

nixy• 12 years ago

I lived in the US last year and just finished my taxes. It was unbelievably complicated and confusing—even using Turbo Tax. Never seen the likes of it.

This is how I do my tax return in Sweden:

1. Receive equivalent of W2, but all returns are already pre-calculated since the Swedish IRS knows all it needs to know to be able to prepare my returns.

2. If I'm happy with my W2 and pre-calculated returns, I simply send a text message with a PIN code to submit my returns.

3. If I'm not happy with my pre-calculated returns, I make the necessary changes in a simple form and mail it back to the IRS. Most people never do this.

haakon• 12 years ago

Norway has you one-upped: if you're happy with the pre-filled returns, you don't have to do anything at all; it will be auto-filed on the deadline.

hackerboos• 12 years ago

I've never filed a tax return in the UK. It's automatic with PAYE. Only self-employed, business owners or those with unearned income from property or other investments need to file.

arbuge• 12 years ago

And if you ever leave Sweden, your tax obligations to Sweden end there. Not so with the USA. Actually they become more complicated than ever unless you also renounce US citizenship. Renouncing is itself a bit of a feat tax-wise.

thisone2• 12 years ago

Indeed. The FBAR and FATCA are terrible.

The incredibly heavy handed penalties for making a mistake can be quite frightening.

The seeming assumption that anyone who has a foreign bank account or property must be a tax dodger is insane.

gk12• 12 years ago

While reading your first two sentences, I thought: "Oh come on, TurboTax at least makes it easier to get through, and anyone with a simple tax situation can get through it within an hour..."

After reading how it's done in Sweden: "Wow, our system is horrible."

walshemj• 12 years ago

even simpler for most in the UK its all done via your employer PAYE - and when I had a complex tax suitation (empoyer went bust the hard way) I rang up and they said ok your owed xxxx took 15 mins to sort out.

aidenn0• 12 years ago

Turbo Tax doesn't let you get through it in an hour.

I have a friend who I watched do her taxes recently. TurboTax probably asked her 100 questions over the course of the process, and for about half of those questions it contained at least one term that she had no idea what it meant.

rayiner3• 12 years ago

I don't know what Sweden's tax code looks like, but at least here in the U.S., the IRS simply can't know a lot of the information necessary to calculate your taxes. How would it know how much you paid in daycare expenses, tuition and tuition interest, home mortgage interest, etc?

You can say that we just shouldn't have deductions for these sorts of things, but that's a very programmer way to look at things (we need to get rid of these features because they would be hard to program). It's also not theoretically sound. An income tax is supposed to be a tax on net accretion to wealth. Expenditures that are non-consumptive should be excluded from taxable income because they don't represent an increase in wealth.

Spoom2• 12 years ago

This is solvable through policy: Have the daycare, educational institution, lender, mortgagee send the IRS (and you) a form detailing the amount you paid. Hell, this is already the case for most tuition and mortgage interest payments.

klausjensen• 12 years ago

Most of the things you mentioned are reported by banks, other government entities etc.

The less people have to think about and understand the staggering amount of taxes paid the better.

dragonwriter• 12 years ago

I don't know what Sweden's tax code looks like, but at least here in the U.S., the IRS simply can't know a lot of the information necessary to calculate your taxes. How would it know how much you paid in daycare expenses, tuition and tuition interest, home mortgage interest, etc?

The same way that it already does know many of those things -- you know those student loan interest, mortgage interest, etc. statements you get at the end of the year that you rely on when filling out your tax forms, and that the tax forms refer to by form number? Yeah, not only are the people you paid required to send those to you, they are already required to file them with the IRS, as well.

There's some things that may not be amenable to this solution, but many taxpayers aren't effected by them and the workload if you reduced filing to addressing those would be minimal -- the IRS just sends you your precomputed "basic" return, with instructions on the handful of potential adjustments you might need to report and document and send back, and a deadline to do so if the basic return isn't all you need (along with the same deadline to pay any balance if the basic return is correct, or any remaining balance on the corrected return.)

Then, if nothing is filed before the deadline, the IRS sends out refunds (if applicable) or starts collection on any amounts due and not paid.

scott_s4• 12 years ago

I agree there are exceptions, and even in the ideal world, many Americans will still end up having to submit something. But I think that starting from zero is silly. The IRS already knows a lot about our income - they must, that's part of how they check the correctness of our returns.

I think a system where the IRS says, "Here is what we know about your tax situation. We have calculated your taxes. If we owe you, and you agree, you don't have to do anything. If you agree, and you owe us, please pay us. If you do not agree, ammend this information and submit, with payment if necessary."

Forcing each American to start with a blank form seems wasteful, to me. It's a reproduction of work. I absolutely agree with your upthread comment about taxes being inherently complex, so please don't mistake my comment for an argument against that point. But I think that many Americans would be able to just accept what the IRS suggests, or at least use what the IRS says as a starting point. I think that the existence of the 1040A and 1040EZ forms support this point. (I tried finding numbers on how many people use those forms, but could not.)

lobster_johnson• 12 years ago

In Norway, your pre-calculated returns will automatically be filed if you don't do anything before the deadline.

If you do need to file anything, everything is now done digitally. No papers to mail. Every single tax form is provided in a very well-organized form system that also validates everything and support subforms ("This field requires that you submit a 27b-6. Click to enter it now."). It was a godsend when I was working as a freelancer and was doing my own accounting, because you could actually do your own accounting without going crazy.

sseveran• 12 years ago

And anyone is surprised because...?

wiradikusuma• 12 years ago

While we're on this topic, if you're a US citizen and you have a company, I would like to ask:

1. If I incorporated a C-Corp on June 2013, and I told my lawyer I want my fiscal year to end by March 31, when is the deadline to file the tax? Is it still April 15? (I hope not, I haven't filed)

2. Is there any free tax filing solution for business? Considering my company has zero revenue (it doesn't even run, but that's another story).

FYI, I'm not a US citizen.

acjohnson552• 12 years ago

Please confirm this info with your own research and expert opinions. I'm not a lawyer or an accountant.

1. According to [1], you have to file by June 15.

2. You can do the taxes yourself if you're brave. My company didn't file a tax return for the year we operated and didn't have revenue. When I shut down the company this year, I paid for a tax accountant to help close up shop properly. He said we probably should have filed a $0 return. He went ahead and filed a late return along with our final return. It didn't really cost us anything extra, but based on my experience, you may want to find a tax accountant who's willing to give you some free advice--perhaps one who's doing good work for someone you know.

[1] http://www.taxact.com/reference/library_calendar_fytaxpayers...

grandinj• 12 years ago

Even "third-world" countries like South Africa have e-filing for taxes....

harywilke• 12 years ago

i'm surprised how many people do not use accountants to prepare their taxes. i tried turbotax or one of it's ilk my first year out of college. it showed me owing 7k. after freaking out i got in contact w/ my brothers accountant. i ended up getting a refund of 700. it's not my job to know the ins and outs of the tax code or to keep up on what has changed since last years filings. hire an expert.

gamed• 12 years ago

This is a typical example of rent seeking behaviour. Companies spending money on lobbying without creating wealth. Unfortunately tax is one of the core functions of government and will always be vulnerable to this sort of manipulation of the political process.

yxhuvud• 12 years ago

Swedish procedure (unless you have slightly more complicated stuff like stock ownership):

Go to tax agency home page and login there.

Go to the form for normal taxes.

All values are prefilled. Check two boxes (if you want to register two very common deductions).

Save and back up one step.

Submit tax declaration by looking through all numbers again and clicking submit.

whoismua• 12 years ago

Before this is settled, the tax code should be made simpler with black or white options. A tax preparer saved me a few thousand dollars once by asking the right questions (school tuition). The same for my corp CPA.

The "free" tax return would serve who exactly? What if the government "forgot" to mention a few tax breaks? Maybe the government should offer free tax returns for the plain and simple ones or for those with very low incomes. Paying $50 to $100 to do your taxes when you pay, say $10K in taxes, isn't much.

US axes are very low compared to Sweden and most EU countries.

AznHisoka• 12 years ago

More reason to hate Turbotax. Their commercials are ridiculous too - NO, doing my taxes is not a way to summarize y year achievements...idiots

jaynos2• 12 years ago

Also, their constant reminders that I can pay for their software out of my refund or get an extra 10% refund by having it all placed on an Amazon gift card. Really annoying to see (and have to click through) when I OWE money.

mfisher87• 12 years ago

I don't understand. I asked them specifically not to do this in my survey after completing my return.

joshdance• 12 years ago

As the witch from Princess Bride would say, "Booooooooo! BOOOOOOO!".

todd8• 12 years ago

The crazy complexity of the US tax system is worse than it appears. There is a non-linear increase in complexity as one goes up the income scale. Have a few investments? More complexity. Real estate investments? More complexity. Starting a company? Even more complexity. Reasonably diversified individuals that have perhaps sold a company or two can expect a rough time.

One reason the complex system is tolerated is that the people it really hurts are very few. A friend of mine has never been audited and does nothing shady but spends roughly $30,000 on tax accountants every year preparing his returns because they are so complex. Fortunately for the rest of us, we just have to waste an inordinate amount of time with Turbo Tax.

stephen_g• 12 years ago

It's not just the complexity. In Australia, we have a ridiculously complicated tax system but the free application that the Australian Taxation Office (ATO) provides walks you through it pretty easily. Usually it only takes me about an hour to file it online, and then you have a return deposited to your bank account (or you get an invoice if you're unlucky) in eight to fifteen days.

The UI is pretty crap but on the whole the app works pretty well. It can 'pre-fill' quite a lot - stuff like salary that has been pre-taxed (called the PAYG system here), share dividends and franking information, bank interest details.

I wish company tax returns were similarly simple, but those have to go in either on paper or electronically through an accountant.

novalis78• 12 years ago

Tax procedure on Mars: Go to your government's website and send them some Marscoin on the kickstarter project of the week or equivalent tipping addresses. Or have some AI distribute a percentage of your funds on your behalf based on some predefined rules.

thrillgore• 12 years ago

Well color me shocked. A company using lobbying to protect its sources of revenue.

cpwright• 12 years ago

The current software is also just bad. I used to use TurboTax, but now I'm using TaxCut. TaxCut has the following issues, which are really just stupid at this point: - Even though it could import last years return, it needs me to tell it how much of my 2012 tax refund from the state should be counted as 2013 income. I have to recalculate my last year's tax liability based on a lower deduction (because AMT may or may not erase the deduction anyway). - It tells you that you have a slightly increased audit risk for one of about 5 different reasons, that are mutually exclusive and only one of them applies to my return.

This is the stuff that a computer can do very well, but is tedious and error-prone for me.

Moreover, the last time I used TurboTax and I'm sure this is true with TaxCut still, it wants me to decide if I want to file jointly or separately. Why in the world should I have to make that decision or do the returns twice. The software should be intelligent enough to do the calculations both ways, and present the better answer, with the option to overrule it.

If the government was making this software you could see it being this bad, but these companies are supposedly competing to do it; but it is still awful. Arguably, this is because the tax system is awful, but most of this is just coasting.

I also would expect that the state software wouldn't be very good (at least for unpopulous states), but most of my issues are with the federal return.

ecolner3• 12 years ago

* Not trying to piss off PG. I honestly don't know the rules about gathering supporters on HN, but this is in the spirit of the community I hope *

If anybody would like to use their skills to fix this issue with me (ex Intuit TurboTax engineer) please hop over to this Ask HN and send me a message (email on thread). Also check the website for a bit more context: http://taxcompactor.com

It's a pretty big project, but it's very doable by a small team from this community. Tax preparation is fundamentally a software engineering problem, which is convenient.

Need everything from testing to project management with myself floating between roles. Remote is welcome - I'm in California. We'll use Basecamp, Github, Jira, Skype? to work - productivity suggestions welcome of course. True collaboration and fair equity.

https://news.ycombinator.com/item?id=7599443

There are a few really great folks that have already reached out. Email me for details and we'll go from there. I'd love to hear from you.

TurboTax Maker Intuit Funnels Millions to Lobby Against Easier Tax Returns

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