Earlier this year, The IRS announced new changes in a program that was supposed to provide free tax preparation to millions...a deal the IRS cut years ago with big tax firms. If they’d offer free help, the IRS agreed not to build its own software to do it. Turns out the free help has been too hard to find and often steered people to paid services. Paul Kiel of Propublica investigated.
Sharyl Attkisson: By way of background, has there been a lot of discussion over the years that the IRS ought to make it easier and provide a free way for people, especially of lower incomes to file?
Kiel: Yeah, I mean, so this goes back to the 1990s, you know, everybody used to file on paper. And there was a big push to get people to file electronically cause the IRS saved a lot of money. Those types of proposals have been something Intuit has viewed as a threat and have tried to stop.
Sharyl: What power do companies like Intuit have or TurboTax have to try to prevent something like this? What do they do?
Kiel: Well, they, they have an army of lobbyists. And we counted this year, they have over 40 lobbyists on Capitol Hill. You know, they spread their contributions around Congress. And also I think they're able to make the arguments that people find persuasive in part because the IRS is not a popular agency. So they're able to make arguments like, do you want the IRS unit preparing your taxes and also auditing you?
Sharyl: On its face, it sounds like a good thing that Turbo Tax and Intuit would come up with a program to let you file for free if you go to their website under certain conditions. But it sounds like you're saying that it's sort of an end run around the notion of really making it easier and free for people?
Kiel: Right. Well, I mean the main thing to know about this program, which goes back to 2002 is that very few people actually know about it. So last year under 3 million people used this program, which is you have to find sort of like a secret door on the IRS’ website. It's called the free file program. And if you may get to that page and then you file a link back to TurboTax, then you'll absolutely have a free tax return filing. Both federal and state is what they're offering right now. But very few people find that secret door. One reason for this is that intuit and H and R Block have these free offers that they make. So if you Google on the Internet free tax prep, what's going to come up usually is like TurboTax and eternal block saying hey, free. But it's a marketing ploy. Both Intuit and H and R block stop Google from indexing their pages because they didn't want people, if you googled “free tax prep,” they didn't want the government program coming up.
Sharyl: How can they stop Google?
Kiel: You can, you can put language on like, you know, basically code on your website that says “Google: no, don't read this.”
Sharyl: Were you able to find out how many people do use the free program that's available through the IRS?
Kiel: So it's under 3 million people, which, 100 million people are eligible, you know, supposedly. But no more than 5 million have ever used it in the whole history of the program. But nevertheless, the IRS claims that this is a successful program.
Sharyl: Can you quantify how much that industries, the tax filing industry spends on lobbyists lobbying and political contributions?
Kiel: I think we total those over $30 million that Intuit is used on, spent on, you know, lobbying over the last decade or so. It's an enormous return on an investment given, you know, the billions of dollars that they've made in profit. So it's, you know, it's a good investment.
Sharyl: Can you tell is whether one party political party or another political party is sort of pushing it? A lot of times it's one against the other
Kiel: Well, they've spread around their money pretty well in Congress and they've gotten bills introduced by both members of both parties.
One study found five of 12 companies that partnered with the IRS used coding that hid their free services from many online searches.