Happy Tax Day: How TurboTax Works to Keep Your Taxes Difficult

Why are taxes so hard? Part of the reason seems to be that tax preparation companies’ lobbying efforts ensure that doing your taxes are really complicated.

When doing your taxes you may notice that, if you’re like most people, virtually all of the information that you’re providing is already something the government has anyway. Why do you have to go through so much effort to show your work all over again?

In addition, if you’ve ever made a mistake filling out your taxes you’ll notice something interesting. It’s not like the IRS accountants just send the forms back to you and say “do a better job, citizen.” No, they usually just fix it for you. (Granted, this often means processing takes longer and you pay more money, but still.)

So, um, how hard are taxes really? Why can’t the government do most of it for you?

Actually, it can. The tax preparation companies just don’t want taxes to be too easy, because then Americans wouldn’t use their services. According a piece by Liz Day at ProPublica:

Imagine filing your income taxes in five minutes—and for free. You’d open up a pre-filled return, see what the government thinks you owe, make any needed changes and be done. The government-prepared return would estimate your taxes using information your employer and bank already send it. Advocates say tens of millions of taxpayers could use such a system each year, saving them a collective $2 billion and 225 million hours in prep costs and time, according to one estimate.

The idea, known as “return-free filing,” would be a voluntary alternative to hiring a tax preparer or using commercial tax software. The concept has been around for decades and has been endorsed by both President Ronald Reagan and a campaigning President Obama.

And yet this has never happened. This year you probably shuffled over with a folder full of papers to H&R Block or (like 25 million other Americans) stayed up late last night processing your returns with the help of TurboTax.

About that TurboTax. It’s not really your ally here. It’s your enemy. Day:

[Return-free filing has] been opposed for years by the company behind the most popular consumer tax software — Intuit, maker of TurboTax.

Intuit has spent about $11.5 million on federal lobbying in the past five years — more than Apple or Amazon. Although the lobbying spans a range of issues, Intuit’s disclosures pointedly note that the company “opposes IRS government tax preparation.”

The disclosures show that Intuit as recently as 2011 lobbied on two bills, both of which died, that would have allowed many taxpayers to file pre-filled returns for free. The company also lobbied on bills in 2007 and 2011 that would have barred the Treasury Department, which includes the IRS, from initiating return-free filing.

Intuit spokeswoman Julie Miller explained to Day that, “Like many other companies, Intuit actively participates in the political process.” Return-free programs, Miller argued “curtail citizen participation in the tax process” and also potentially have “implications for accuracy and fairness in taxation.”

Yea, maybe. Perhaps more importantly, according to Intuit’s annual Securities and Exchange Commission report, a free government tax preparation device would be a serious risk to its business.

I used TurboTax to do my taxes on Saturday afternoon. It took me about an hour and a half. It was a lot cheaper than going to H&R Block or using a private accountant. It makes doing taxes a pretty easy process.

But thanks largely to the efforts of TurboTax, it’s not nearly as easy as it could be.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer