TurboTax is Scamming You (Script & Sources)

Good morning, bad news!

Taxes are due on May 17th, which means that you’re probably about to pay a company like TurboTax to do a bunch of intentionally complicated math for you to figure out how much money you owe the government, but actually the government already knows how much you owe them, but they won’t tell you, and if you get it wrong, you’ll be audited, fined, and you could go to jail.

So why can’t the government just tell you how much you owe them instead of forcing you to take a weird math test every year that puts your entire financial future at risk? Because the billionaires who own the companies that prepare your taxes for you, like TurboTax and H&R Block make $150 billion dollars a year, and it only costs them a small fraction of that to bribe Congress to keep this system in place.

Now, most of the rest of the world thinks that’s really stupid and exploitative, and instead of delegating tax preparation to a private company, the government just does it for you and sends you either a refund check, or a bill - and literally everyone thinks this is a good idea - including Ronald Reagan of all people, who proposed that exact idea, and so did Barack Obama and so did George W. Bush.

So… why don’t we just do that?

Well, thanks to research by ProPublica, which is an investigative journalism nonprofit, for the last 20 years, tax groups have been hiring former IRS and other government officials and lobbyists to “negotiate” with the IRS to prevent them from implementing a simplified tax system would make all of our lives easier.

But the US government is embarrassingly bad at negotiating with private companies, to the point that it seems less like they’re negating in the public interest, and more like they’re working with private companies to figure out how badly they can screw the public without the public getting too mad at them.

The deal between the IRS and companies like TurboTax was that the IRS agreed not to implement a simplified system, but in return, tax prep companies had to provide “free” online filing for lower-income taxpayers. As you can imagine, TurboTax doesn’t make money on free filing, so they spent millions of dollars designing an online system that literally plays psychological mind games with you to hide, obscure, redirect, and otherwise make it extremely difficult to take advantage of this “free” online filing, to the point that legally 100 million Americans qualify for free filing, but only 3% of them take advantage of it.

In fact, here’s an internal powerpoint from TurboTax of user complaints, including that “The website lists Free, Free, Free and the customers are assuming their return will be free.” It’s funny that in this case, the psychology mind game is just blatantly lying.

They also did stuff like hiding the real “free” tax return page from google results, and boosting a different “free” tax return page that actually costs money, as well as upgrading free customers to paid plans without their knowledge - and a bunch of other unethical and probably illegal bait-and-switch schemes.

And let’s be VERY clear about something, the effort to keep in place the current byzantine tax prep system that ONLY benefits private billionaires, and actively harms the general public, is supported by both political parties who both receive millions of dollars in bribes from these companies.

In 2019, a piece of legislature called the Taxpayer First Act would have officially made it illegal for the IRS to create a free online tax prep system, and it was passed and supported by both parties in the House, with support from both in the Senate. The few politicians to oppose the bill were young progressives like Alexandria Ocasio-Cortez, while establishment Democrats and Republicans heartily endorsed it. In fact, it would have passed except ProPublica released their investigative report that highlighted the corruption so clearly that Congress was forced to remove that part of the bill.

Anyway, if you make less than $72,000 a year, you can go to irs.gov and select “file your taxes for free”, to actually find free tax prep, although it’ll still be complicated, and you’ll still run the risk of being fined or jailed for doing it wrong. Because as you can obviously tell, privatizing a basic government requirement creates a situation where private companies will spend millions of the dollars that they steal from you to pay off or hire people in government who would otherwise be expected to stop them.

And for some reason, America is practically the only high-income country where this level of corruption is so blatant and unregulated that you’d expect to see it in a war-torn developing country on the brink of collapse. Oh, and don’t forget if you got more than $10,200 in unemployment last year, you owe taxes on it, but if you bought a yacht, you can deduct the interest you paid on up to $750,000. It used to be a million, but they lowered it.